Landmark ruling on consolidated VAT groups

According to a landmark ruling by the Federal Fiscal Court, the tax liability of the tax group parent is in line with EU law. However, the tax group itself is not necessarily dependent on the tax group parent having a majority of votes.

Following a preliminary ruling by the European Court of Justice (ECJ), the Federal Fiscal Court has also determined that the tax liability of the tax group parent for the transactions of a VAT group is in line with EU law. So everything remains the same here. What is new, however, is the finding that financial integration also exists if the controlling company only holds 50 % of the voting rights, but holds a majority stake in the capital of the controlled company and is the sole managing director of the controlled company. The ECJ considered the requirement of a majority of voting rights to be contrary to EU law.

At the same time, the Federal Fiscal Court referred a further question arising from the previous decision to the ECJ for a preliminary ruling. The aim is to clarify whether the non-taxability of internal transactions between members of the tax group can continue to apply.