Fundamentals of VAT grouping in the Netherlands

Abstract

VAT grouping is a complex concept in European VAT law. Due to the optional nature of Article 11 VAT Directive and the judgment of the CJEU in the Larentia + Minerva case that Member States must develop and maintain their own specifications of the so-called link criteria, no strong harmonisation between national VAT grouping regimes is to be expected in the near future. It is beyond doubt that VAT grouping pervades the practice of many Member States, and as such can play a significant role in international business decisions. It is up to VAT practitioners in each Member State to provide their foreign colleagues with the legal particulars of their national VAT grouping regime. In this contribution, the authors take up this challenge by giving a brief overview of the fundamentals of the VAT grouping regime in the Netherlands. The contribution contains a sketch of the history of the Dutch grouping regime and a short examination of the criteria for forming a Dutch VAT group. It also touches on the consequences of being a VAT group for the application of VAT law to the parties concerned, as well as on matters of administrative obligation and joint liability. More in-depth attention is given to the Dutch interpretation of the criteria of close financial, organizational and economic links. Finally, the authors examine on an even deeper level a contemporary discussion in Dutch VAT doctrine as regards the criterion of close economic links, spurred on by recent case law of the Dutch Supreme Court