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European Commission v UK, Court of Justice of the EU
European Commission notified the UK in September 2008 that legislation allowing non-taxable persons to be included in a VAT group might not be compatible with article 9 and article 11 of the VAT Directive.
The UK disputed the commission’s assertion.
The commission took the matter to the Court of Justice of the EU which ruled that the wording of the first paragraph of article 11 permitted a member state to treat a number of persons as a single taxable group if they were established in the territory of that state and they had close financial economic and organisational links.
The article did not distinguish between taxable persons and non-taxable persons using the word “persons” rather than “taxable persons” – and there was no case law to support the European Commission’s argument.
The court preferred the view of the UK that the presence of non-taxable entities in a...
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