Joining the group

While the European elections were rocking the political status quo in the UK more trouble with Europe may have emerged just outside the spotlight.

On 8 May the European Court of Justice (ECJ) published the questions referred to it by the highest German tax court the Bundesfinanzhof (BFH) regarding – among other things – the eligibility of partnerships to be members of VAT groups.

The case (Beteiligungsgesellschaft Larentia + Minerva mbH & Co KG v Finanzamt Nordenham C-108/14) concerns a type of German limited partnership a Kommanditgesellschaft (KG) that had a 98% interest in each of two other (“daughter”) KGs which operated container ships. Input VAT directly and immediately connected with this VAT-free activity can in principle be deducted in Germany.

The mother KG (the appellant here) paid charges to raise funds to buy interests in its future daughters and...