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Germany: Key features of VAT group rules

Germany: Key features of VAT group rules

The German Ministry of Finance (BMF) has presented the key features of the value added tax (VAT) group rules in line with Article 11 of the EU VAT Directive—that could replace the regulations concerning VAT groupings in Germany.

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According to Article 11 of the EU VAT Directive, following consultation with the VAT committee, each EU Member State can treat persons that are residents within its territory as one “VAT-able person” if the persons or entities, while legally independent, are closely affiliated due to mutual financial, economic and organizational relationships.

The anticipated schedule regarding the VAT group rules is as follows:

  • A position paper (April 2019) concerning the VAT group rules provides that all group members are to be jointly and severally liable for the group’s VAT liability.
  • Comments from industry representatives are to be presented to the BMF this summer (2019), and then expected to be followed by more discussions.
  • The model for group taxation would then be submitted to the EU VAT committee for consultation in 2019 (if necessary).
  • After that, the German legislative process could be initiated in 2020.
  • Ideally, the new law would be effective 1 January 2021, with a transition phase (during which time, the former and new VAT group rules would be applicable in parallel) until 31 December 2021.


Read a July 2019 report [PDF 322 KB] prepared by the KPMG member firm in Germany


Other VAT developments

Other recent VAT developments that may affect businesses in Germany include the following items:

  • Activity as a member of the supervisory board of a foundation (CJEU* judgment of 13 June 2019 ‒ case C-420/18 ‒ IO)
  • Action against Germany on account of input tax refund procedures (CJEU referral of 10 May 2019 ‒ case C-371/19 ‒ European Commission v. Germany)
  • Input VAT deduction in connection with hospitality expenses (Lower Tax Court Berlin-Brandenburg, decision of 9 April 2019, 5 K 5119/18)
  • Tax corrections during tax audit ‒ Changes to administrative directives


*CJEU = Court of Justice of the European Union

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