German VAT grouping
Germany implemented a VAT grouping simplification. From a VAT perspective, members of the group are integrated in the business of the Head of the group. This simplification is not limited to specific sectors or industries. Also, permanent establishments can be members of a VAT group (the head office abroad would not be considered part of the group).
VAT grouping is mandatory in Germany. Where two or more established companies are bound to each other, these businesses are treated as one taxable person by the German tax authorities.
Taxable persons are considered bound to each other where more than 50% of the shares are directly or indirectly owned by the same company. They may also be considered bound when there are organizational or economic links between these businesses.
Each member of the group must be a taxable person, even holding companies are accepted as group members. The head of the group can be any member. As in most countries, one single VAT return is filed for the entire group. Members are jointly and severally liable for all VAT liabilities.