VAT group simplification changes in Germany

Recent decisions by the German authorities have clarified or amended the VAT group simplification rules in the country.

1 April, 2016


The following changes have been announced:

  • Partnerships can be part of the group. The Federal Tax Court allowed partnerships to be members of a VAT group provided they are the head of the group or, alternatively, they are fully owned by the Head of the group.
  • The same Court provided more details on the financial bond between two companies in order to create a VAT group. This decision gives details about the personal management requirement, excluding activities like preparing tax returns or issuing directives for the controlling company.
  • Non-taxable persons cannot be part of a VAT group in Germany.

Unlike other EU countries, Germany implemented a mandatory VAT group simplification. Companies are obliged to create a VAT group as soon as they meet the group criteria. Austria and The Netherlands are the other two countries that implemented mandatory VAT grouping. All other European countries have either not introduced VAT groups or introduced them as an option for taxpayers meeting the relevant criteria.


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