The fundamental tenet that no supplies within a VAT group are subject to taxation remains unchanged

August 15, 2024

In its ruling of 26 January 2023 (V R 20/22), the Federal Fiscal Court referred the national provision on VAT groups to the ECJ for review.

The ECJ was tasked with determining whether the national regulation was in compliance with EU law in general (1st question referred) and whether an exception would be necessary in cases where the recipient of the service was not entitled to deduct input VAT, which could potentially result in a tax loss (2nd question referred).

In its judgement of 11 July 2024 (C-184/23), the ECJ confirmed that supplies between the members of a VAT group are not subject to VAT. This also applies if the service recipient is not (or only partially) entitled to deduct input VAT.