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HMRC internal manual

VAT Groups

General principles of VAT group treatment: EC legislation

The EC vires for VAT group treatment is contained in Article 11 of the Principal VAT Directive (Dir. 2006/112) which states that:

After consulting the advisory committee on value added tax (hereafter the “VAT Committee”), each Member State may regard as a single taxable person any persons established in the territory of that Member State who, while legally independent, are closely bound to one another by financial, economic and organisational links.

This is a discretionary provision which Member States may choose to implement in their national legislation or not.