Concept Definition
What is a VAT group?
A VAT group is a tax arrangement in which two or more legally separate businesses are treated as a single VAT entity for VAT purposes. Supplies between group members are disregarded for VAT. The group files a single consolidated VAT return. VAT grouping is permitted in most EU member states but with varying eligibility conditions.
How does VAT grouping affect invoicing?
Within a VAT group, supplies between members are outside the scope of VAT and do not require VAT invoices. External invoices are issued by the representative member under the group VAT number. Individual members no longer hold their own VAT numbers for the period of grouping.
Frequently Asked Questions
- Can any business join a VAT group?
- No. Eligibility for VAT grouping requires that members are legally independent but financially, economically, and organizationally linked. The precise criteria vary by jurisdiction. In most EU countries, VAT grouping is limited to corporations and requires application to the tax authority.
- Does VAT grouping affect e-invoicing?
- Yes. E-invoicing systems must use the group VAT number for all external invoices during the grouping period. Intra-group documents do not need to be compliant VAT invoices. Changes to group membership require updates to invoice templates and validation configurations.