Creation and dissolution of a VAT group

Verified 01 January 2024 - Directorate for Legal and Administrative Information (Prime Minister)

When several businesses have close financial, economic and organizational ties, they can be a VAT group. Only the group representative for all businesses will have to complete VAT formalities with the tax authorities.

A VAT group is the meeting of several businesses with close financial, economic and organizational links under a single entity subject to the VAT arrangements. Members are no longer individually liable to VAT. The VAT group becomes the only taxable person.

Financial links

There are close financial links when a business holds directly or indirectly (the head of a holding company indirectly holds the shares of a daughter business) more than 50% capital or voting rights of another business.

The close financial link is presumed in the case of the following entities even if there is no direct or indirect holding of more than 50% voting rights or capital of one business over another:

  • Mutual or cooperative bank
  • Prudential grouping
  • Person who meets the requirements for the combination accounts
  • Joint Social Protection Grouping
  • co-ordination business

Economic links

The economic links between several businesses exist in the following situations:

  • They exercise a principal activity of the same nature
  • They have complementary interdependent activities or pursuing a common economic objective
  • They're doing activities wholly or partly for the benefit of of the other members of the future group

Organizational Links

The organizational link exists when the businesses are legally (through official documents) or in fact (in view of what happens in practice) directly or indirectly under a joint directorate.

This is also the case if these businesses organize their activities wholly or partly in consultation.

Example :

This is the case, for example, when a parent business holds a significant number of shares in several businesses, called daughter businesses. These businesses are in an organizational scheme in which the parent business is the common management.

To create a VAT group, the businesses linked to each other must opting for the regime of the VAT group and designate the entity from among them which will represent the group.

This option is taken for at least 3 calendar years.

It must be exercised no later than 31 October the year before the year for which the group wants to start the option.

Group members must meet the conditions by 1er January of the year for which the option starts.

The list of members of the VAT group must be sent each year, no later than 10 January the year in which the members are in the VAT group. It may contain entities that do not yet fulfill the conditions (economic, organizational and financial link) in 1er January. These entities will become members of the group after fulfilling all the conditions.

This option must be taken by the group representative with the companies’ tax office to which it is attached:

Who shall I contact

The representative shall indicate the following information at the time the option is taken:

  • Its identity
  • Name the single taxable person and each member
  • Domiciliation of the single taxable person
  • Formalized agreement of each member of the VAT group signed by his legal representative
  • Nature of the activity of each member
  • Intra-Community VAT Number assigned prior to group integration for each member or number Siren

Warning  

All members of the VAT group must have given their agreement to exercise the option.

The representative of the group shall be responsible for to fulfill all VAT obligations (declaration, payment, reimbursement of credits, etc.).

VAT group members must pay in solidarity VAT, interest on late payments, tax increases and fines up to what they would have had to pay if they were not in a VAT group.

Starting on 1er January of the first option year, members of the VAT group no longer have to carry out VAT-related formalities. They're said to be plus taxable persons.

The representative of the group is responsible for completing all VAT formalities for the group.

These include, for example:

However, the members of the group remain liable for their VAT obligations before entering the group and after leaving the group.

Warning  

Group members are not exempt from tax returns other than VAT.

The option for setting up a VAT group lasts at least 3 years.

The list of members is set for 3 years. It is not possible to bring in a new member or to bring out a new member unless the conditions are no longer met by that member.

For example, a company on the group's list who did not meet the conditions and who ends up meeting them within those three years could join the VAT group. Conversely, a member automatically exits the group on 1er the day of the month following the month in which it ceased to fulfill the conditions.

The group representative must report any exit from or entry into the group to the tax administration:

Who shall I contact

FYI  

The company which becomes a member during the initial three-year period may leave the group at the end of the initial period. If she joined the group after 6 months, she could leave the group in 2 and a half years.

At the end of the initial 3-year period, the group perimeter can evolve. Some companies can join or leave the VAT group.

Entry of a new member

If a company meets the conditions of a VAT group and wishes to join it, the representative (single taxable person) of that group must notify the tax authorities of the entry of that new member.

He must indicate to the tax department the companies on which he depends updated list of members and the express agreement of the new member(s):

Who shall I contact

The new member(s) shall be included in the group on 1er January of the year following the year in which the application for integration was made.

Exiting a Member

A member of the VAT group may decide to leave the group with the agreement of the group representative. The latter must inform the tax office of the companies on which it depends not later than 31 October of the preceding year the exit of the limb.

Who shall I contact

This output is effective at 1er January of the year following the year in which the information is transmitted.

The VAT group can end in several ways. Dissolution may be chosen by the members or may be an automatic result of the members' circumstances.

Dissolution of the group

Members of a VAT group can choose to dissolve the group by denouncing the. Such dissolution may not take place before the end of a period of 3 calendar years and each member of the group must give his or her express agreement.

The representative of the group must inform his tax department of the companies of the denunciation of the option:

Who shall I contact

Loss of certain conditions of all members

The members of the VAT group must comply with the criteria of economic, financial and organizational links. If all the members of the group can no longer fulfill at least one of these three criteria, the group must be dissolved.

This dissolution is immediate and can intervene at any time (including during the mandatory period of 3 calendar years).

The representative of the group shall notify his company tax office without delay of:

Who shall I contact

Exiting the penultimate member

As soon as the penultimate member leaving the group (whether voluntarily or not), the dissolution of the VAT group is immediate because there's only one member left.

The representative of the group shall notify his company tax office without delay of:

Who shall I contact