The Advocate General’s opinion concludes that Sweden has failed to fulfill its obligations under Article 11 of the VAT Directive by restricting the availability of VAT grouping to the financial and insurance sectors.
The Advocate General’s opinion is not binding on the CJEU; rather, it is the role of the Advocates General to propose to the court, in complete independence, a legal solution to the case. Now, the judges of the court can begin their deliberations in this case, with judgment to be given at a later date (most likely in early 2013).
Tax professionals in Sweden believe that at this point, it seems likely that the CJEU could agree with the Advocate General’s opinion. The future of the current rules on VAT grouping is therefore uncertain.
It could be that a change to the VAT grouping rules is possible, depending on the judgment in the pending case. One possible outcome would be an expansion of the strict rules on VAT grouping, so that more companies would be able to form VAT groups. If, however, the Swedish VAT grouping rules are simply repealed, this could result in increased VAT costs for companies within the financial and insurance sectors.
Depending on the outcome of the judgment, it remains to be seen how the Swedish government would react. Companies in the financial and insurance sectors need to monitor this development.
For more information, contact a tax professional with the KPMG member firm in Sweden:
+46 8 7239698