Organizational Ties and VAT Group Exclusion: Legal and Managerial Autonomy

• To exclude a company from the VAT Group, it must be proven that there is no organizational link, meaning the companies operate with full legal and managerial autonomy without being subject to direction and coordination
• Specific agreements proving this independence are crucial for a favorable opinion
• The Italian Revenue Agency has clarified that to demonstrate the absence of an organizational link, it is sufficient to show that the companies are not subject to activities of direction and coordination but operate independently
• Two companies have submitted a request for interpretation regarding the correct application of VAT Group regulations, specifically concerning the absence of the so-called organizational link as per article 70-ter, paragraph 3, of DPR no 633 of 1972
• The relationship between the VAT Group formed by the two applicant companies (DELTA and ALFA groups) involves complex agreements, highlighting that an organizational link exists when there is coordination, legally or factually, among the decision-making bodies of the companies, influencing the shareholder in major management and organizational decisions
• For a company to be included in the VAT Group perimeter, the mere existence of a financial link, hence legal control as per article 2359, paragraph 1, no 1 of the civil code, is enough to also presume an organizational link
• To counter this presumption, it must be demonstrated that there is no such link between the controlling company and the controlled companies
• Legally, article 2497-sexies of the civil code establishes another relative presumption, stating that the activity of direction and coordination of companies is considered to be exercised by the company
• required to consolidate their financial statements or
• that otherwise exercises legal control as per article 2359 of the civil code
• The applicant companies emphasize that, due to the governance agreement signed, it was expressly established that
• the DELTA Group and the individual companies of the DELTA Group will not be subject to direction and coordination activities by the ALFA shareholder and will operate with full legal and managerial autonomy
• The VAT Group concept was outlined in a circular from the Revenue Agency dated October 31, 2018, no 19/E

Source: commercialistatelematico.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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