EGC – T-268/25 (Sampension Livsforsikring) -AG Opinion – 100% ownership rule permissible if proportionate against tax avoidance

On April 22. 2026, the EGC issued the AG Opinion in the case T-268/25 (Sampension Livsforsikring).

Context: Reference for a preliminary ruling – Taxation – Value added tax (VAT) – Article 11 of Directive 2006/112/EC – Taxable persons – ‘VAT group’ – Persons closely bound to one another by financial, economic and organisational links – Measures to prevent tax evasion or avoidance – National legislation requiring 100% ownership for certain taxable persons

Summary

Facts of the Case: Sampension Livsforsikring A/S, an insurance company with VAT-exempt financial services, sought to form a VAT group with its management company, Sampension Administrationsselskab A/S. Sampension Livsforsikring owned 94% of the management company, with the remaining 6% held by two pension funds. The Danish Tax Agency rejected the application because Danish law (Article 47(4) of the Law on VAT) requires 100% ownership for VAT groups including persons performing VAT-exempt or non-economic activities. Sampension Livsforsikring challenged this, arguing incompatibility with Article 11 of the VAT Directive.
Issues Raised: The core issues are: 1) Whether Article 11 of the VAT Directive, particularly its first paragraph concerning “close financial links” and its second paragraph allowing measures against “tax evasion or avoidance,” precludes national legislation that mandates 100% ownership for certain taxable persons (those engaged in VAT-exempt or non-economic activities) to form a VAT group. 2) If so, whether Article 11 has direct effect. (The AG’s opinion focuses only on the first question.)
AG’s Opinion on First Paragraph (Close Financial Links): The AG opines that the first paragraph of Article 11 does not permit a 100% ownership requirement. The concept of “close financial links” must be interpreted uniformly and broadly, not narrowly. Previous case law suggests that a majority holding in share capital is sufficient, and a 100% stake goes beyond what can be justified under this provision.
AG’s Opinion on Second Paragraph (Tax Evasion/Avoidance) & Argumentation:
- Distinction between Evasion and Avoidance: The AG clarifies that “tax evasion” refers to illegal activities and the Danish law does not aim to combat such. “Tax avoidance,” however, refers to obtaining a tax advantage contrary to the purpose or spirit of tax law, even if legally compliant, and does not require intent from the taxpayer.
- Purpose of VAT Group Scheme: The primary purpose of Article 11 is to prevent the creation of tax advantages that would not exist outside a VAT group (e.g., splitting a single undertaking to exploit special schemes) and to simplify administration. It is not to create tax advantages or ensure “organisational fiscal neutrality” (i.e., making the VAT treatment indifferent to whether activities are internal or outsourced within a group).
- Tax Avoidance in this Context: The tax advantages gained by including persons performing VAT-exempt or non-economic activities within a VAT group (where services between them become non-taxable, reducing the overall VAT burden) are seen as a form of tax avoidance that Member States are permitted to counter under the second paragraph of Article 11.
- Proportionality and Fiscal Neutrality: The national measure must be proportionate and respect fiscal neutrality. The Danish 100% ownership rule achieves its objective only partially, as fully owned entities still gain the advantage. The referring court must assess if it is appropriate and necessary, considering less restrictive alternatives. It also needs to assess if the 100% ownership requirement respects fiscal neutrality, particularly given the justification of equal treatment between integrated and grouped undertakings, and whether the ability to autonomously choose organizational structure is truly limited only at 100% ownership. The AG notes that regulatory reasons in sectors like finance might justify different treatment, but this wouldn’t apply universally to other sectors.
Conclusion of AG’s Opinion (Answer to Question 1): Article 11 of the VAT Directive should be interpreted as not precluding national legislation that makes eligibility for a VAT group (including persons carrying out VAT-exempt or non-economic activities) subject to one person owning 100% of the others, provided that such legislation genuinely aims to prevent tax advantages beyond administrative simplification, and complies with the principles of proportionality and fiscal neutrality.

Article in EU VAT Directive

Article 11 of the EU VAT Directive 2006/112/EC.

Article 11
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 ofthat Member State who, while legally independent, are closely bound to one another by financial,economic and organisational links.
A Member State exercising the option provided for in the first paragraph, may adopt any measures needed to prevent tax evasion or avoidance through the use of this provision.

Facts & Background

Parties Involved:
- Applicant: Sampension Livsforsikring A/S, a customer-owned insurance company in Denmark, engaged in life insurance and various financial services, including labor market and company pensions.
- Defendant: Skatteministeriet (Ministry of Taxation, Denmark).
Legislative Context:
- The dispute revolves around the interpretation of Article 11 of Council Directive 2006/112/EC regarding the common system of value-added tax (VAT). This directive has been implemented in Denmark through Paragraph 47(4) of the Danish VAT law (momsloven).
Background of the Dispute:
- Prior Structure: Until January 1, 2017, Sampension Livsforsikring A/S was part of a VAT group with Sampension Administrationsselskab A/S, which managed various administrative tasks for Sampension and two other pension funds not included in the group.
- Change in Ownership: In late 2016, Sampension Livsforsikring A/S allowed two pension funds to acquire a 3% stake in Administrationsselskab, resulting in Sampension no longer owning 100% of the shares. Consequently, the VAT group ceased to exist as it no longer met the 100% ownership requirement under Danish law.
Request for Joint Registration:
- On January 15, 2019, Sampension Livsforsikring A/S requested permission from the Danish Tax Agency to be re-registered as a joint VAT group with Administrationsselskab, arguing that the 100% ownership requirement was inconsistent with EU law, particularly Article 11 of the VAT Directive.
- At the time of the request, Sampension owned 94% of Administrationsselskab.
Decisions by Tax Authorities:
- The Danish Tax Agency rejected the request on February 8, 2019, citing the lack of 100% ownership. This decision was upheld by the Landsskatteretten (National Tax Tribunal) on December 13, 2021, which ruled that the requirement of full ownership was not satisfied and that Sampension could not rely directly on Article 11 of the VAT Directive as it does not have direct effect.
Referral to the Court:
- Sampension Livsforsikring A/S appealed the decisions to the Retten i Lyngby (Lyngby District Court), which subsequently referred the case to the Østre Landsret (High Court of Eastern Denmark) due to the case raising significant legal questions regarding the interpretation of EU VAT law.
Current Ownership Structure:
- The ownership of Sampension Administrationsselskab A/S currently includes Sampension Livsforsikring A/S (88%), along with minority stakes held by other pension funds.

The background of this case is crucial for determining the compatibility of national VAT regulations with EU law and the implications for VAT group registrations, especially concerning ownership requirements.

Questions

(1) Is the first paragraph of Article 11 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in conjunction
with the second paragraph thereof, to be interpreted as precluding legislation of a Member State, such as that at issue in the present case, under which eligibility for creating a VAT group comprising persons not engaged in activity subject to registration or not engaged in economic activity subject to the condition that one
person in the VAT group directly or indirectly owns 100% of the other person or persons in the VAT group?
(2) If question 1 is answered in the affirmative, does Article 11 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax then have direct effect in the Member States, with the result that taxable persons are entitled, vis-à-vis a Member State, to be registered as a VAT group in cases where the legislation of that Member State does not comply with that provision and cannot be interpreted in accordance therewith

AG Opinion

Article 11 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax

must be interpreted as not precluding legislation of a Member State under which eligibility to form a VAT group comprising persons carrying out activities exempt from VAT or not engaged in economic activity, within the meaning of Article 9(1) of Directive 2006/112, is subject to one person in the VAT group owning, directly or indirectly, 100% of the other person or persons in the VAT group, in so far as that legislation is intended to prevent tax advantages arising from the application of the VAT group scheme other than those connected with simplifying administration, and complies with the principles of proportionality and fiscal neutrality.

Judgment

Source

Curia

Other ECJ cases referred to

Judgments of 22 May 2008, Ampliscientifica and Amplifin, C‑162/07, EU:C:2008:301, and of 11 July 2024, Finanzamt T II, C‑184/23, EU:C:2024:599 (paragraph 40): These are cited to explain that within a VAT group, services between members are not subject to VAT because the group is treated as a single taxable person. This highlights a key tax effect of forming a VAT group.
Judgment of 1 December 2022, Norddeutsche Gesellschaft für Diakonie, C‑141/20, EU:C:2022:943 (paragraph 64), and Judgment of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285 (paragraph 44): These cases are referenced to establish that Member States have a margin of discretion in setting specific rules for VAT groups, but the concept of “close financial links” under Article 11 must be interpreted uniformly.
Judgments of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt, C‑108/14 and C‑109/14, EU:C:2015:496 (paragraph 42); 1 December 2022, Norddeutsche Gesellschaft für Diakonie, C‑141/20, EU:C:2022:943 (paragraphs 50 and 66); and 1 December 2022, Finanzamt T (Internal supplies within a VAT group), C‑269/20, EU:C:2022:944 (paragraphs 44 and 45): These are cited to show that even before the explicit introduction of the second paragraph of Article 11 (concerning tax evasion/avoidance), Member States could impose restrictions on VAT groups to prevent abusive practices.
Judgments of 25 April 2013, Commission v Sweden, C‑480/10, EU:C:2013:263 (paragraph 36), and of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285 (paragraph 45): These cases support the argument that the condition of “close financial links” cannot be interpreted narrowly, thereby challenging the 100% ownership requirement.
Judgment of 1 December 2022, Norddeutsche Gesellschaft für Diakonie, C‑141/20, EU:C:2022:943 (paragraph 71): This case is directly used to argue that a majority holding in capital (not necessarily 100%) is sufficient to establish close financial links, as it precluded requiring a majority of voting rights in addition to a majority shareholding.
Judgments of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285 (paragraph 58), and of 16 February 2023, DGRFP Cluj, C‑519/21, EU:C:2023:106 (paragraph 86): These are cited to emphasize that it is ultimately for the referring court to determine if a national measure is necessary and appropriate for preventing tax evasion or avoidance, while the ECJ (or AG) provides guidance.
Judgments of 25 April 2013, Commission v Sweden, C‑480/10, EU:C:2013:263 (paragraph 38), and of 25 April 2013, Commission v Finland, C‑74/11, not published, EU:C:2013:266 (paragraph 66): These cases are used to demonstrate that Member States are permitted to restrict the application of the VAT group scheme through national legislative measures to combat tax evasion or avoidance.
Judgments of 12 July 1988, Direct Cosmetics and Laughtons Photographs, 138/86 and 139/86, EU:C:1988:383, and of 14 December 2017, Avon Cosmetics, C‑305/16, EU:C:2017:970: These cases are crucial for the AG’s distinction between “tax evasion” (requiring intent) and “tax avoidance” (an objective phenomenon not requiring intent), drawing on interpretations of Article 27(1) of the Sixth Directive.
Judgment of 21 February 2006, Halifax and Others, C‑255/02, EU:C:2006:121 (paragraph 74): This well-known VAT case is cited to define the objective element of tax abuse, where applying a tax provision results in an advantage contrary to its purpose. This helps to define tax avoidance as well.
Judgments of 25 April 2013, Commission v Sweden, C‑480/10, EU:C:2013:263 (paragraph 37); of 5 March 2015, Commission v Luxembourg, C‑502/13, EU:C:2015:143 (paragraph 47); and others: These are consistently cited to explain the established purpose of Article 11 – to prevent the creation of tax advantages through legal technicalities, particularly by splitting undertakings, and for administrative simplification.
Judgments of 9 April 2013, Commission v Ireland, C‑85/11, EU:C:2013:217, and of 11 July 2024, Finanzamt T II, C‑184/23, EU:C:2024:599: These are mentioned to counter the argument that “organisational fiscal neutrality” is an objective of the VAT group scheme, asserting that the Court has never followed this approach.

See also

Roadtrip through ECJ Cases – Focus on ”VAT Grouping” (Art. 11) – VATupdate

Join the Linkedin Group on ECJ/CJEU/General Court VAT Cases, click HERE
VATupdate.com – Your FREE source of information on ECJ VAT Cases

Podcasts & briefing documents: VAT concepts explained through ECJ/CJEU cases on Spotify

Article

1. Introduction and Background

This briefing summarizes the Opinion of Advocate General (AG) Brkan, delivered on April 22, 2026, to the General Court regarding a request for a preliminary ruling from the Østre Landsret (High Court of Eastern Denmark). The case addresses the conditions Member States may impose for allowing access to a Value Added Tax (VAT) group, particularly whether a national law requiring 100% ownership for certain taxable persons (those engaged in VAT-exempt or non-economic activities) is compatible with EU VAT law.

The dispute arises from Sampension Livsforsikring A/S, an insurance company whose activities include VAT-exempt financial services, being denied permission to form a VAT group with its management company (Sampension Administrationsselskab A/S). At the time of application, Sampension Livsforsikring owned 94% of the management company. Danish law (Article 47(4) of the momsloven) requires 100% ownership for such entities to join a VAT group. The core question is whether this 100% ownership requirement, introduced to prevent tax evasion or avoidance, is permissible under Article 11 of the VAT Directive.

2. Key Legal Framework

EU Law: Article 11 of Directive 2006/112/EC (VAT Directive)

First Paragraph: “After consulting the advisory committee on value added tax …, 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 provision allows Member States to implement VAT grouping but grants them discretion in defining the specific rules.
Second Paragraph: “A Member State exercising the option provided for in the first paragraph may adopt any measures needed to prevent tax evasion or avoidance through the use of this provision.” This paragraph was introduced to explicitly permit anti-avoidance measures.

Danish Law: Article 47(4) of the momsloven (Law on VAT)

Permits VAT groups for taxable persons carrying out registered activities.
For persons carrying out VAT-exempt activities or not engaged in economic activity, the law imposes a condition that “one of the persons (inter alia, the parent company) is the owner of the other person or persons (inter alia, subsidiaries and sub-subsidiaries) registered under the same number, inter alia by directly or indirectly holding all their capital.” This implies a 100% ownership requirement for such entities.

3. Main Themes and Important Ideas

3.1. The “Tax Advantage” of VAT Grouping for Exempt Activities

The AG highlights the practical implications of VAT grouping, particularly for companies with VAT-exempt activities. In the Sampension case:

The management company charges VAT for its services to Sampension Livsforsikring.
Sampension Livsforsikring, due to its VAT-exempt financial services, “is unable to deduct in full the VAT charged on the services,” meaning it bears the burden of this VAT.
If a VAT group were formed, services between the two companies “would not be subject to VAT,” thereby eliminating this burden.
The AG states: “Thus, the first question referred for a preliminary ruling essentially concerns whether, and to what extent, a Member State may prevent the generation of such tax advantages by precluding eligibility to form part of a VAT group for persons carrying out activities which do not confer the right to deduct VAT, unless they are 100% owned by a group company.”

3.2. Distinction Between the First and Second Paragraphs of Article 11

The AG emphasizes a crucial distinction:

First paragraph: Defines the core conditions for a VAT group (financial, economic, and organisational links).
Second paragraph: Allows additional conditions specifically “with the sole aim of combating tax evasion or avoidance.”

3.3. Interpretation of Article 11(1) – “Close Financial Links”

The AG concludes that the first paragraph of Article 11 does not support a 100% ownership requirement:

The concept of “close financial links” must be interpreted uniformly across Member States and “cannot be interpreted narrowly.”
A 100% ownership condition is a “very narrow definition” that excludes other levels of participation.
Previous case-law suggests that a “majority holding in the share capital is sufficient to establish the existence of close financial links.”
Therefore, the AG finds that “the first paragraph of Article 11 of the VAT Directive must be interpreted as meaning that that provision cannot serve as the basis for a condition of a 100% capital holding, as provided for in Danish law.”

3.4. Interpretation of Article 11(2) – Combating “Tax Evasion or Avoidance”

The AG delves deeply into the concepts of tax evasion and avoidance:

Tax Evasion vs. Tax Avoidance:
Tax Evasion: Illegal activity. The Danish law’s purpose “is not to combat an illegal activity, but rather to restrict the scope of the VAT group scheme… to reduce the tax advantages.”
Tax Avoidance: This term requires definition. The AG argues for an objective definition, where “tax avoidance within the meaning of the second paragraph of Article 11 of the VAT Directive corresponds to the purely objective accrual of a tax advantage which is incompatible with the purpose of that provision, without an intention on the part of the taxable person to that end being required.” This means that the taxpayer’s intent to gain an advantage is not a prerequisite for something to be considered avoidance.
Purpose of the VAT Group Scheme:
The established purpose is to “ensure, either in the interests of simplifying administration or with a view to combating abuses such as, for example, the splitting-up of one undertaking among several taxable persons.”
Crucially, the AG states the purpose is “to prevent the creation of tax advantages which would not exist outside such a VAT group, and not to create such advantages.”
Therefore, “the tax advantages arising from the inclusion of a taxable person engaged in an exempt activity… in the VAT group are not in line with the purpose of that scheme.” These advantages “constitute a form of tax avoidance which Member States are, in principle, permitted to counter.”
Rejection of “Organisational Fiscal Neutrality” as a Primary Purpose:
The AG acknowledges that some other Advocates General have argued for an additional objective: “organisational fiscal neutrality,” meaning VAT should not influence decisions on whether to outsource activities or keep them internal.
However, the AG emphasizes that the Court of Justice “has never followed that approach in its case-law concerning Article 11 of the VAT Directive.”
Confusing the “effects” of the scheme (which may include such neutrality) with its “objectives” would “deprive of all meaning the authorisation given to Member States to counter tax avoidance.”

3.5. Conditions for National Anti-Avoidance Measures: Proportionality and Fiscal Neutrality

Even if a national measure aims to counter tax avoidance, it must comply with EU law principles:

Proportionality: The national court must determine if the measure is “appropriate and necessary” to achieve its objective.
Partial Attainment: The Danish rule only partially achieves the objective by allowing 100% owned entities to group despite the tax advantages. The national court must assess if it pursues the objective “in a consistent and systematic manner.”
Necessity: “While the exclusion of persons carrying out only exempt or non-economic activities does seem necessary in order to combat tax avoidance, it is unclear that the same logic can be applied to persons carrying out such activities only partially.” The national court should consider if less restrictive measures are possible.
Fiscal Neutrality: The measure must comply with fiscal neutrality, which “precludes in particular treating economic operators carrying out the same transactions differently for VAT purposes.”
The Danish rule differentiates between entities with 100% ownership and those with less, even if they are otherwise similar.
The AG questions the Danish government’s justification that organisational integration is only freely chosen at 100% ownership, and asks the national court to verify this under Danish company law.
The AG also notes that “there may be a particular need on the part of the financial sector… relating to the requirement that economic operators in that sector organise themselves in the form of separate legal persons for regulatory reasons.” While this might justify different treatment within the financial sector, “that reasoning cannot justify the different treatment applied to those other sectors which, unlike the financial sector, are not subject to regulation of that kind.”

4. Advocate General’s Proposed Conclusion

AG Brkan proposes that the General Court answer the first question as follows:

“Article 11 of Council Directive 2006/112/EC… must be interpreted as not precluding legislation of a Member State under which eligibility to form a VAT group comprising persons carrying out activities exempt from VAT or not engaged in economic activity… is subject to one person in the VAT group owning, directly or indirectly, 100% of the other person or persons in the VAT group, in so far as that legislation is intended to prevent tax advantages arising from the application of the VAT group scheme other than those connected with simplifying administration, and complies with the principles of proportionality and fiscal neutrality.”

This opinion suggests that the 100% ownership requirement in Danish law could be permissible under EU law, but only if the national court confirms that it genuinely serves an anti-avoidance purpose (as defined by the AG) and adheres to the principles of proportionality and fiscal neutrality. The burden is placed on the referring national court to conduct this assessment.