- Germany’s draft Annual Tax Act 2026 proposes a major reform of VAT grouping to align with EU law, increase legal certainty, and reduce bureaucracy.
- VAT groups would no longer arise automatically by law; instead, the parent company would have to file a declaration specifying the entities to be included.
- The tax authorities would not approve or formally assess the group, and the declaration could only be withdrawn prospectively.
- If VAT group conditions are not met or later cease to apply, the group status would be reversed retroactively for tax purposes, with correct tax treatment applied as if no group existed.
- The reform would also limit VAT group effects to domestic intragroup supplies and could extend affiliate status to partnerships under certain conditions.
Source: taxathand.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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