6 October 2015

A further detailed Working Paper has been submitted to the European Commission regarding the implementation of the Skandia America Corporation Case C-7/13. This paper is prepared by the VAT Expert Group, and concludes that a limited implementation of the effects of the judgment is preferable to the more literal interpretation already implemented by some countries such as Belgium.
It is suggested that the extended application of the Skandia case could lead to conflict with the fundamental principles of the VAT Directive. The VAT Expert Group, in answering the questions posed in the earlier VAT Committee Working Paper, prefers a more limited implementation, which preserves the principles first set out by the Court of Justice of the European Union (“CJEU”) in FCE Bank plc Case C-210/04. This may necessitate a harmonised anti-avoidance provision such as that in the UK, as the Advocate General in the Skandia case seemed to accept. The VAT Expert Group does reaffirm the importance of VAT grouping in the EU.