taxud/2414/08 - European Commission - Europa

these costs. This concept is easy to control for the fiscal administrations concerned,
because the number of recipients is limited and known in advance. The group itself can
carry out its activity with limited administrative charges because it must not differentiate
between turnover in and outside the group. This simplicity should be maintained to meet
the basic objective not to increase administrative charges for fiscal administrations and
economic operators.
Example 9: Four insurance companies found a group in the form of a software company;
this company supplies software services to the four insurance companies but also
software services with VAT to two banks which are not members of the group. This is
not admissible and the exemption cannot be granted In fact, the services are no longer
exclusively supplied to members of the group but to outsiders. This increases the
administrative charges for the fiscal authorities because they need to differentiate
between taxable and non-taxable supplies of the group.
The services of the group must also be necessary to supply exempt financial and
insurance services. This reflects the need for a specific solution for smaller and medium
size financial services and insurance operators whose investments (in particular in staff
and IT-technology) are particularly high and who might have difficulties opting for
taxation, where the benefits of opting for taxation are compensated by the administrative
burden related to the option or where the option for other reasons (e.g.: organisational) is
not the best solution. Against this background the requirement that the services of the
group must be necessary to supply exempt financial and insurance services reflects that
the need for exempt cost-sharing must be substantiated. This need is pertinent where the
economic operator can demonstrate that a majority of members in the group supplies
exclusively exempt financial and insurance services, that the costs shared with VAT to
other members of the group are smaller than those shared without VAT and that this
inclusion of taxable cost sharing does not conflict with the objective not to increase
administrative charges for fiscal administrations and economic operators.
Example 10: Three insurance companies supplying partly exempted insurance services
and partly taxable services (e.g.: consulting) want to set up a cost-sharing group. In such
a case the group would have to invoice its services in any case with VAT (see above (3)).
There is therefore no need for a group which shares costs exempt from VAT.
Example 11: Three insurance companies supplying 90% exempted insurance services
and 10% taxable services (e.g.: consulting) and one bank supplying exclusively exempt
financial services want to set up a cost-sharing group. It is unknown whether the costs
shared with VAT to members of the group are smaller than those shared without VAT.
Although the taxable activities are random, there is no need for a group which shares
costs exempt from VAT. As the Group would have to invoice with VAT to the three
insurance companies their pro-rata determines the amount of deductible VAT. There is a
need only for the bank in the group; however. A need for exempt cost-sharing is thus not
pertinent because no majority of member supplies entirely exempt financial and
insurance services. Also, the administrative charges of the fiscal administration for
monitoring the correct application of the exemption appear to conflict with the objective
not to increase administrative charges for fiscal administrations and economic operators.
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