The federal tax court of Germany (Bundesfinanzhof – BFH) has changed its position on the rules for organizational integration of companies into value added tax (VAT) groups.
As per the BFH, a consequence of a “merger into a single taxpayer” as a VAT group is that the controlling company that means the entity liable to tax must act as a collector of taxes for all subsidiaries and collect public funds on behalf of the government. This will need a relationship between “superior-inferior” and the controlling company and the group subsidiary by which the company in control would be able to exercise control over the day-to-day business activities of subsidiary by reason of the financial integration.
