The European Commission has officially asked Luxembourg to change its rules on VAT in the case of independent groups of persons, saying the principality's current rules are incompatible with EU law.
The change may affect financial services groups based in the principality. Currently, services provided by an independent group to its members are completely free of VAT provided that the members' taxed activities do not exceed 30% of their annual turnover (or 45% under certain conditions). The current law also permits group members to deduct the VAT charged to the group on its purchases of goods and services. What’s more, Luxembourg law permits that operations by a member in his or her own name, but made on behalf of the group, are also regarded as non-taxable. The Commission insists...
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