VAT Group: organizational constraint

    

It should be noted that, according to the above mentioned, the participation in a VAT Group of a company is established if and only if the following three constraints apply jointly:

 
Paragraphs 4 and 5 of the same article 70-ter below specify that, for simplifying reasons, if there is a financial constraint between the parties, economic and organizational constraints shall also be deemed to exist between them, unless the taxpayer proves the contrary by means of an instance of inquiry. In order to prove the non-existence of the organizational constraint and therefore to exclude some of its subsidiaries from the VAT group, Alfa S.p.A. submitted a request to the Revenue Office, which answered the question on 4 November 2020.
 

First of all, it should be noted that art. 2497-sexies allows to infer from the obligation to draw up the consolidated financial statements of the companies the existence of management and coordination activities. 
 

Although it should therefore be taken into due consideration that, in the case in question, the participation of the company in question in the consolidated financial statements of Alfa S.p.A. is sufficient, in principle, to establish the presumption of the existence of the management and coordination of the company by Alfa S.p.A., it is considered that the documentation produced by the applicant company is sufficient to deny the existence of the presumption of management and coordination. For example, Alfa points out that an investee company is listed on the stock exchange and some subsidiaries enjoy full autonomy: the applicant does not even approve its strategic plans and budgets. 

 
If the prerequisite of management and coordination is no longer in place, the organizational constraint is no longer in place. As a result, since the all-in-one rule pursuant to article 70-quater is in force and proof of the absence of the organisational constraint is provided, some of the subsidiaries of the applicant Alfa will be excluded from the VAT Group, since the financial, economic and organisational requirements are no longer met.