The European Court of Justice (ECJ) ruled on an infringement procedure from the European Commission (EC) against the Netherlands regarding the inclusion of non-taxable persons in a VAT group.

In principle, only (taxable) VAT entrepreneurs can be included in a Dutch VAT group. However, a Dutch decree mentions that under certain conditions, non-taxable persons can also be included in a VAT group. This is only possible if a holding company has a managing and policy-/decision-making function within such group.

The EC did not agree with this Dutch approach and initiated an infringement procedure, since the EC was of the opinion that the Dutch decree was not in line with the VAT Directive.

The ECJ ruled, however, that under the VAT Directive, including non-taxable holding companies in a Dutch VAT group is allowed. The holding company should, however, be "involved" in the group (active participation in decision-making), whether or not for remuneration and irrespective of the fact that (other) VATable activities are performed.