Related Parties – Article 9 – VAT Executive Regulations

Article 9 – Related Parties

1. For the purposes of Tax Group provisions, the definition of Related Parties shall relate to any two legal persons in instances such as:

   1. One Person or more acting in a partnership and having any of the following:
      1. Voting interests in each of those legal Persons of 50% or more;
      2. Market value interest in each of those legal Persons of 50% or more;
      3. Control of each of those legal Persons by any other means.
   2. Each of Persons is a Related Party with a third Person.

2. Two or more Persons shall be considered Related Parties if they are associated in economic, financial, and regulatory aspects, taking into account the following:

   1. Economic practices, which shall include at least one of the following:
      1. Achieving a common commercial objective;
      2. One Person’s Business benefiting another Person’s Business;
      3. Supplying of Goods or Services by different Businesses to the same customers.
   2. Financial practices, which shall include at least one of the following:
      1. Financial support given by one Person’s Business to another Person’s Business.
      2. One Person’s Business not being financially viable without another Person’s Business.
      3. Common financial interest in the proceeds.
   3. Regulatory practices, which shall include any of the following:
      1. Common management.
      2. Common employees whether or not jointly employed.
      3. Common shareholders or economic ownership.

3. For the purposes of this Article:

   1. “Market value interest” in a legal Person shall be calculated as the percentage of the market value of shares and options a Person owns over the total market value of all shares in the legal Person.
   2. Any shareholding will be disregarded if there exists another agreement, which contradicts it. In that case, the shareholding will be treated as the adjusted value under that other agreement.