Case law
24 March 2021

Services supplied to a branch by main establishment belonging to a VAT group are subject to VAT

The Court of Justice of the EU (CJEU) released judgement C‑812/19 Danske Bank, dealing with the VAT treatment of supply of services performed by the main establishment belonging to a VAT group to its branch established in another EU Member State.

Zuzana Šidlová

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According to case C-7/13 Skandia America (USA), filial Sverige issued by the CJEU in 2014:

  • The main establishment seated outside the EU and its branch, established in the EU Member State, belonging to a VAT group cannot be treated as one taxable person, therefore
  • the services supplied by the main establishment to such a branch must be are considered to be supplied to the VAT group and not to that branch and are, thus, taxable and
  • this VAT group is the person liable to pay VAT from the services received.

This judgment led to questions, whether such approach is applicable also in situation where the main establishment is located in an EU Member State and not in the third country or provided the main establishment (and not the branch) is a member of the VAT group.

These questions were answered by the CJEU in its judgement C‑812/19 Danske Bank. The CJEU confirmed that the principles, presented in case C-7/13 Skandia America (USA), filial Sverige, were applicable also in the situation where the main establishment, located in the EU Member State (Denmark), belongs to a VAT group and supplies services to its branch established in another EU Member State (Sweden).

Services supplied to a branch by main establishment belonging to a VAT group are thus taxable.

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