Financial Services Ireland

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Skandia CJEU judgment: VAT due on intra-group supplies

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Skandia CJEU judgment:

In its judgment in the case of Skandia America Corporation USA, Sweden branch (C-7/13) released on 17 September, 2014, the Court of Justice of the European Union (CJEU) found that a VAT group is a separate taxpayer from its constituent members.  Depending on how this decision is implemented it could result in significant additional costs, for example for a branch in an Irish VAT group which receives services from its non-Irish head office.

Going forward, Irish businesses may need to account for VAT on all head office/branch services or cost allocations in circumstances where either the non-Irish provider or the Irish recipient of the services is in a VAT group.  This could particularly affect banks and insurance companies which may be required to account for VAT on head office/branch (or branch to branch) services which are currently disregarded.

The impact of Skandia is not limited to Ireland. Given the majority of EU Member States disregard supplies between branches of the same legal entity the Skandia judgment is likely to result in a complete change regarding how and where VAT is accounted for across the EU.