By Aleksandra Bal about C-812/19
In the corporate tax world, the relationship between a head office and its foreign branch is clear: the branch is considered a separate entity and should be attributed profits that it would earn if it was an independent company engaged with other parts of the enterprise in the same activities under the same conditions.
In the VAT world, the head office – branch relationships are far more complex. As the VAT Directive is silent on this matter, the Court of Justice of the European Union (CJEU) was asked to provide guidance. In its first decision commenting on the relationship between the head office and its branch (FCE Bank, C-210/04), the CJEU ruled that no VAT should be levied on services provided by the UK head office to its Italian branch as there was no legal relationship between both parties. The fact that the UK head office was part of a VAT group was not considered important and was not even mentioned in the judgment.