VATupdate

Answer 756: VAT regime of post-Brexit transactions between Italian branch and parent company belonging to an English VAT Group

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OPINION OF THE REVENUE AGENCY
It should be noted, first of all, that for the purposes of solving the question raised in the in the appeal – concerning the identification of the modalities by which an Italian branch of an English company, member of an English company, member of a VAT Group set up in the United Kingdom, may obtain the refund of VAT paid on goods and services purchased in Italy – it is necessary to establish whether the State – it is necessary to establish whether the transactions, in this case supply of services, carried out by the Italian permanent establishment in favour of its parent company, a member of the in favour of its parent company, which is a member of the English VAT group, are or are not relevant for the purposes of VAT.

In this regard, it should be clarified whether, for the purposes of the VAT treatment of the transactions taking place in the post-Brexit period between the Italian permanent establishment and the parent company belonging to the UK VAT group, do the principles developed by the EU courts with the principles developed by the Community judges in the Skandia ruling – according to which that the parent company and/or branch belongs to a VAT group set up in a Member State breaks the according to which belonging to the parent company and/or branch to a VAT Group set up in a Member State breaks the subjective identity link that exists between the main establishment and the foreign branch.

In this regard, it should be noted that with regard to the application of the principles established with the Skandia verdict – which have been implemented in the domestic legal system through the amendment of article 70-quinquies of Presidential Decree no. 633 of 1972 – has been expressed by the VAT Committee, by a qualified majority, which adopted guidelines according to which the “Skandia” principles apply irrespective of which entity is part of the VAT group (the latter principle has also recently been confirmed by the Court of Justice in
Danske Bank judgment of March 11, 2021) and also, insofar as is relevant here, regardless of whether the transaction takes place between Member States or between a Member State and a third country (cf. Member State and a third country (see Guidelines of the 105th Meeting of the VAT Committee of October 26, 2015, DOCUMENT A – taxud.c.1(2016)7465801 – 886).

Consequently, in accordance with the conclusions reached by the VAT Committee, the rules set forth in Article 70-quinquies, paragraph 4-quater) of Presidential Decree No. 633 of 1972 – which provides for the relevance, for VAT purposes, of transactions carried out between
parent company and/or permanent establishment when one of the two parties belongs to a VAT group set up in a Member State of the European Union, whilst the other operator is established in Italy – also applies to transactions taking place, in the post-Brexit period, between the parent company and the and the permanent establishment in the event that one of the two operators joins the UK VAT group in the post-Brexit period.

Therefore, in light of the above considerations, it is deemed that in the case in point the indications provided in response no. 954-XX/2XX are still valid, and therefore, considering that the SO does not carry out taxable operations in Italy, it may request a refund of the deductible excess pursuant to Article 30, second paragraph, letter d), of Presidential Decree no. 633 of 1972″.

Source: gov.it

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