- The Revenue Agency has issued guidance on transactions between permanent establishments of foreign companies belonging to a VAT group.
- Transactions between two permanent establishments in Italy of different foreign companies in a VAT group cannot be considered irrelevant for VAT purposes if attributable to the establishments.
- After joining a VAT group, participating companies lose their individual VAT liability in favor of the group.
- The irrelevance of transactions cannot be invoked even if the foreign VAT group is considered the “single parent company.”
- An exception to the general principle of VAT irrelevance occurs when the parent company and/or its permanent establishment are included in a VAT group located in a different EU member state.
- Transactions between the VAT group and its included permanent establishments are relevant for VAT purposes as they are carried out between “third party” subjects.
- Transactions between permanent establishments are even more relevant for VAT purposes as they are distinct taxable persons established in Italy.
Source Ipsoa
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