Eligibility of Foreign Branch and Subsidiary to Form Separate VAT Group in Italy Confirmed

Summary of Risposta n. 211/2025 from the Italian Revenue Agency

Subject:

VAT Group (Gruppo IVA) — Clarification on whether a secondary branch of a foreign company (ALFA) and its Italian subsidiary (DELTA) can form a separate VAT Group in Italy, distinct from an existing group (BETA VAT Group).

Key Issues Addressed:

• Eligibility to Form a Separate VAT Group The branch of ALFA and DELTA sought to establish a new VAT Group (ALFA VAT Group), separate from the BETA VAT Group already operating in Italy.
• Holding Period Requirement The Agency evaluated whether the control relationship between ALFA and DELTA met the minimum holding period required under Article 70-ter of Presidential Decree 633/1972.
• Impact of Foreign Intermediary Entities The presence of an intermediary foreign company (GAMMA) between ALFA and the ultimate parent BETA1 raised questions about the financial control link.

✅ Conclusions by the Tax Authority:

• Two Separate VAT Groups Are Permissible ALFA and DELTA can form a distinct VAT Group, provided the financial, economic, and organizational links are satisfied.
• Control Relationship Validated The control between ALFA and DELTA was deemed sufficient, based on ALFA’s full ownership and registration of DELTA’s shares before the cut-off date (1 July of the previous year).
• Branch Status Is Not a Barrier The fact that ALFA operates in Italy through a secondary branch does not prevent it from participating in a VAT Group, as long as the branch is properly registered and holds an Italian VAT number.

Source Agenzia Entrate

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