- On 20 August 2025, the Italian Revenue Agency issued Ruling 216/2025, determining that services provided between fixed establishments of the same company that are part of an EU VAT Group are subject to VAT, effectively breaking the VAT unity between these establishments.
- The ruling clarifies that following Brexit, UK VAT Groups are not recognized under EU VAT law, meaning that the UK fixed establishment (ALFAUK) is considered a separate taxable person from the Italian fixed establishment (ALFAIT) for VAT purposes due to the Head Office’s participation in an EU VAT Group.
- Multinational companies should evaluate the implications of EU VAT Group membership on intra-entity transactions, as this can lead to unexpected VAT obligations for services exchanged between branches, even if those branches are not themselves part of an EU VAT Group.
Source EY
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