CJEU AG: Separate Legal Entities Must Act Independently to Be Separate VAT Taxable Persons

• The CJEU Advocate General (AG) opined that separate legal entities cannot be treated as a single taxable person for VAT purposes if each acts independently and on its own behalf.
• The AG rejected the Czech tax authority’s attempt to treat a Czech company and three U.S. company branches as a single “society” for VAT liability.
• The AG emphasized that VAT taxable person status depends on whether entities act on their own behalf and at their own risk.
• A “society” cannot be a taxable person unless someone acts externally on its behalf.
• If the arrangement was primarily to avoid VAT registration, it could be considered abusive and subject to additional VAT assessment.

Source: kpmg.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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