UK 2025 Budget: HMRC Confirms VAT Group Divergence From EU, Rejects Skandia Ruling

• The UK Budget 2025 confirms that overseas establishments and branches of UK VAT group members remain part of the UK VAT group, keeping internal transactions outside the scope of VAT.
• This decision explicitly rejects the EU’s Skandia case approach, which treats such transactions as taxable within VAT groups.
• Ireland, in contrast, is narrowing its VAT group rules to align more closely with the Skandia decision, only allowing Irish-established entities and branches in VAT groups.
• The UK and Ireland’s diverging approaches highlight a growing split between UK and EU VAT systems.
• Multinational businesses should closely monitor these changes, as they may impact cross-border VAT group structures and compliance.

Source: meridianglobalservices.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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