Spain’s DGT on UK Head Office/Spanish Branch VAT

Spain DGT Binding Consultation V0782-26: Post-Brexit “Skandia” Applies — Services from a UK Head Office (in a UK VAT Group) to its Spanish Branch Are Between Separate Taxable Persons, but Fall Outside Spanish VAT

The Spanish Directorate-General for Taxation (DGT) has clarified the VAT treatment of intra-entity services provided by a Spanish branch to its UK head office, especially post-Brexit. The case involves a Spanish branch of a UK-established bank, where the UK head office is taxed under Section 43 of the UK Value Added Tax Act 1994. This branch exclusively offers IT and operational support to its parent, lacking external customers or revenue. The DGT was asked if these services are subject to Spanish VAT.

The DGT’s legal reasoning draws upon the CJEU trilogy:

FCE Bank (C-210/04): Established that a branch and its head office are a single taxable person if the branch doesn’t bear economic risk.
Skandia America (C-7/13): Qualified FCE Bank, stating that VAT grouping breaks this unity, making services between a third-country head office and a VAT-grouped branch taxable.
Danske Bank (C-812/19): Extended Skandia, confirming that if a head office is part of a VAT group in one Member State and provides services to a branch in another, they are separate taxable persons, and the services are taxable.

The DGT confirmed that despite the UK no longer being bound by the VAT Directive (2006/112/EC) post-Brexit, Section 43 of the UK Value Added Tax Act 1994 still deems all group members as a single “representative member.” Therefore, the Skandia logic applies: the UK head office (as part of the UK VAT group) and its Spanish branch are considered separate taxable persons.

Outcome: Place of Supply Matters

Because the branch and UK head office are treated as separate taxable persons, the branch-to-head-office services fall within the scope of VAT. However, applying the B2B general place-of-supply rule in Article 69.One.1 of the Spanish VAT Law (Law 37/1992) (transposing Article 44 of the VAT Directive (2006/112/EC)), the recipient (UK head office/UK VAT group) has no seat, fixed establishment, or domicile in Spain. Consequently, the services are not subject to Spanish VAT. Nevertheless, this analysis is crucial for invoicing, ESL/reporting, and input VAT recovery.

The official ruling was issued by the Spanish DGT on 8 April 2026, as V0782-26.

Source SECRETARY OF STATE FOR FINANCE DIRECTORATE-GENERAL FOR TAXATION Binding Consultations