Italian Tax Authority rules effects of UK VAT groups not recognized for Italian VAT purposes

• The Italian Tax Authorities have published a ruling reversing a prior decision regarding the VAT relevance of supplies between Italian and UK branches or head offices of the same entity, where the UK establishment is a member of a UK VAT group.
• The new ruling states that supplies between Italian fixed establishments/head offices and VAT-grouped UK establishments/head offices are not relevant for Italian VAT purposes and must be disregarded under the FCE Bank case.
• Italian establishments without the right of recovery may recover input VAT through issuing a credit note or filing a special refund claim.
• Those who have treated a service to a UK VAT-grouped establishment as a cross-border supply may need to regularize their position.

Source EY

See also

• ECJ Cases on VAT Grouping (Art. 11)
  • Focus on Supplies of services between Head Office and its Branch, whereby one of the parties is part of a VAT Group

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