Groups after the Skandia judgment

Revenue and Customs Brief 18/2015 confirms the UK VAT changes resulting from the judgment in Skandia America Corp (USA) filial Sverige (C-7/13). It also contains a table of other member states that operate an “establishment only” VAT grouping.

The changes cover supplies treated as made in the UK under place of supply rules and input tax recovery by UK VAT registrations.

According to HMRC the implication of the Skandia judgment is that an overseas establishment of a UK-established entity is part of a separate taxable person if the former is VAT-grouped in a member state that operates similar “establishment only” grouping provisions to Sweden. This will be the case irrespective of whether the entity in the UK is part of a UK VAT group.

Businesses must therefore treat intra-entity services provided to or by such overseas establishments as supplies made to or by another taxable person and account...