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Branch: DGT doctrinal evolution

How the DGT's position on this topic has evolved, and the rulings it rests on.

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How the DGT's position has evolved

Refined position High confidence 10 rulings · 2015–2023

Current position

For VAT purposes, a branch established in another Member State must be considered a taxable person distinct from the entity that is part of a group of entities. This implies that the provision of services between the parent company and its branch is carried out between independent entities. For such operations to be subject to or exempt from tax, the specific requirements of the group of entities regulations must be met.

The DGT's position has shown an evolution from a view of economic unity towards a distinction of taxable persons. Initially, it was considered that if the branch did not assume its own economic risks, it was not a taxable person distinct from the parent company for VAT purposes. However, recent doctrine establishes that, in the context of groups of entities, a branch in another Member State acts as an independent taxable person.

Turning points

  1. V1704-17

    Establishes that if the branch does not personally assume the economic risks, it is not a taxable person distinct from its parent company for VAT purposes.

  2. V1472-23

    Determines that, in groups of entities, the branch in another Member State must be considered a taxable person distinct from the constituent entity.

Analysis based on 9 of 10 rulings with a stated position. Updated 30 September 2026.

Rulings on this topic

10

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