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May 18, 2023

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

The Italian Tax Authorities (ITA) have published a ruling response (n. 314/2023) addressing the value-added tax (VAT) relevance of supplies between an Italian branch or head office (HO) and a United Kingdom (UK) branch or HO of the same entity, where the UK establishment is a member of a UK VAT group.

In a prior ruling (n.756/2021), issued in December 2021, the ITA had stated that, notwithstanding Brexit, supplies flowing from a UK HO in a UK VAT group to its Italian branch were subject to VAT in Italy under Skandia/Danske Bank principles 1 to the extent that the UK group has the same essential features of the VAT group as defined by Article 11 of the VAT Directive. The ITA reached this conclusion despite that, under Italian law, the principles at issue applied only to supplies involving VAT groups established in EU Member States.

In its recent ruling the ITA clarified that:

  • The conclusions reached in Ruling 756/2021 are reversed.
  • Supplies between Italian fixed establishments/HOs and VAT-grouped UK HOs/fixed establishments are not relevant for Italian VAT purposes, because they must be disregarded under the FCE Bank case, C-210/04, concluding that intra-entity transactions did not constitute supplies for VAT purposes.
  • In the event that an Italian establishment with no right of recovery has issued self-invoices to apply Italian VAT on supplies received from the UK branch starting from 1 January 2021 (Brexit starting date), it may recover the input VAT by:
    • Issuing a credit note if the deadline (one year from the issue of the self-invoice) has not yet expired
    • Filing a special refund claim under article 30-ter of the Italian VAT law within two years from the payment of the VAT applied on reverse charge
  • If an Italian establishment has treated a service to a UK VAT-grouped establishment as a cross-border supply, it may also need to regularize its historical position.

We are working with a number of businesses to make adjustments and submit claims as needed. Reach out to one of the contacts listed below if you would like to discuss this further.


For additional information with respect to this Alert, please contact the following:

Studio Legale Tributario, Rome

Studio Legale Tributario, Milan

Studio Legale Tributario, Treviso

Studio Legale Tributario, Turin

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor



1 In the Skandia case (C-7/13), the Court of Justice of the European Union (CJEU) decided that services supplied by a non-EU company to its Swedish branch, which was a member of a VAT group, were liable to reverse charge VAT in Sweden. The decision was based on the principle that the VAT group (to which the branch belonged) shall be deemed as a separate taxable person for VAT purposes with respect to the head office. In the Danske Bank Case (C-812/19), the CJEU decided that the supply of services by an HO located in and belonging to a VAT group in one EU Member State and a branch situated in another Member State is relevant for VAT purposes because the VAT group shall be regarded as a separate taxable person from the branch situated in a different Member State.


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