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CJEU’s ruling on VAT accounting



22 March 2021


The Court of Justice of the European Union issued on 11 March 2021 an important ruling (Case C-812/19) on VAT accounting, which concerns entities which are part of a VAT group and whose principal establishment is in one and a branch in another EU Member State.

The principal establishment and a foreign branch vs VAT – the ruling

The case concerned a Danish bank with the principal establishment in Denmark and operating as part of the Danish VAT group but pursuing its business activities through a branch office in Sweden.

The ruling clears doubts as to how to treat the principal establishment being part of a VAT group and its foreign branch in the context of the VAT Directive – as one or two VAT taxable persons.

Ultimately, the CJEU ruled that as a consequence of the bank’s principal establishment joining the Danish VAT group the principal establishment and the branch should be considered for VAT purposes as separate taxable persons when the principal establishment supplies services to the branch and imputes the costs thereof to the branch.

Services provided between the head office being part of a VAT group and its foreign branch offices are subject to taxation.


In our opinion, this ruling is also important for entities operating as part of VAT groups and having a fixed establishment in another EU Member State. A similar situation will be applicable to entities having branch offices in different countries while a branch office in one of them will operate as part of a VAT group.


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Monika Bartosiewicz

Tax adviser (Poland)

Associate Partner

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