VAT Groups - treatment of overseas branches
HMRC have issued Revenue and Customs Brief 18/15 to clarify their position on the treatment of intra group transactions involving branches located in other member states following the judgment in Skandia.
Sweden and other EC member states treat the 'resident' branch of an overseas company as a separate taxable person even where that branch is VAT grouped with entities in that particular member state.
This means that, in some member states, supplies between an overseas company and a group which includes the overseas company's branch cannot be treated as intra-group transactions for VAT purposes.
The UK interprets VAT grouping on a 'whole entity' basis and as such the impact will not be felt where a group including the UK branch of an overseas company buys services from that company.