Revenue tightens territorial scope of VAT groups to Irish establishments only

Cross-border intra-company supplies between head office and branches will no longer be outside the scope of VAT under the Irish Revenue’s updated position on VAT grouping rules.

The Irish Revenue have updated Irish VAT grouping rules to align with CJEU case law, effective 19 November 2025 with a transitional period until 31 December 2026 for any existing VAT groups impacted by this change. This significant development in Irish VAT policy comes shortly after Revenue released its October 2025 publication on its phased rollout of e-invoicing and digital requirements. This change also aligns Ireland with several EU Member States who have already limited the territorial scope of their VAT groups which will mitigate any discrepancies in the interpretation of VAT grouping rules in the context of intra-company supplies.

As a result of the recent update, Irish businesses who are part of an Irish VAT group with non-Irish entities are encouraged to review its position and consider next steps and timing when it comes to disbanding the VAT group. Our experienced team are here to help you navigate the change in a way that is practical and aligns commercially to your business.  

Revenue’s historic position

Ireland has historically applied the single-entity approach with respect to supplies between head office and branch meaning that any intra-company supplies were not liable to VAT on the basis that they formed a single legal entity. From an Irish VAT group perspective, where an Irish establishment joined a local VAT group, it is the entire legal entity that became a member, including any foreign branches or head office. This preserved the single-entity approach.

What has changed?

On 19 November 2025, Revenue updated its position on VAT groupings rules to align with CJEU case law, Danske Bank (C-812/19) and Skandia (C-7/13), limiting the territorial scope of VAT groups and providing that only entities established in a Member State can only be a member of a VAT group in that Member State.

• Skandia (C-7/13), was the first case that overruled the single-entity approach in its judgment released in 2017. The CJEU held that a branch becomes a separate taxable person relative to its head office by virtue of joining a VAT group. This meant that branch to head office supplies became liable to VAT.
• Similarly, the 2021 judgment in Danske Bank (C-812/19), held that a Danish head office constituted a separate taxable person relative to its Swedish branch to the extent that the Danish head office was a member of a Danish VAT group.

With effect from 19 November 2025, only a head office or branch established in Ireland can be a member of an Irish VAT group. Any foreign branches or head offices may not be brought into an Irish VAT group under the single entity approach rendering any supplies between head offices and branches (despite being a single legal entity) subject to normal VAT rules.

Next steps for your business

The new position on Irish VAT grouping rules takes immediate effect from 19 November 2025 and a 
transitional period until 31 December 2026 have been granted for any existing VAT groups impacted by this change.

Businesses with both Irish and non-Irish establishments are now advised to review its intra-group transactions from a VAT perspective and consider any mitigation steps with the view preserving the single-entity approach (such as disbanding an Irish VAT group, though this will need to be considered as part of wider commercial decisions). We have outlined below some other key points to consider:

Statistical reporting

Cross-border intra-company supplies within the EU will need to align with VAT compliance rules such as existing invoicing requirements and statistical filing obligations, e.g. VIES.

VAT recovery entitlement 

While the reverse charge mechanism will apply on the receipt of intra-company supplies with a simultaneous entitlement to input credit in many cases, certain businesses particularly those in the financial sector will need to restrict recovery on any VAT incurred on intra-company supplies. Conversely, this change could result in increased recovery on outbound supplies to non-EU jurisdictions.

Contact us

Should you have any queries in respect of the above or the implications for your business, please contact Barry McNamara, Áine Casey or Merille Pangasinan.