The Revenue have reaffirmed that a supply by a head-office to a branch will not be regarded as a taxable supply for VAT purposes. The ICAI has lobbied the Revenue to ensure the continuation of this treatment.

The EU Commission have indicated that the judgement in the ECJ case Agenzia dell Entrate v FCE Bank plc means that the link between the head office and branch is broken if either entity joins a VAT group and therefore VAT arises on the supply of services between the branch and head office. However the Revenue will continue the practice of regarding a supply by a head office to a branch as non taxable supply regardless of VAT group arrangements.

It was also confirmed by Revenue that the concession allowing the supply by a subsidiary of a head-office to a branch office is to remain not liable for VAT. The finalised position would be communicated to the Revenue Regions and made available to practitioners and traders.