Transactions between branch and head office and the right to deduct input VAT in cross-border scenarios

Sammanfattning: Financial institutions and VAT are often like oil and water. If a financial institution is considering centralizing an activity in a certain jurisdiction, non-recoverable VAT could pose a serious problem. In addition to that, ambiguous judgments of the European Court of Justice have contributed to this issue. As of now, even services carried out within the same legal entity may trigger non-recoverable VAT when there is a cross-border component involved. With a new interesting ruling in Danske Bank and a withdrawn request for a preliminary ruling in the Bank of China case, it appears to be possible to shake up the VAT area regarding VAT treatment of cross-border intra-entity services. This thesis places the above mentioned cases in context with the Skandia America and Morgan Stanley court cases and discusses their potential impact on financial institutions. Particularly for establishments located outside the European Union.