Irish Revenue Updates Guidance on Territorial Scope of VAT Groups

What you Need to Know

Revenue in Ireland has updated its guidance on the territorial scope of Irish VAT groups to confirm that only establishments located in Ireland can be members.

This change has immediate effect for newly formed VAT groups and must be implemented by existing groups by 31 December 2026.

Overview

Irish Revenue (“Revenue”) has published updated guidance clarifying the territorial scope of Irish VAT groups and aligning its guidance with European Court of Justice (“ECJ”) case law (in e Danske Bank (C‑812/19), Skandia Sverige (C‑7/13), FCE Bank (C‑210/04). The revised position brings Ireland in line with the majority of EU Member States and confirms that only establishments located in Ireland may be members of an Irish VAT group.

The change is particularly relevant to businesses in the financial services sector, which often have limited ability to recover input VAT. Irish AIFMs and management companies which form part of an Irish VAT group and have overseas branches or establishments will need to consider the impact of this change.

What has changed?

Previously, Ireland allowed for non-Irish establishments to form part of an Irish VAT group. Revenue had taken the position an Irish VAT group could include the entire Irish legal entity, including foreign branches or establishments (the “whole entity” approach). The impact of this approach was that supplies between Irish and foreign establishments of the same legal entity were disregarded for Irish VAT purposes, regardless of whether the entity was a member of an Irish VAT group or not.

Revenue has now expressly confirmed that VAT grouping in Ireland is available only to establishments located in Ireland. In practice, this means that only an Irish head office or an Irish branch of a non-Irish legal entity may be a member of an Irish VAT group. Non-Irish head offices or branches cannot form part of the Irish VAT group.

Where an Irish VAT group transacts with a non-Irish establishment of the Irish legal entity, those supplies are treated as made to or from a third party and are within the scope of VAT under the normal rules. This reflects the approach in Danske Bank and Skandia that VAT grouping is strictly territorial and can bifurcate a legal entity into separate taxable persons where a head office or branch is grouped in another Member State.

There has been no change to the VAT treatment of supplies of services between head offices and branches where neither the head office nor the relevant branch are members of VAT groups. Those transactions can continue to be disregarded.

Timing

The guidance applies immediately to VAT groups formed from the date of publication of the guidance (19 November 2025).

Existing VAT groups that are impacted are expected to implement the updated position by 31 December 2026.

Practical Implications

The new approach will affect all Irish VAT groups with overseas branches, establishments or head offices as well as Irish establishments of entities that are members of VAT groups in other EU Member States. The most significant impact will likely be on businesses with limited VAT recovery such as those operating in the investment management and financial services sectors.

Irish Branches and Non-Irish Head Offices

Where an Irish branch is a member of an Irish VAT group, supplies between the non-Irish head office and the Irish VAT group are treated as made between separate taxable persons. The Irish VAT group should account for Irish VAT under the reverse charge to the extent the supplies are taxable.

Irish VAT Groups with Non-Irish Branches

If a member of an Irish VAT group has a non-Irish branch, supplies by the Irish VAT group to that non-Irish branch are treated as supplies to a third party. Normal place‑of‑supply and reverse charge rules will apply in the jurisdiction of the branch. Input VAT recovery in Ireland will depend on whether the supplies constitute qualifying activities of the VAT group.

Internal Charging and Shared Services

Cross-border recharges between Irish VAT group members and their non-Irish establishments (or vice versa) now carry VAT implications where either side is grouped in its local (EU) jurisdiction. Treasury, IT, HR, and other shared-service recharges, as well as cost allocation frameworks, may need to be re‑papered and re‑priced for VAT and transfer pricing purposes.

Deductibility Assessed at the VAT Group Level

Input VAT recovery remains determined at the level of the VAT group’s overall activities. VAT grouping can change recovery outcomes relative to the pre‑grouping position. Revenue has reiterated that while legitimate economic advantages from grouping are acceptable, arrangements primarily aimed at securing tax advantages contrary to the EU VAT rules will be challenged.

What Actions Should be Taken Before 31 December 2026

Impacted VAT groups should map all head office–branch and group‑to‑branch cross‑border flows, identify where a non‑Irish establishment is (or will be) grouped overseas, and determine the VAT treatment, place of supply, reverse charge, and invoicing consequences. Consideration should also be given to any impact on the VAT recovery rate of the Irish VAT group from this new bifurcation. In some cases, restructuring into or out of a VAT group may be relevant.

From an administrative perspective, contracts and internal charging policies may require amendment. In addition, systems should be updated to capture and report transactions between Irish VAT groups and non‑Irish establishments and any required VAT registrations or changes in reporting in relevant EU jurisdictions should be confirmed.

Further Information

For further information, please liaise with your usual Maples Group contact or any of the persons listed on this page.