Recovery of the VAT in-curred by a branch for services supplied to its foreign head office

The question was to determine whether a Polish branch of a company established in Slovakia was entitled to recover the VAT incurred in Poland for the needs of the services supplied to its head office located in Slovakia, which performed VAT taxable transactions in Slovakia. To be noted that the Polish branch also performed, on an occasional basis, some taxable transactions in Poland. The Court held, on the basis of the principle of neutrality, that the VAT incurred in an EU member State A for the performance of VAT taxable transactions in the EU member State B is recoverable. In the case at hand, the Polish branch was therefore entitled to recover the VAT incurred in Poland for the performance of the services supplied to its foreign head office, regardless the fact that the purchases were made for the needs of VAT taxable transactions performed in another EU member State.

In France, this case law is quite important since it refutes the solution retained by the Administrative Court of Appeal of Versailles in the « Morgan Stanley » case, which rejected the recovery of the French input VAT incurred by a French branch of a UK company for the needs of services supplied to its foreign head office arguing that such services were out of the scope of VAT, without giving rise to the right to deduct VAT. The supreme French Court will rule on this issue soon as an appeal has been made.

Michel Guichard

Michel Guichard, Partner, leads the Indirect Tax activity. With more than 30 years’ experience in International and French Tax law, he advises his clients on indirect tax matters. Michel is […]

Odile Courjon

Odile Courjon, Partner, has developed a strong expertise in indirect tax issues (VAT, wage taxes, excise taxes, export control and customs) in France and overseas. She advises her clients in […]

Bertrand Jeannin

Bertrand Jeannin, Partner, supplies strategic and technical advice to French and foreign multinational groups in all aspects of their VAT and customs policies. Major focuses of Bertrand’s input involve the […]

William Stemmer

William Stemmer, Partner, has more than 15 years’ experience in Indirect Tax matters. William particularly specializes in the real estate and financial sectors. William is a lecturer at the University […]

Anne Gerometta

Anne, Director, has been advising companies on indirect tax issues for more than 15 years. Anne has developed a specific expertise on the manufacturing sector (VAT, customs and Export Control) […]