The authorities state that such transactions cannot be considered irrelevant for VAT purposes if they can be attributed to these fixed establishments. When a VAT group is formed, the participating companies lose their individual VAT status in favor of the group’s unified status. Therefore, even the respective parent companies of the two Italian branches, by joining a VAT group established in another EU member state, lose their individual VAT status. The document further explains the exception to the general principle of irrelevance of VAT transactions between a parent company and its fixed establishment when they are part of a VAT group located in a different EU member state. In this case, the identity relationship between the two entities (branch and parent company) belonging to the same legal entity is broken. The article concludes that transactions between a VAT group and fixed establishments within it are relevant for VAT purposes, especially when these fixed establishments directly intervene as separate VAT entities, as is the case with the two Italian branches.
Source: agenziaentrate.gov.it
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