On 11 March 2021, the Court of Justice of the European Union (CJEU) issued its ruling in case C-812/19 (Danske Bank ruling) – a case involving the Value Added Tax (VAT) treatment of the supply of services from a head office, which was part of a VAT group in Denmark, to its branch in Sweden.

The VAT burden on intra-entity transactions for businesses that operate in the European Union (EU) by using a branch structure has historically been eased by the disregard of head-office-to-branch transactions (as per the decision of the CJEU in FCE Bank, C-210/04). The subsequent decision of the CJEU in Skandia (C-7/13) began to erode the protection offered by the disregard, but left many questions unanswered on how far the principles established in that case should apply.

In the Danske Bank ruling, the CJEU confirmed that where a branch or head office is in a VAT group, the head office should be considered as a separate taxable person from its branch such that transactions between the head office and branch should be recognized for VAT purposes. Reason being, the head office was a member of a VAT group in one member state while the branch was situated in another member state, and the effects of VAT grouping should only apply on a territorial basis.

The Danske Bank case has several similarities with the earlier decision in Skandia, in which the CJEU ruled that the transaction between a head office (located outside the EU, in the US) and a branch that was part of a VAT group (in Sweden) was subject to VAT. Danske Bank deals with the scenario where it is the head office that is part of a local VAT group. Furthermore, Skandia involved a head office established outside of the EU (i.e., the United States), whereas both the head office and branch in Danske Bank are located in EU member states.

On our alert published on Baker McKenzie’s InsightPlus platform, we outline the impact and consequences of the ruling, as well as some key takeaways on specific jurisdictions

  • Different consequences around the EU
  • Luxembourg, Sweden and Spain – examples of territorial approach to VAT grouping
  • Netherlands, the UK, and Germany – examples of an extra-territorial approach to VAT grouping

The consequences of the Danske Bank ruling are expected to vary across the EU, particularly since the individual member states have varied ways of implementing the VAT grouping rules under Article 11 of the VAT Directive. You can read our full alert – Europe: Danske Bank judgment impacts branch-head office transactions on InsightPlus


Linnea Back is a partner of Baker McKenzie’s Stockholm office and is heading the Stockholm Tax Practice Group. Her main practice area is tax reorganization for national and international company groups, as well as for small or medium-sized corporations managed by their owners. Linnea also advises companies in connection with tax litigation processes. She is recognized as Leading Individual for Tax in Legal 500 2021. Linnea is a frequent speaker on seminars regarding tax news and restructuring issues.


Philippe Gamito is a senior tax adviser in Baker McKenzie’s London office, with over 10 years of experience. With prior experience gained working in Brussels and Paris, he specializes in VAT in the financial services sector, and advises companies on their complex cross-border flows and restructuring projects across Europe. He also advises financial services businesses in relation to their tax litigation matters. Philippe regularly publishes articles in UK and international tax reviews with respect to financial services VAT.


Ana Royuela is a partner in Baker McKenzie’s Barcelona Tax Team, with over 20 years of experience. She heads Baker McKenzie’s Global VAT Practice in the EMEA region. Her practice emphasizes on international VAT and customs law, primarily on behalf of high-tech, e-commerce and retail companies. Ana’s main focus is multinational VAT planning leading to a VAT efficient sale and services structure for such multinationals with, for example, a minimum of VAT compliance obligations and VAT refund issues. She is listed in Chambers, Legal 500 and ITR rankings.