with No Comments

What are the VAT implications of a permanent establishment?

The VAT issues raised by the presence of a permanent establishment abroad can be summarised in the following three questions:

  • How should internal transactions between the parent company and its permanent establishment be treated? What about cost reallocation? What about transfer pricing adjustments?
  • Who, from the head office or permanent establishment, should charge the end customer? Should this invoice be issued with or without local VAT?
  • Are services (consultants, legal services, IT services, etc.) and goods (goods, equipment, etc.) purchased from third parties to be invoiced to the head office or to the permanent establishment? What are the procedures for refunding local VAT?