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Skandia America v Skatteverket

In Skandia America v Skatteverket (C-7/13) (17 September 2014) the CJEU found that supplies of services between a US holding company and its European branch were taxable transactions.

Skandia had appealed against the decision of the Swedish tax authorities to charge VAT on the supply of services by Skandia America (SAC) established in the US to its branch Skandia Sverige (Sverige) established in Sweden.

SAC sold externally purchased IT services to Sverige which processed them and sold a final product to companies within the group.

The CJEU first observed that a supply of services is only taxable if a reciprocal legal relationship exists between the supplier and the recipient. Here this depended on whether Sverige carried on an independent economic activity. The CJEU found that Sverige did not function independently and was not therefore a taxable person. However because Sverige belonged to a...

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