Judgment;Summary — ECLI:EU:C:2021:196
Date: 2021-03-11
Language of the case: Swedish
Court formation: Seventh Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Sweden

Translation C-812/19 — 1 
Case C-812/19 
Request for a preliminary ruling 
Date lodged:  
4 November 2019 
Referring court:  
Högsta förvaltningsdomstolen (Sweden) 
Date of the decision to refer:  
24 October 2019 
Appellant:  
Danske Bank A/S, Danmark, Sverige Filial 
  
Other party to the proceedings:  
Skatteverket 
  
[...] 
APPELLANT 
Danske Bank A/S, Danmark, Sverige Filial [...] 
[...] Stockholm 
OTHER PARTY TO THE PROCEEDINGS 
Skatteverket [...] Solna 
DECISION UNDER APPEAL 
Decision of the Skatterättsnämnden (Revenue Law Commission, Sweden) of 
23 November 2018 in Case No 37-17/1  
MATTER 
EN 
REQUEST FOR A PRELIMINARY RULING OF 24.10.2019 — CASE C-812/19 
 
2  
Preliminary decision on value added tax (‘VAT’); need to obtain a preliminary 
ruling from the Court of Justice of the European Union 
[...] 
ORDER 
A preliminary ruling under Article 267 of the FEU Treaty shall be obtained from 
[OR. 2] the Court of Justice of the European Union in accordance with the 
annexed request for such a preliminary ruling [...] 
[...] [OR. 3] 
[...] 
Reference for a preliminary ruling under Article 267 TFEU concerning the 
interpretation of Articles 2(1), 9(1) and 11 of Council Directive 2006/112/EC 
of 28 November 2006 on the common system of value added tax (‘the VAT 
Directive’). 
Introduction 
1 A bank in another Member State provides services to its branch in Sweden and 
imputes the costs thereof to the branch. The bank is part of a VAT group in that 
other Member State, while the branch is not part of a VAT group in Sweden. The 
Högsta förvaltningsdomstolen (Supreme Administrative Court, Sweden) seeks 
clarification, by a preliminary ruling, of whether the VAT group constitutes, for 
the purpose of the supply of services, a taxable person independent of the branch 
and whether, as a result, the branch constitutes an independent taxable person. 
Relevant EU law 
2 Under Article 2(1)(c) of the VAT Directive, the supply of services for 
consideration within the territory of a Member State by a taxable person acting as 
such is to be subject to VAT. 
3 In accordance with Article 9(1), a taxable person is any person who, 
independently, carries out in any place any economic activity, whatever the 
purpose or results of that activity. [OR. 4] 
4 It follows from Article 11 that, after consulting the VAT Committee, each 
Member State may regard as a single taxable person any persons established in the 
territory of that Member State who, while legally independent, are closely bound 
to one another by financial, economic and organisational links. 
DANSKE BANK 
 
3 
Relevant national legislation 
5 In accordance with the first subparagraph of Chapter 1, Paragraph 1, of the 
mervärdesskattelagen (1994:200) (the Law on value added tax (1994:200); ‘the 
ML’), VAT is to be paid on such supply within national territory of taxable 
services effected by a taxable person acting as such, in so far as the taxable person 
is not exempt from taxation on the supply. 
6 Under 1 Chapter 2, Paragraph 1, third subparagraph, point 1, of the ML, the term 
‘supply of services’ means that a service is carried out, transferred or otherwise 
provided for consideration. 
7 A service supplied to a taxable person acting as such is regarded, in accordance 
with the general rule in the first subparagraph of Chapter 5, Paragraph 5, to have 
been supplied within national territory if the taxable person either has the seat of 
his economic activity in Sweden or has a permanent establishment there and the 
service was provided to that establishment. Chapter 1, Paragraph 2, first 
subparagraph, point 2 [of the ML] provides that if a person supplying services 
such as those referred to in Chapter 5, Paragraph 5, is a foreign taxable person, the 
person who acquires the services is liable to pay VAT, inter alia, if that person is a 
taxable person or a legal person registered in Sweden for VAT. 
8 In accordance with Chapter 4, Paragraph 1, a taxable person is any person who, 
independently, carries out in any place any economic activity, whatever the 
purpose or results of that activity. [OR. 5] 
9 Sweden has introduced rules on VAT groups into Chapter 6a [of the ML]. It 
follows from Paragraph 1 of that Chapter that, for the purposes of the application 
of the law, two or more taxable persons, on the conditions set out in the chapter, 
may be regarded as a single taxable person (VAT group) and the activity carried 
out by the VAT group may be regarded as a single activity. The second 
subparagraph of Paragraph 2 provides that only a taxable person’s permanent 
establishments in Sweden may form part of a VAT group. 
The facts of the case 
Request for a preliminary decision 
10 The case concerns a preliminary decision of the Skatterättsnämnden (Revenue 
Law Commission) which is the subject of an appeal before the Högsta 
förvaltningsdomstolen (Supreme Administrative Court) by Danske Bank A/S, 
Danmark, Sverige Filial. The following, inter alia, is clear from the application for 
a preliminary decision. 
11 Danske Bank A/S has its principal establishment in Denmark. The bank carries on 
its activities in Sweden through the branch. The bank is a member of a Danish 
VAT group. The branch is not a member of any Swedish VAT group. 
REQUEST FOR A PRELIMINARY RULING OF 24.10.2019 — CASE C-812/19 
 
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12 The bank uses an IT platform in its Nordic activities, which are to a great extent 
common to all the establishments. The costs of the branch’s use of the platform in 
the Swedish activity will be imputed by the principal establishment to the branch. 
13 By its application, the branch wished to know whether the fact that the bank was 
part of a Danish VAT group means that the VAT group must be regarded as an 
independent taxable person vis a vis its branch in Sweden for the purpose of 
applying the provisions of the ML. [OR. 6] 
14 The branch also wished to know whether the services of the Danish VAT group, 
the costs of which will be imputed to the branch, are to be regarded as a supply for 
VAT purposes, whether the branch must pay VAT on the acquisitions in Sweden 
and whether the taxable amount is the sum of the attributed costs. 
The Skatterättsnämnden’s preliminary decision 
15 The Skatterättsnämnden found that the branch and the Danish VAT group in 
Denmark of which the principal establishment forms part are to be regarded as 
two distinct taxable persons, since the Danish principal establishment separated 
itself from the Swedish branch by entering into a Danish VAT group in 
accordance with Danish VAT rules. 
16 The Skatterättsnämnden further found that the supply of services by the Danish 
VAT group, the cost of which is attributed to its branch in Sweden, constitutes a 
supply of services entailing a tax liability for the branch, provided that the 
remuneration received by the VAT group constitutes the consideration actually 
given for the services provided and that the other conditions for tax liability are 
satisfied. The remainder of the application was rejected as inadmissible in that it 
was not answered. 
Positions of the parties 
The branch 
17 The branch asks the Högsta förvaltningsdomstolen (Supreme Administrative 
Court) for a declaration that the branch and the principal establishment are one 
and the same taxable person and that the attribution by the principal establishment 
does not constitute a supply for the purposes of VAT. [OR. 7] 
18 A supply of services is taxable only if there exists between the service supplier 
and the recipient a legal relationship in which there is a reciprocal performance. In 
order to determine whether there is a legal relationship between a foreign 
company and one of its establishments situated in another Member State, it is 
necessary to examine whether that establishment carries out an independent 
economic activity. 
DANSKE BANK 
 
5 
19 The branch does not act independently and does not itself bear the economic risks 
inherent in the branch’s activity. The branch is therefore dependent on the 
principal establishment and thus cannot be regarded as a taxable person. The 
principal establishment and the branch are therefore the same taxable person even 
when the principal establishment is part of a VAT group. The branch cannot 
separate itself from the principal establishment unless the branch itself becomes a 
member of a Swedish VAT group. 
The Skatteverket 
20 The Skatteverket (Swedish Tax Agency) is of the view that the Högsta 
förvaltningsdomstolen (Supreme Administrative Court) should confirm the 
preliminary decision. 
21 The assessment must be made in the light of the Danish rules on VAT groups. The 
Danish provisions mean that it is only establishments in Denmark which may 
form part of a Danish VAT group. It follows that the branch in Sweden is not part 
of the Danish VAT group. Accordingly, the branch and the principal 
establishment cannot be regarded as forming a single taxable person. 
The need for a preliminary ruling 
22 It follows from the case-law of the Court of Justice that a supply of services is 
taxable only if there exists between the service supplier [OR. 8] and the recipient 
a legal relationship in which there is a reciprocal performance. In one case, the 
Court held that a branch of a foreign company was not independent of that 
company and that there was no legal relationship between those companies. The 
fact that, since the principal establishment supplied services to the branch, the 
costs were apportioned to the branch did not therefore mean that the branch 
should be regarded as a taxable person (FCE Bank, C-210/04, EU:C:2006:196, 
paragraphs 34 to 37, 40 and 41). 
23 The relevance of the fact that a branch forms part of a VAT group was examined 
by the Court of Justice in a case concerning services supplied by a company 
established in a non-Member State to its Swedish branch, which was a member of 
a VAT group in Sweden. The Court observed that the branch did not operate 
independently and did not itself bear the economic risks arising from the exercise 
of its activity. Nor did the branch have any capital of its own and its assets were 
included in those of the principal establishment. Consequently, the branch was 
dependent on the principal establishment and could not therefore itself be 
characterised as a taxable person within the meaning of Article 9 of the VAT 
Directive (Skandia America Corp. (USA), Sweden branch, C-7/13, 
EU:C:2014:2225, paragraph 26). 
24 However, in that same case, the Court held that the branch formed part of a VAT 
group and that the branch formed, with the other members of the group, a single 
REQUEST FOR A PRELIMINARY RULING OF 24.10.2019 — CASE C-812/19 
 
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taxable person. Classification as a single taxable person means that the members 
of a VAT group can no longer be treated as taxable persons and that, in such 
circumstances, services supplied by a third party to a member of a VAT group 
must therefore be regarded as having been supplied not to the member but to the 
group itself. Services supplied for consideration by a company to its branch were 
deemed to have been supplied to the VAT group and the supply of such services 
was deemed to constitute a taxable transaction, on the basis that the principal 
establishment [OR. 9] and its branch cannot be considered to be a single taxable 
person. The Court found that services supplied by a principal establishment in a 
non-Member State to its branch established in a Member State constitute taxable 
transactions when the branch is a member of a VAT group (Skandia America, 
paragraphs 29 to 32). 
25 It is clear from the case-law of the Court that the starting point is that a branch 
must not be regarded as a taxable person where the principal establishment 
supplies services to the branch. Consequently, transactions between the branch 
and the principal establishment are not taxable. It is, however, clear from the case-
law that the branch, by entering into a VAT group, may be separated from the 
principal establishment and instead become part of another taxable person, namely 
the VAT group. Transactions between the principal establishment and the branch 
which is part of a VAT group are then taxable. 
26 However, the question which now arises is whether the Swedish branch, which is 
not part of any Swedish VAT group, must be regarded as a taxable person where 
the principal establishment is a member of a VAT group in another Member State 
and supplies services to it and imputes the costs associated therewith to it. Can the 
branch which, in its capacity as a branch of the bank and similarly to the branch in 
the Skandia America case, does not act independently, does not itself bear any 
economic risks and has no capital of its own and is therefore dependant on the 
bank, be regarded itself as a taxable person (c.f. Skandia America, paragraph 26)? 
The Court of Justice has not yet examined that question. 
27 One way of looking at such a situation is that the Swedish branch becomes an 
independent taxable person since the principal establishment, by becoming a 
member of a VAT group, has separated itself from the taxable person which the 
principal establishment and its branch together are deemed to constitute in 
transactions between them. The principal establishment thus becomes part of 
another taxable person, namely the VAT group, and the branch becomes an 
[OR. 10] independent taxable person. On that view, the transactions between the 
branch and the principal establishment are taxable. 
28 Another way of looking at the situation is that the branch is part of the same 
taxable person as the principal establishment, even if the principal establishment is 
part of a VAT group in another Member State, since the branch is not independent 
of the principal establishment when it is not part of a VAT group in the State in 
which it is established. On that view, the transactions between the branch and the 
principal establishment are not taxable transactions and the branch is regarded in 
DANSKE BANK 
 
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practice as simply another branch and a part of the VAT group in the other 
Member State. 
29 The EU’s VAT Committee adopted, following its 105th meeting in October 2015, 
guidelines on the basis of the judgment of the Court of Justice in the Skandia 
America case. It is apparent from the guidelines that a supply of goods or services 
by one entity to another entity of the same legal person such as ‘head office to 
branch’, ‘branch to head office’ or ‘branch to branch’, where only one of the 
entities involved in the transaction is a member of a VAT group or where the 
entities are members of separate VAT groups, is to constitute a taxable transaction 
for VAT purposes, provided that the conditions laid down in Article 2(1) of the 
VAT Directive are met.  
30 Under the guidelines of the VAT Committee, a branch must therefore be regarded 
as an independent taxable person in the situation in question. The guidelines were 
adopted by a large majority. The Högsta förvaltningsdomstolen (Supreme 
Administrative Court) finds that there is therefore a relatively extensive 
convergence of views as between the Member States on the present question, but 
there is not total agreement. 
31 Against that background, the Högsta förvaltningsdomstolen (Supreme 
Administrative Court) finds it necessary to request a preliminary ruling from the 
Court of Justice. [OR. 11] 
Question 
32 Does a Swedish branch of a bank established in another Member State constitute 
an independent taxable person where the principal establishment supplies services 
to the branch and imputes the costs thereof to the branch, if the principal 
establishment is part of a VAT group in the other Member State, while the 
Swedish branch is not a member of any Swedish VAT group?