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Are the Swiss fixed establishment rules a solution to the VAT grouping issues of the European Union?

Bänziger, Manuel LU (2015) HARN60 20151
Department of Business Law
Abstract
The VAT grouping provision in Article 11 of the VAT directive is a recent source of problems for the European Union. Especially the area of cross border head office to branch transactions was in the centre of attention in the recent case law. This thesis investigates the source of these problems and why they appeared in the first place, by analysing the provision and the notions used in Article 11. One of the issues for cases like Skandia and FCE Bank is that the European Union applies the so called single entity principle for foreign branches. This means that a branch in another State is still con-sidered as the same entity as the head office. Due to that, transactions be-tween the head office and branches are usually regarded as internal... (More)
The VAT grouping provision in Article 11 of the VAT directive is a recent source of problems for the European Union. Especially the area of cross border head office to branch transactions was in the centre of attention in the recent case law. This thesis investigates the source of these problems and why they appeared in the first place, by analysing the provision and the notions used in Article 11. One of the issues for cases like Skandia and FCE Bank is that the European Union applies the so called single entity principle for foreign branches. This means that a branch in another State is still con-sidered as the same entity as the head office. Due to that, transactions be-tween the head office and branches are usually regarded as internal transac-tions, and therefore as non-relevant for VAT purposes. Other States like Switzerland, Australia and New Zealand do apply a dual entity principle. Under this principle foreign branches which are not in the same State as the head office are considered as their own legal entities, which means that transactions between the foreign branch and the head office are treated in the same way as transactions between a head office and its subsidiaries.
After comparing the Swiss and the European approach the thesis tries to analyse what would happen if the European Union implements a dual entity principle comparable to the one which is applied in Switzerland. After look-ing at the advantages and disadvantages of such a change, the conclusion is that the advantage of the simplification of the system would be outweighed by the disadvantages, namely the significantly increased administrative bur-den as well as problems of determining the taxable amount. (Less)
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author
Bänziger, Manuel LU
supervisor
organization
course
HARN60 20151
year
type
H1 - Master's Degree (One Year)
subject
keywords
fixed establishment, VAT grouping, VAT, Indirect Taxes, single entity, dual entity
language
English
id
5435268
date added to LUP
2015-06-12 15:54:37
date last changed
2015-06-12 15:54:37
@misc{5435268,
  abstract     = {The VAT grouping provision in Article 11 of the VAT directive is a recent source of problems for the European Union. Especially the area of cross border head office to branch transactions was in the centre of attention in the recent case law. This thesis investigates the source of these problems and why they appeared in the first place, by analysing the provision and the notions used in Article 11. One of the issues for cases like Skandia and FCE Bank is that the European Union applies the so called single entity principle for foreign branches. This means that a branch in another State is still con-sidered as the same entity as the head office. Due to that, transactions be-tween the head office and branches are usually regarded as internal transac-tions, and therefore as non-relevant for VAT purposes. Other States like Switzerland, Australia and New Zealand do apply a dual entity principle. Under this principle foreign branches which are not in the same State as the head office are considered as their own legal entities, which means that transactions between the foreign branch and the head office are treated in the same way as transactions between a head office and its subsidiaries. 
After comparing the Swiss and the European approach the thesis tries to analyse what would happen if the European Union implements a dual entity principle comparable to the one which is applied in Switzerland. After look-ing at the advantages and disadvantages of such a change, the conclusion is that the advantage of the simplification of the system would be outweighed by the disadvantages, namely the significantly increased administrative bur-den as well as problems of determining the taxable amount.},
  author       = {Bänziger, Manuel},
  keyword      = {fixed establishment,VAT grouping,VAT,Indirect Taxes,single entity,dual entity},
  language     = {eng},
  note         = {Student Paper},
  title        = {Are the Swiss fixed establishment rules a solution to the VAT grouping issues of the European Union?},
  year         = {2015},
}