Irish VAT groups – Revenue announces significant changes to territorial application of VAT grouping rules

On 19 November 2025, the Irish Revenue Commissioners (“Revenue”) published new and updated guidance on VAT groups including a new tax and duty manual which sets out guidance on the territorial scope of VAT groups in Ireland.

What has changed?

This guidance represents a significant change regarding Irish VAT groups. The key points to note from this guidance are as follows:

1. Revenue are changing their interpretation of the scope of an Irish VAT group to restrict it to Irish establishments only in accordance with the Court of Justice of the European Union’s decisions in Skandia and Danske Bank.
2. This interpretation contrasts with Revenue’s historic position that all establishments (foreign or Irish) were treated as within an Irish VAT group.
3. This change in the territorial scope of VAT groups will also have Irish VAT implications for Irish establishments of entities which are members of VAT groups in any other EU Member States.
4. Revenue have confirmed when this change in interpretation will come into effect:

• For existing Irish VAT groups, the change will apply from 1 January 2027 (ie, there is a transitional period up to 31 December 2026).
• For new Irish VAT groups, the change will apply with immediate effect (from 19 November 2025).

Impact for taxpayers

Irish VAT groups in particular will need to carefully consider whether and to what extent these changes will impact them.

In the first instance it should be confirmed if any cross border supplies are made to or from establishments outside Ireland which are currently members of an Irish VAT group.

In addition, attention should be paid to whether any Irish establishments receive supplies from or make supplies to EU establishments in the same entity which are members of an EU VAT group.

The impact of this change in interpretation will vary significantly depending on the profile of a VAT group.  For taxpayers with full VAT recovery, this change may or may not actually have a financial impact, but there may still be administrative considerations regarding new supplies which may have to be recognised.  For those without full VAT recovery, this change will likely have a financial impact as well as administrative considerations regarding new supplies which may have to be recognised.

Next steps

Taxpayers should identify if they currently apply an Irish VAT group so as to disregard any cross border supplies to or from establishments outside Ireland of any VAT group members, or if they currently have Irish establishments or entities which are members of an EU VAT group in another Member State.

Where either of these fact patterns apply, it will be necessary to consider:

1. the VAT treatment of any supplies made cross border from or to the Irish VAT group / establishment to identify if VAT will arise or an exemption may apply for example;
2. the recoverability of any Irish VAT which may now arise on receipt of services by the VAT group / establishment;
3. the impact on recoverability for the Irish VAT group / establishment itself as regards any supplies it will now be making to establishments outside Ireland; and,
4. whether there are potential benefits or requirements to restructure arrangements to mitigate identified VAT costs.

If you have any questions on how this may impact your business or if you would like additional information, please contact Matthew Broadstock or Dara Higgins, or your usual Matheson contact.