The situation
The group’s intercompany recharge invoices and service agreements
The group recharges IT, HR and finance costs from the German parent to subsidiaries in Poland and the Czech Republic, and the Polish SSC recharges its own services back. The auditors asked how each flow is treated for VAT. Nobody has written it down since the structure changed.
Each flow is simple on its own. Together they cover cross-border services, cost-sharing without a margin and, since last year, a Czech branch. The answer has to be right per entity and consistent across the group.
What the research has to settle
The rules behind the answer
- A recharge between companies is usually a supply
- Separate legal entities supplying services to each other make taxable supplies, even at cost. The absence of a margin does not take a recharge out of scope.
- Cross-border flows follow the business-customer rule
- Services from the German parent to the Polish subsidiary are generally supplied where the subsidiary is established, and the subsidiary accounts for the VAT under the reverse charge.
- Branches and VAT groups need separate care
- Flows within one legal entity are generally outside VAT. The Court of Justice has held that this changes where a branch or head office belongs to a VAT group, so the group’s registrations matter.
- Pure disbursements are the narrow exception
- Costs paid in the name and for the account of another company can fall outside the taxable amount. Ordinary recharges of shared costs usually do not qualify.
How it runs in azta
From the question to the document
The question, as you would type it
German parent recharges IT and HR costs at cost to its Polish subsidiary and to its own Czech branch. The Czech branch is not in a VAT group. What is the VAT treatment of each flow, and what must the invoices show?
You start with
The group’s intercompany recharge invoices and service agreements
- 01
Upload the invoices and agreements
Add a sample of recharge invoices and the intercompany agreements. azta reads them and cites the passage behind each answer.
File upload· Pro - 02
Research each flow
Ask about each entity in turn. azta cites the VAT Directive, the national VAT acts and the Court of Justice decisions on branches and VAT groups.
Cited research· Free - 03
Draft the note per entity
Ask for one note per entity with a table of flows, treatment and invoice requirements. Refine it in Canvas.
Canvas · Ask azta· Pro - 04
Keep it where the team works
On Enterprise, keep the agreements, research and notes in one workspace for the group, so the next question starts from the same file.
Workspaces· Enterprise You send
A VAT treatment note per entity, ready for the shared-service centre
What you get
A VAT treatment note per entity, ready for the shared-service centre
VAT note · draft
Intercompany recharges: Polish subsidiary
IT and HR services from the German parent. These are services supplied to a business established in Poland. The parent does not charge German VAT. The Polish subsidiary self-assesses Polish VAT under the reverse charge and may deduct it in the same return, subject to its normal right of deduction.
Finance services supplied by the Polish SSC to group companies abroad. These are treated as supplied where each recipient is established. The SSC invoices without Polish VAT, states that the reverse charge applies and reports the supplies in its recapitulative statement.
Recharges at cost. Charging at cost does not change the treatment above. The recharge is the taxable amount.
Outcomes on your numbers
What azta is worth on this task
Pro pays for itself after
14 minutes a month
At €120 an hour, that is all the time Pro (€27 a month) has to take off your desk to cover its price.
Example figures. Replace them with your own.
- Hours back a year
- 54
- Capacity at your rate
- €6,480
- More entity VAT notes a quarter
- 2.3
- Return on Pro
- 20×
- Research
- Drafting
- Your review
A scenario you set, not a promise. The hours that come back go to another client, or deeper into this one.
Want these numbers on your team’s real workload?
Book a demoSources azta searches here
- EUR-Lex · Curia
- Gesetze im Internet
- Dziennik Ustaw
- e-Sbírka
What stays with you
- Confirming the group’s VAT registrations and any VAT-group membership.
- Deciding the position for flows where the facts are unclear.
- Agreeing the treatment with the auditors.
Frequently asked questions
- Can the whole tax team use the same research?
- On Enterprise, shared workspaces keep the documents, conversations and drafts for an engagement together, with access by membership.
- Does it cover all the group’s countries?
- azta researches tax and legal questions across Europe in the original languages. The source register lists each covered country and what it holds.
- Can we add our own transfer-pricing policy?
- Yes. Upload it and azta reads it alongside the law. On Enterprise, the knowledge space keeps approved internal material cited separately from the law.
