If your business structure includes a mix of Irish and foreign branches, or if you operate as part of a multinational group, the landscape of Irish VAT just shifts beneath your feet.

On 19 November 2025, Revenue issued updated guidance that fundamentally tightens the rules on who can—and cannot—be part of an Irish VAT group.

For years, many companies have relied on the “Whole Entity” approach to simplify their tax affairs. This allowed Irish head offices and their foreign branches to act as one single taxpayer, meaning internal transactions were ignored for VAT purposes.

That era is ending.

Here is the authoritative guide on what has changed, why it matters for your cash flow, and the specific steps you must take to remain compliant.

The Core Change: “Establishment Only”

To understand the impact, we need to look at the “Before” and “After.”

How it worked before November 2025: Previously, if a legal entity (like a company) joined an Irish VAT group, the entire entity was included. This meant if you had a Head Office in Dublin and a branch in London, both were considered inside the Irish VAT group.

• The Benefit: Services passed between the Dublin HQ and the London branch were disregarded. No VAT was charged, and no paperwork was needed.

The New Rule (Effective Immediately): Revenue has moved to an “Establishment Only” approach. From now on, only Irish establishments (Irish-registered head offices or fixed establishments located physically in Ireland) can be members of an Irish VAT group.

• The Consequence: Your foreign branch is now treated as a separate third party.

Why This is a “Silent” Risk

This change is dangerous because it turns invisible transactions into visible, taxable events.

If your Irish HQ provides IT support, HR services, or management functions to a foreign branch (or vice versa), these are no longer internal “non-events.” They are now cross-border supplies of services.

1. The VAT Charge: Transactions between your Irish entity and your foreign branch may now trigger Irish VAT. This typically happens via the “Reverse Charge” mechanism.

2. The Cost of Exempt Sectors: If your business is in Finance, Insurance, or Real Estate, this is critical. Because you likely cannot reclaim all your VAT, any new VAT charged on these internal services becomes a hard cost. It is money straight off your bottom line.

The Timeline: You Have a Grace Period (But Don’t Waste It)

Revenue is not pulling the rug out overnight for everyone, but the clock has started ticking.

• New VAT Groups: The new rules apply immediately (from 19 Nov 2025).

• Existing VAT Groups: You have a transition period. You must review your structure and make necessary changes by 31 December 2026.

That sounds like a long time. It isn’t. Unravelling complex inter-company dependencies takes months of accounting work.

Your Action Plan: What You Must Do Now

At Intax, we believe in proactive compliance. Do not wait for the 2026 deadline to find out you have a tax leak. Follow these instructions:

1. Map Your Group Structure Draw it out. Identify every entity currently in your VAT group.

• Check: Are any of these branches located outside Ireland?
• Check: Are any Head Offices located outside Ireland? If the answer is yes, they must be removed from the group.

2. Audit Your “Inter-Company” Flows Look at the flow of money and services.

• Does the UK branch charge the Irish HQ for marketing?
• Does the Irish HQ charge the French branch for software licensing?
• Instruction: Stop treating these as “disregarded.” Calculate what the VAT impact would be if these were third-party invoices.

3. Review Your Invoicing Protocols Your current invoicing software might be set to automatically suppress VAT on these internal transactions. This needs to be updated. You may need to begin issuing formal VAT-compliant invoices or self-billing documents for transactions that previously required no paperwork.

4. The “Health Check” If you are a fully Irish-based group (all branches and HQs are on the island of Ireland), you can breathe easy—VAT grouping likely still makes sense for you to simplify administration. However, if you have any cross-border elements, you need a professional review.

The intention of these changes is to align Ireland with broader EU case law (specifically the Danske Bank and Skandia judgments). While it adds administrative weight, it also brings legal certainty.

Do not navigate this alone. Unpicking a VAT group is complex. If you get it wrong, you risk underpaying VAT or overpaying on irrecoverable costs.Next Step: Are you unsure if your foreign branch is affected? Contact Intax.ie today. We will perform a VAT Group Health Check, mapping your exposure and ensuring your transition to the new rules is seamless and cost-efficient.