The journey of branches into VAT schizophrenia

Abstract

The notion of branch has long raised questions in VAT matters. The judgment of the Court of Justice of the European Union in the Crédit Lyonnais case gives an opportunity to build a comprehensive picture of that notion. This article discusses the European VAT provisions governing the status of branches as well as the Crédit Lyonnais case to show that the conclusions reached by the Court negate the effects on the deduction right of the VAT status of branches. It goes on to propose a dissenting analysis supporting the harmonisation of the VAT deduction right at the EU level.