VAT Implications on Secondment of Staff

The decision taken by the Court of Justice of the EU (CJEU) in March 2020 in the case C-94/19 (San Domenico Vetraria SpA vs Agenzia delle Entrate), is of interest to companies which engage in the practice of lending or secondment of staff, within the same group of companies or in other scenarios. The CJEU held that such lending or secondment is not deemed to be an activity that falls outside of scope for VAT purposes. Thus, such supply of labour shall  give rise to the charging of VAT, and this reasoning applies independently of whether the consideration or fee charged is equal to, greater than or less than the costs incurred by the employer.

This decision is interesting as the till now, many professionals in the field of VAT and accountants, have argued that staff is seconded at cost incurred by the actual employer, there is no value added involved and hence no VAT is to be charged on such a transaction.

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