Financial services, insurance, asset management and other organisations with restricted VAT recovery are likely to face the greatest impact from the Irish VAT grouping changes.


From 1 January 2027, Irish VAT groups will comprise only the Irish establishments of their members. This means that certain services between an Irish VAT-grouped establishment and its overseas head office or branch may become subject to VAT, potentially creating an irrecoverable cost.


With less than 50 working days before these changes come into effect, businesses should assess the financial, compliance and operating impact on their organisation.

1. Is my organisation impacted?

Where the business has all three of the following:

  • An Irish VAT group
  • Overseas branches or head offices
  • Cross-border service charges, cost allocations or management recharges

These features may create new Irish VAT liabilities. It is important to review these structures as a priority.

2. Which transactions should I review first?

You should focus on transactions between:

  • Irish head office–overseas branch and Irish branch–overseas head office flows
  • Cross-border charges involving an establishment that is part of a VAT group

Example: Services from an overseas head office to an Irish branch in an Irish VAT group may attract reverse charge VAT and, where recovery is restricted, an irrecoverable cost.

Businesses should review transfer pricing, shared-service and cost-allocation arrangements, where affected flows may not be visible for VAT purposes.

3. How much will the change cost the business?

You should quantify:

  • Annual affected charges and related VAT
  • Recoverable and irrecoverable amounts
  • Systems and compliance costs

This will establish the recurring exposure and business case for change.

4. Is there any upside that could offset the cost?

The review may also identify opportunities to:

  • Refine cost and income attribution or the recovery methodology
  • Identify taxable activities, historic treatments or data gaps affecting recovery

5. Are there alternative solutions available?

Where costs are material, consider changes to VAT grouping, service flows, branch structures or operating models.
Any solution must be commercially workable and assessed against wider tax, regulatory, transfer pricing and legal considerations.

How EY can help

EY can provide a focused impact assessment that can help organisations to:

  • Map affected flows
  • Quantify the irrecoverable VAT exposure
  • Assess mitigation options
  • Identify potential VAT recovery options
  • Agree actions required before 1 January 2027

To discuss the potential impact on your organisation, contact your usual EY adviser or our dedicated tax team: