Insourcing and Outsourcing in a VAT Context

In recent years the choice between insourcing and outsourcing has been the subject of increased interest among economic operators. The continuous search for cost reductions, and the maintenance of competitiveness have entailed that both national and international undertakings must regularly consider the optimal mix of in-house production and external production.

However, such considerations may not be based only on operational considerations, as the choice can have significant VAT implications. From this perspective, it is highly relevant to examine the VAT consequences of insourcing and outsourcing in the EU VAT system.