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Fixed establishment EU VAT case law

15 cases of the Court of Justice and the General Court of the European Union on this point of VAT law, from 1985 to 2024.

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The 15 cases, most recent first

Under each case, what the Court decided, from its summary. The summaries are AI-generated and are not official documents: open the case for the Court’s own text.

C-475/23 Voestalpine Giesserei Linz

Judgment · 4 October 2024 · Romania

Deduction on equipment provided free of charge to a subcontractor

Free provision to the subcontractor does not of itself break the link. Deduction must be allowed where the cost forms a component of the taxable person's output transactions or general costs. The qualification is that if the making available goes beyond what is necessary for that purpose, the link is partly broken and deduction is limited to the objectively necessary part. Absence of separate accounts is a formal failing and cannot bar deduction where the authorities can verify the substantive conditions. Penalties may be imposed instead. Useful for manufacturers and toll processing structures where the principal supplies plant, tooling, cranes or premises to contractors at no charge, a common pattern in automotive, foundry and construction supply chains.

C-533/22 Adient

Judgment · 13 June 2024 · Romania

Fixed establishment through a group toll manufacturer

No fixed establishment arises solely from group membership or from a services contract between the two companies. For place of supply purposes the focus is on resources for receiving services, so a structure intervening in downstream supplies of the manufactured goods is irrelevant, as is where those goods are sold. There is no fixed establishment where the recipient's human and technical resources are not distinct from those used by the supplier, or where they perform only preparatory or auxiliary activities. Confirms and tightens Berlin Chemie and Cabot Plastics for toll manufacturing and contract processing structures, especially intra-group ones. Relevant to automotive and manufacturing groups and their advisers.

C-232/22 Cabot Plastics Belgium

Judgment · 29 June 2023 · Belgium

Fixed establishment created by an exclusive toll manufacturer

No fixed establishment, absent a suitable structure in human and technical resources of the recipient's own. Exclusivity, group membership and long duration are relevant but not decisive. The provider remains responsible for its resources and bears its own risk, so they do not become the customer's. The same resources cannot both supply and receive the services. Services received must be distinguished from the principal's own onward sales. Ancillary services facilitating those sales are irrelevant. Confirms and extends Berlin Chemie to non-EU principals and to toll manufacturing structures. Relevant to chemicals, pharmaceuticals and contract manufacturing groups using a principal company outside the EU, and to tollers exposed as the party assessed.

C-333/20 Berlin Chemie A. Menarini

Judgment · 7 April 2022 · Romania

Whether a subsidiary supplying marketing services creates a fixed establishment of its parent

No fixed establishment arises merely because a company owns a subsidiary in another Member State which makes human and technical resources available to it under contracts for marketing, regulatory, advertising and representation services supplied exclusively to it, even if those services directly influence sales volumes. Ownership of resources is not required, but the parent must be able to dispose of them as if its own. Decisively, the same resources cannot both supply and receive the same services. Useful for groups using local service or support subsidiaries, notably pharmaceutical and consumer goods structures with promotional, regulatory and order taking functions.

C-931/19 Titanium

Judgment · 3 June 2021 · Austria

Let property without own staff is not a fixed establishment

A let property without staff of the owner's own is not a fixed establishment. A fixed establishment requires a sufficient degree of permanence and a structure adequate in human and technical resources to supply the services independently. A structure with no staff of its own cannot qualify. A property whose owner has no own staff for the letting is not a fixed establishment under Article 43, or Articles 44 and 45 as amended. Management tasks contracted out, with the owner retaining all important letting decisions, do not supply the missing human resource. Non-established landlords holding a single let property in another Member State cannot be treated as locally established merely by owning it, so supplies to business tenants fall to be handled by the recipient where the Member State applies Article 194 or Article 196. Relevant to real estate funds and offshore property holding vehicles, and to their tenants, for whom the question is whether reverse charge obligations were missed.

C-547/18 Dong Yang Electronics

Judgment · 7 May 2020 · Poland

Whether a subsidiary is a fixed establishment of its foreign parent

A supplier may not infer a fixed establishment from the mere existence of a subsidiary, and is not required to inquire into the contractual relationships between parent and subsidiary. Legal status is not decisive. A subsidiary can be a fixed establishment, but only where the substantive conditions in Article 11 are met, assessed against economic and commercial reality. The Free Trade Agreement reservation restricting Korean investors to Polish corporate forms does not affect that interpretation. Suppliers dealing with EU subsidiaries of third country groups can rely on the Article 22 sequence. Relevant to toll manufacturing and contract processing arrangements.

C-111/14 GST - Sarviz Germania

Judgment · 23 April 2015 · Bulgaria

Reverse charge applied in error where the supplier had a fixed establishment

Where the services are supplied from a fixed establishment in the Member State of taxation, the supplier alone is liable. Article 194 does not permit the authorities to treat the recipient as liable, even where the recipient has already paid on a mistaken assumption. Refusing the supplier a refund breaches fiscal neutrality where the recipient's deduction has been definitively denied and invoices cannot be adjusted. The outcome would differ if national law allowed the supplier to adjust its invoices and recover the VAT from the recipient. Relevant wherever a fixed establishment is asserted retrospectively on audit and the customer has meanwhile self-accounted.

C-605/12 Welmory

Judgment · 16 October 2014 · Poland

Fixed establishment of the recipient of services

The place where the recipient has established its business remains the primary point of reference. The fixed establishment rule is an exception. A fixed establishment exists only where there is a structure of sufficient permanence and suitable human and technical resources enabling it to receive the services and use them for its own business. That the two companies' activities form an economic whole benefiting consumers in the same Member State is immaterial. Verification is for the national court. Confirms that Article 44 case law under the Sixth Directive, and the Implementing Regulation definition, apply to recipient side fixed establishments. Relevant to digital platform, e-commerce and outsourcing structures where a local service provider's staff and equipment are used by a foreign principal.

C-318/11 Daimler and Widex

Judgment · 25 October 2012 · Sweden

Fixed establishment and refunds to non-established taxable persons

Such a taxable person has no fixed establishment of that kind. The test is cumulative because there must be a fixed establishment and actual output taxable transactions effected from it. A mere ability to make supplies is insufficient, so testing or research activities alone do not defeat the refund claim and there is no need to decide whether a fixed establishment exists. The presence of a wholly owned subsidiary supplying services for the testing activity does not alter this. The subsidiary is a separate taxable person and did not make the purchases. Tax authorities cannot refuse Eighth Directive or Directive 2008/9 refunds by pointing to permanent premises, staff or equipment alone.

C-244/08 Commission v Italy

Judgment · 16 July 2009 · Italy

A fixed establishment does not force a non-resident into the refund procedure

The Court finds the infringement established. A taxable person with a fixed establishment in the Member State concerned, which makes supplies there, is not a person not established in that State for the purposes of those directives. It must therefore recover the input tax by deduction through its Italian return, and it cannot be pushed into the refund procedure merely because the purchase was made directly by the principal establishment. A practically important judgment for groups with branches.

C-210/04 FCE Bank

Judgment · 23 March 2006 · Italy

Supplies between a head office and its foreign branch

A fixed establishment which is not a legal entity distinct from its company is not a taxable person merely because costs are imputed to it for services received from that company. The decisive point is independence. The branch had no endowment capital and bore none of the economic risk of the banking business, so it forms a single taxable person with the head office. The OECD Convention is irrelevant (direct taxation), as is any cost sharing agreement not negotiated between independent parties. No need to consider Article 43 EC. Confirms that internal recharges between a head office and its branch fall outside VAT, which matters most to exempt sectors such as banking and insurance where output VAT on internal charges sticks as a cost.

C-452/03 RAL (Channel Islands) and Others

Judgment · 12 May 2005 · United Kingdom

Place of supply of slot gaming machine services as entertainment

Enabling the public to use slot gaming machines for consideration in amusement arcades in a Member State is an entertainment or similar activity under the first indent of Article 9(2)(c), so the place of supply is where the machines are physically operated. Artistic input is not required, and the provision is not confined to supplies between taxable persons. Supplies to final consumers are covered. Having answered on that basis, the Court did not address fixed establishment or abuse of right. Operators of gaming and amusement machines, and their advisers, cannot relocate the place of supply by placing the operating company outside the Community.

C-190/95 ARO Lease

Judgment · 17 July 1997 · Netherlands

Fixed establishment of a car leasing company

The leasing company has no fixed establishment in the other Member State. Services are supplied from an establishment other than the main place of business only where it has sufficient permanence and a structure adequate in human and technical resources to supply the services independently, that is, to negotiate, draw up and administer the agreements or take management decisions. Neither the physical availability or use of the vehicles, nor local registration and road tax, nor self-employed intermediaries, amount to such a structure. Ancillary local transactions do not alter this.

C-260/95 DFDS

Judgment · 20 February 1997 · United Kingdom

Fixed establishment of a tour operator through a subsidiary acting as agent

VAT is payable in the State of the agent company where that company acts as a mere auxiliary organ of the tour operator and has the human and technical resources characteristic of a fixed establishment. Separate legal personality and ownership of its own premises do not make a subsidiary independent. Wholly owned status and the contractual obligations imposed by the parent pointed the other way. The place of business remains the primary point of reference only where it gives a rational result for tax purposes. Confirms that a tightly controlled local subsidiary can constitute the principal's fixed establishment, displacing the place of business as the point of taxation.

C-168/84 Berkholz v Finanzamt Hamburg-Mitte-Altstadt

Judgment · 4 July 1985 · Germany

Fixed establishment and gaming machines on ferries

Article 9(1) treats the place of business as the primary connecting factor. Another establishment is relevant only where attribution to the place of business does not give a rational fiscal result or causes conflict with another Member State. An installation on board qualifies as a fixed establishment only if it involves the permanent presence of both the human and technical resources needed to supply the services. Gaming machines with intermittent servicing do not obviously meet this. Article 15(8) covers only services necessary for operating the vessel, not passenger entertainment. The origin of the fixed establishment test. Relevant to any adviser assessing whether equipment, machines or unmanned facilities abroad create an establishment.

Related topics

Place of supply · Supply of services · Persons liable for payment of VAT · Refund of VAT · Restrictions on the right of deduction · Origin and scope of right of deduction · Right of deduction · Fiscal neutrality