The Court of Justice of the EU, in its judgment of 13 June 2024 in Case C-533/22, identified the elements necessary to identify a fixed establishment for VAT purposes.
The case concerned whether the German parent company’s subsidiary established in Romania was a permanent establishment for VAT purposes due to the fact that the latter, under a special contract, provided processing services on goods owned by the parent company. On this point, the Court held that a permanent establishment for VAT purposes cannot exist where it would be identified in the human and technical means attributable to the subsidiary.
In detail, the Judgment, first reiterating certain established principles in the Court’s case law, concluded that:
- to identify the place of supply of services, it cannot be assumed that a company, which is the recipient of services provided by another company established in another member State, has a permanent establishment there for VAT purposes, merely because the two companies belong to the same group or are linked to each other by a services contract;
- not relevant for the same purpose: (i) nor that the client company has a structure in the other State which participates in the supply of finished goods resulting from such processing services, (ii) nor that such supplies are mostly carried out outside that state and that those carried out there are subject to VAT;
- a company purchasing services provided by a company established in another member state does not have a permanent establishment for VAT purposes in the latter member state if the human and technical means available to it there are not other than those by means of which the services are provided to it, or if those human and technical means perform only preparatory or auxiliary activities.