Sources
- BFH (in German)
- Rechtsprechung
- PwC
Facts
- A German companyprovides consultancy services to non-taxable personsfrom offices located abroad
- The taxpayer rents the office and the infrastructure and has at its disposal perosnnel subject to taxpayer’s instructions
- It is sufficient for the existence of a permanent establishment that the plaintiff had close and constant access to someone else’s personnel and technical equipment. His power of disposal is essentially comparable to that of a tenant or owner. Because even a tenant would only use and rent the rooms for his professional activity or acquire objects and employ employees who he needed for his professional activity abroad.
Unofficial translation of the PwC newsletter
In a recent ruling, the Federal Fiscal Court (BFH) has decided that an entrepreneur will in any case maintain a permanent establishment or permanent establishment if he has extensive access to an institution that has a sufficient degree of stability and a structure that is dependent on the personnel and technical equipment enables an autonomous provision of the service in question.
facts
The plaintiff worked as a consultant economist in the taxation periods 2008 to 2010. The seat of his economic activity was S, his sales were taxed according to the received payments.
In the years of dispute, the plaintiff received remuneration from an activity as a so-called intermittent long-term advisor to a project partner from non-EU country X. -Perent daughter of J, who handled the project for accounting purposes.
The plaintiff invoiced A-GmbH for the services he provided without showing sales tax. In his sales tax returns for the years in dispute, which were equivalent to tax assessments subject to review, the sales in question are listed as non-taxable.
After an external audit, the auditor came to the conclusion that the location of the other services in question – for the years of dispute 2008 and 2009 according to § 3a Paragraph 3 Clause 1 of the Sales Tax Act (UStG) and for the year of dispute 2010 according to § 3a Paragraph 2 UStG – in each case in Germany and the taxable sales are therefore to be measured according to the amounts received minus sales tax.
The action brought against this before the Finance Court in Berlin-Brandenburg was unsuccessful.
Decision of the BFH
The BFH overturned the decision of the lower court and referred it back to the tax court for another negotiation and decision.
According to the factual findings of the tax court, the plaintiff has provided relevant services as an advisory economist in the field of economic development.
There has been no relocation of the place of performance in accordance with Section 3a (3) UStG 2005. Because neither from the presentation of the participants, from the rest of the file content nor otherwise, it is evident that the W within the meaning of Section 2 (1) sentence 1 UStG would have become entrepreneurial, which is why a relocation according to Section 3a (3) sentences 1 and 2 UStG 2005 is not comes into consideration.
Even if the W is not an entrepreneur within the meaning of Section 2 Paragraph 1 Sentence 1 UStG, the place of performance is also not shifting according to Section 3a Paragraph 3 Sentence 3 UStG 2005, since the W is not based in the third country, but in S has.
However, the tax court wrongly assumed that the plaintiff did not maintain any business premises in X during the years of dispute from which he performed other services.
According to § 3a Paragraph 1 Clause 1 UStG 2005, another service (subject to §§ 3b and 3f UStG 2005, which are not relevant in the event of a dispute and insofar as § 3a Paragraph 2 UStG 2005 is not fulfilled in the case of a dispute) is performed at the location from which the entrepreneur operates his company. If the other service is carried out by a permanent establishment, the permanent establishment is deemed to be the location of the other performance (Section 3a (1) sentence 2 UStG 2005).
The term “permanent establishment” used in this regulation corresponds to the term “permanent establishment” used from January 01, 2007 to December 31, 2009 in Art. 43 VAT Directive old version (cf. BFH judgment of December 12, 2012 – XI R 30/10, see our blog post ).
For the assumption of a permanent establishment it is necessary, but also sufficient, that the human resources and operating resources required for the provision of certain services are permanently available and that this establishment has a certain existence (see ECJ, judgment of 17.7.1997 – C -190/95 “ARO Lease”).
