Article in the EU VAT Directive
Article 44 of Directive 2006/112 and Article 11 of Implementing Regulation No 282/2011
Article 44 (Place of supply)
The place of supply of services to a taxable person acting as such shall be the place where that person has established his business. However, if those services are provided to a fixed
establishment of the taxable person located in a place other than the place where he has established his business, the place of supply of those services shall be the place where that fixed establishment is located. In the absence of such place of establishment or fixed establishment, the place of supply of services shall be the place where the taxable person who receives such services has his permanent address or usually resides.
Article 11 of Implemeting Regulation 282/2011
Facts
BC, a German company, sells goods in Romania where it has a non-resident VAT registration. BCAM, incorporated in Romania, provides BC with marketing, advertising and regulatory support services, has treated those services as being outside the scope of Romanian VAT, and subject to reverse charge VAT in Germany. The Romanian tax authorities believe, by virtue of its own subsidiary, BC has sufficient human and technical resources at its disposal in Romania to create a fixed establishment there. This would mean BCAM’s services to BC are subject to VAT. The concept of business establishment and fixed establishment is relevant to place of supply questions regarding the provision of services and, whilst branch structures create fixed establishments, the question of whether a subsidiary of a company can create a fixed establishment for a parent company, or other legal entity within the group continues to be the subject of disputes.
Questions
1. If a company that carries out supplies of goods in the territory of a Member State other than that in which it has established its business is to be regarded as having, within the meaning of the second sentence of Article 44 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Article 11 of Council Regulation No 282/2011, a fixed establishment in the State in which it carries out those supplies, is it necessary for the human and technical resources employed by that company in the territory of that Member State to belong to it, or is it sufficient for that company to have immediate and permanent access to such human and technical resources through another affiliated company which it controls since it holds the majority of its shares?
2. If a company that carries out supplies of goods in the territory of a Member State other than that in which it has established its business is to be regarded as having, within the meaning of the second sentence of Article 44 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Article 11 of Council Regulation No 282/2011, a fixed establishment in the State in which it carries out those supplies, is it necessary for the presumed fixed establishment to be directly involved in decisions relating to the supply of the goods, or is it sufficient for that company to have, in the State in which it carries out the supply of goods, technical and human resources that are made available to it through contracts concluded with third party companies for marketing, regulatory, advertising, storage and representation activities which are capable of having a direct influence on the volume of sales?
3. On a proper construction of the second sentence of Article 44 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value
added tax and Article 11 of Council Regulation No 282/2011, does the possibility for a taxable person to have immediate and permanent access to the technical and human resources of another affiliated taxable person controlled by it preclude that affiliated company from being regarded as a service provider for the fixed establishment thus created?
AG Opinion
Decision
Personal comments/VATupdate
Source
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