- The Cabot Plastics Belgium SA case dealt with whether a contractor can be considered a Permanent Establishment of its client if the contractor works exclusively for the client.
- A writ of execution was issued against Cabot Plastics Belgium SA regarding the collection of €10,609,844.08 VAT and a fine of €1,060,980. The VAT administration considered Cabot Plastics Belgium SA to be a Belgian permanent establishment of the Swiss company Cabot Switzerland GMBH (CSG).
- The court partially annulled the writ of execution as regards the fine, but Cabot Plastics Belgium SA appealed.
- The Court of Appeal in Liège requested a preliminary ruling from the Court of Justice on three questions.
- The Court of Justice ruled that before there can be a permanent establishment, the company not established in Belgium must be able to dispose of its ‘own’ technical resources and ‘own’ personnel in a ‘sustainable’ manner for purchasing and using the services locally for the purpose of carrying out taxable transactions.
- The Court ruled that this was not the case with Cabot Plastics Belgium SA and that the client in Switzerland had ‘substance’. It is not because the contractor works ‘exclusively’ for its client and also performs additional services, eg. in terms of logistics, that the contractor is the permanent establishment of its client.
Source Legalnews
See also
- ECJ C-232/22 (Cabot Plastics Belgium) – Judgment – Toll manufacturing with ancillary services does not lead to Fixed Establishment
- Summary of ECJ-232/22 (Cabot) – No fixed establishment due to lack of human and technical resources even if ancillary services are performed, exclusivity
