- The Court of Justice of the European Union (CJEU) ruled on June 13, 2024, regarding whether a toll manufacturer constitutes a fixed establishment for VAT purposes.
- Under EU law, services provided to a taxpayer are taxed where the taxpayer’s business is established unless provided to a fixed establishment elsewhere.
- A fixed establishment requires a sufficient degree of permanence and suitable human and technical resources to receive and use services.
- The case involved a German company and a Romanian company within the same group.
- The German company contracted the Romanian company for manufacturing and assembly services.
- The Romanian tax authority deemed the German company to have a fixed establishment in Romania, making the services subject to Romanian VAT.
- The German company contested this decision, arguing the conditions for a fixed establishment were not met.
- The CJEU ruled that merely belonging to the same group or having a service contract does not constitute a fixed establishment.
- Shared IT and accounting systems and storage facilities do not imply the German company has the necessary infrastructure in Romania.
- The CJEU concluded that the German company did not have a fixed establishment in Romania for VAT purposes.
Source: kpmg.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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