On May 30, 2022, the ECJ issued the Preliminary Ruling request in the case C-232/22 (Cabot Plastics Belgium).
Articles in the EU VAT Directive 2006/112/EC
Article 44 in EU VAT Directive 2006/112/EC
Article 44
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 the EU VAT Implementing Regulation 282/2001
Article 11
1. For the application of Article 44 of Directive 2006/112/EC, a ‘fixed establishment’ shall be any establishment, other than the place of establishment of a business referred to in Article 10 of this Regulation, characterised by a sufficient degree of permanence and a suitable structure in terms of human and technical resources to enable it to receive and use the services supplied to it for its own needs.
2. For the application of the following Articles, a ‘fixed establishment’ shall be any establishment, other than the place of establishment of a business referred to in Article 10 of this Regulation, characterised by a sufficient degree of permanence and a suitable structure in terms of human and technical resources to enable it to provide the services which it supplies:
(a) Article 45 of Directive 2006/112/EC;
(b) from 1 January 2013, the second subparagraph of Article 56(2) of Directive 2006/112/EC;
(c) until 31 December 2014, Article 58 of Directive 2006/112/EC;
(d) Article 192a of Directive 2006/112/EC.
3. The fact of having a VAT identification number shall not in itself be sufficient to consider that a taxable person has a fixed establishment.
Facts
The proceedings concern a writ of execution against SA C PLASTICS BELGIUM (CPB) issued on 19-12-2017 regarding the recovery of EUR 10 609 844.08 and EUR 1 060 980, respectively for VAT and a fine, in addition to statutory interest from 21-01 -2017. The writ of execution relates to the supply of services invoiced by CPB to the Swiss company C SWITZERLAND GMBH (CSG) without VAT being charged. However, following an audit in 2017, the tax authorities took the view that CSG had a permanent establishment in Belgium within the meaning of the VAT law and that the disputed services provided in the years 2014, 2015 and 2016 should therefore be deemed to be located in Belgium to be situated. By application dated 30-03-2018, CPB brought the dispute before the court of first instance in Liège. By judgment of 14-01-2020, this judge declared the request admissible and only partially well-founded. He accepted the Belgian State’s argument that CSG did in fact have a permanent establishment in Belgium, but partially annulled the writ of execution in so far as it relates to the fine of EUR 1 060 980. CPB requests the Court of Appeal to review the judgment, to declare the cross-appeal of the Belgian State concerning the remission of the fines unfounded, to rule that no VAT is due in Belgium,
Consideration:
The particularities of the present case lie in the fact that, although CPB is part of one and the same group, it is a separate legal entity that is not a subsidiary of CSG, and that the tax authorities intend to designate CPB as a provider of services and as a provider of material and human resources for a permanent establishment of the recipient of these services, namely CSG, whose seat of economic activity is located outside the territory of the European Union. In other words, the question arises whether, in these circumstances, it must be assumed that a taxable person has an adequate structure constituting a permanent establishment in terms of its own personnel and technical resources, if the said resources belong to his service provider, who is part of the same group, and with whom he is linked by an agreement under which he undertakes to use his resources exclusively (or almost exclusively) for the performance of the agreed services. Since the Court has held that a structure without its own staff cannot be covered by the concept of a ‘permanent establishment’, it is in particular necessary to determine whether, in such circumstances, the staff of the service provider, the instructions of the recipient of the service cannot in any case be regarded as ‘proprietary’ to that recipient.
Source ecer.minbuza.nl
Questions
- (1) In the case of services supplied by a taxable person established in a Member State to another taxable person acting as such and whose business is established outside the European Union, while they are separate and legally independent entities but are part of the same group, the service provider undertakes by contract to use its facilities and personnel exclusively for the manufacture of products for the customer and these products are subsequently sold by the customer,giving rise to taxable supplies of goods to which the service provider provides logistical assistance and which take place in the Member State in question, Article 44 of Council Directive 2006/112/EC of 28 November 2006 and Article 11 of Regulation (EU) No 282/ [2011] of the Council of 15 March 2011 be interpreted as meaning that the taxpayer established outside the European Union must be regarded as having a permanent establishment in that Member State?282/[2011] of 15 March 2011 be interpreted as meaning that the taxpayer established outside the European Union must be regarded as having a permanent establishment in that Member State?282/[2011] of 15 March 2011 be interpreted as meaning that the taxpayer established outside the European Union must be regarded as having a permanent establishment in that Member State?
- (2) Should Article 44 of Directive 2006/112/EC and Article 11 of Council Regulation (EU) No 282/[2011] of 15 March 2011 laying down measures for the implementation of Directive 2006/112/EC on the common system of value added tax, be interpreted as meaning that a taxable person may have a permanent establishment if the necessary human and technical resources come from his supplier who is legally independent but is part of the same group and who is located there contractually commits to deploy these resources exclusively and for the benefit of that taxpayer?
- (3) Should Article 44 of Directive 2006/112/EC and Article 11 of Council Regulation (EU) No 282/[2011] of 15 March 2011 laying down measures for the implementation of Directive 2006/112/EC on the common system of value added tax shall be interpreted as meaning that a taxable person has a permanent establishment in the Member State of his supplier where the latter, in performance of an exclusive contractual obligation, for the benefit of that taxable person, is in addition to contract manufacturing activities in the strict sense,provides a series of additional or additional services and thus contribute to the realization of sales concluded by the said taxable person from his seat outside the European Union, but which give rise to taxable supplies of goods which, according to VAT legislation, are located in the territory of said Member State?
Source
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