The recent judgment of the Court of Justice of the European Union (CJEU) in the case of Berlin Chemie has found that the use of staff and technical resources belonging to another entity in an EU member state is potentially capable of creating a fixed establishment of the user in that country for VAT purposes. Despite the UK’s departure from the EU’s VAT system, UK businesses whose trading structures include affiliates in an EU member state may still be affected.
The Berlin Chemie case concerned a German pharmaceutical company that sold its products in various markets, including Romania. Its Romanian subsidiary provided it with local marketing and legal services to promote its products and ensure that they met local regulations to allow distribution in Romania.
Source RSM
