The Polish tax authorities are stretching the VAT rules when interpreting the Welmory Case (Case C-605/12). The main requirements for a foreign company to have a fixed establishment in an EU country is that the foreign company must have “sufficient human and technical resources” in that EU country, which is uses to perform taxable activities. In the Welmory case, the ECJ ruled that these human and technical resources do not have to be directly employed or owned by the foreign company, but that these may also be provided via third-party resources in a way that is comparable to having its own resources.
This reminds us of the opinion of Advocate General Poiares Maduro in Case C-452/03 (RAL). In this opinion, the AG also states that “a company which supplies gaming machine services […], with the aid of auxiliary staff outsourced from third companies to perform ancillary activities necessary to confer a permanent character on the supply, should be regarded as having a commercial structure in the United Kingdom with the minimum resources required for it to be considered itself a fixed establishment”
The Polish tax authorities are now taking this a step further, ruling that “for a fixed establishment to exist in Poland, it is sufficient that the foreign entity conducts business on an organised and permanent basis using some personnel and infrastructure in Poland (beneficial use of people and equipment) and making
taxable transactions in course of this business.”
Source: International Tax Review