Spanish Tax Court has issued a recent judgment analyzing the concept of a fixed establishment (FE) and its consequences in the denial of the reverse charge rule application.
The case analyzed consists of a non-established entity that supplies certain goods to its subsidiaries established in Spain — acting in their own name but on behalf of the parent company — applying the reverse charge mechanism. The subsidiaries then supply those goods to Spanish customers charging the corresponding VAT.
One of the most relevant aspects to take into account when concluding that the subsidiaries are an FE is their dependency on the parent company (if they need the authorization of the parent company to sign contracts, etc.). If the relationship between the subsidiary and the parent company is just the one derived from the agency agreement, the subsidiary will not constitute an FE (as an independent agent).
Source Baker & McKenzie
See also
- Roadtrip through ECJ Cases – Focus on ”Fixed Establishments”
- For all other newsitems related to Fixed Establishments, click HERE
