A tax dispute concerning VAT fixed establishments brought before the Court of Justice of the European Union (CJEU), after obtaining its referral to the Luxembourg based court – a game changer for “lohn” structures?
In this case, the non-resident company acquired a complex manufacturing service from a related party, established in Romania. The non-resident company was the owner of the raw material and of the finished products while the resident company contributed with the labor and owned the related production equipment. In addition to the processing of raw material and transformation into finished products, the complex service included related activities such as reception, inventory, placing orders with suppliers of raw material, providing storage space, inventory management in the IT system, processing orders from customers of the finished products, mentioning the address on the transport documents and invoices, support in quality audits, etc. The finished products resulting from the processing were sold by the non-resident company mainly outside Romania under VAT exemption and, to a small extent, in Romania subject to VAT.
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Source NNDKP
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