On April 7, 2022, the ECJ issued its decision in the case C-333/20 (Berlin Chemie A. Menarini SRL).
Context: Reference for a preliminary ruling — Value added tax (VAT) — Directive 2006/112/EC — Article 44 — Place of supply of services — Implementing Regulation (EU) No 282/2011 — Article 11(1) — Supply of services – Place of tax attachment – Concept of “permanent establishment” – Company of a Member State affiliated with a company located in another Member State – Appropriate structure in terms of human and technical resources – Ability to receive and use the services for the specific needs of the permanent establishment – Provision of marketing, regulatory, advertising and representation services provided, by a related company, to the recipient company
English version
Article 44 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2008/8/EC of 12 February 2008, and Article 11(1) of Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112 must be interpreted as meaning that a company which has its registered office in one Member State does not have a fixed establishment in another Member State on the ground that that company owns a subsidiary there that makes available to it human and technical resources under contracts by means of which that subsidiary provides, exclusively to it, marketing, regulatory, advertising and representation services that are capable of having a direct influence on the volume of its sales.
Article in the EU VAT Directive
Article 44 of Directive 2006/112 and Article 11 of Implementing Regulation No 282/2011
Article 44 (Place of supply)
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 Implementing Regulation 282/2011
Facts
BC, a German company, sells goods in Romania where it has a non-resident VAT registration. BCAM, incorporated in Romania, provides BC with marketing, advertising and regulatory support services, has treated those services as being outside the scope of Romanian VAT, and subject to reverse charge VAT in Germany. The Romanian tax authorities believe, by virtue of its own subsidiary, BC has sufficient human and technical resources at its disposal in Romania to create a fixed establishment there. This would mean BCAM’s services to BC are subject to VAT. The concept of business establishment and fixed establishment is relevant to place of supply questions regarding the provision of services and, whilst branch structures create fixed establishments, the question of whether a subsidiary of a company can create a fixed establishment for a parent company, or other legal entity within the group continues to be the subject of disputes.
Questions
1. If a company that carries out supplies of goods in the territory of a Member State other than that in which it has established its business is to be regarded as having, within the meaning of the second sentence of Article 44 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Article 11 of Council Regulation No 282/2011, a fixed establishment in the State in which it carries out those supplies, is it necessary for the human and technical resources employed by that company in the territory of that Member State to belong to it, or is it sufficient for that company to have immediate and permanent access to such human and technical resources through another affiliated company which it controls since it holds the majority of its shares?
2. If a company that carries out supplies of goods in the territory of a Member State other than that in which it has established its business is to be regarded as having, within the meaning of the second sentence of Article 44 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Article 11 of Council Regulation No 282/2011, a fixed establishment in the State in which it carries out those supplies, is it necessary for the presumed fixed establishment to be directly involved in decisions relating to the supply of the goods, or is it sufficient for that company to have, in the State in which it carries out the supply of goods, technical and human resources that are made available to it through contracts concluded with third party companies for marketing, regulatory, advertising, storage and representation activities which are capable of having a direct influence on the volume of sales?
3. On a proper construction of the second sentence of Article 44 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value
added tax and Article 11 of Council Regulation No 282/2011, does the possibility for a taxable person to have immediate and permanent access to the technical and human resources of another affiliated taxable person controlled by it preclude that affiliated company from being regarded as a service provider for the fixed establishment thus created?
AG Opinion
None
Decision
Article 44 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2008/8/EC of 12 February 2008, and Article 11(1) of Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112 must be interpreted as meaning that a company which has its registered office in one Member State does not have a fixed establishment in another Member State on the ground that that company owns a subsidiary there that makes available to it human and technical resources under contracts by means of which that subsidiary provides, exclusively to it, marketing, regulatory, advertising and representation services that are capable of having a direct influence on the volume of its sales.
Source
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