Fixed establishments and subsidiaries have a different VAT treatment. Whereas a fixed establishment is part of the same VAT entrepreneur a subsidiary is a VAT entrepreneur different from its parent company. Supplies between a fixed establishment and its head office are as a rule not subject to VAT, whereas supplies between a parent company and its subsidiary are. Earlier case law of the CJEU has demonstrated that a subsidiary can be a fixed establishment of its parent company if the conditions for a fixed establishment are met. In a recent case the CJEU has provided more guidance as to when those conditions have been met.
It is important to know whether your subsidiary is indeed a fixed establishment or not. If the subsidiary is indeed a fixed establishments supplies made or received by your company can be subject to VAT in the country where your subsidiary/fixed establishment is located. Some EU Member States, like Poland, have the reputation to easily regard a subsidiary as a fixed establishment.
Source BDO
See also See also ECJ C-333/20 (Berlin Chemie A. Menarini SRL) – Judgment – No Fixed establishment via affiliate rendering services on an exclusive basis
