Comments on ECJ C-232/22 (Cabot) – VAT fixed establishment in a toll manufacturing structure

On June 29, 2023, the Court of Justice of the European Union issued a preliminary ruling in case C-232/22 Cabot Plastics Belgium SA against État belge (Belgium) regarding a Fixed Establishment in the manufacturing industry.
The case concerned the provision of production services on entrusted material and other ancillary services by Cabot Plastics Belgium SA to a legally independent but related company, Cabot Switzerland.
The tax authorities recognized that Cabot Switzerland has a permanent place of business in Belgium, and therefore the place of performance and taxation of the services was Belgium.
Cabot Plastics disagreed and appealed, leading to the case being brought before the Court of Justice of the EU. The CJEU ruled that a taxable person who is a recipient of services does not have a fixed establishment in the Member State where there is a legally separate entity providing the services if it does not have an appropriate structure there in terms of personnel and technical facilities, which may constitute a permanent place of business.
The judgment will strengthen the changing line of interpretation regarding the fixed place of business for VAT purposes in the structures of toll manufacturing.