Comments on ECJ C-232/22: Toll manufacturer no fixed establishment for VAT

The Court of Justice of the European Union ruled in the Cabot Plastics Belgium case regarding the concept of ‘fixed establishment’ in VAT. The court ruled that the human and technical resources of a Belgian toll manufacturer do not constitute a fixed establishment for a client established outside the EU, despite both the affiliation and the exclusive contractual relationship between the principal and the toll manufacturer.
The fixed establishment serves as a point of reference for levying VAT, and its existence determines whether VAT is chargeable and the place where supplies are subject to VAT. The term fixed establishment has been defined in the VAT Regulation of the European Union since 2011. The interpretation of the concept regularly leads to disputes with foreign tax authorities.
The judgment is highly dependent on the facts in this particular case, and it is not excluded that in similar cases with a different factual pattern, there is indeed a fixed establishment.
The Court of Justice of the EU emphasizes that there are still situations where the human and technical resources of a group company can constitute a permanent establishment in another entity within the group.