- The Court of Justice of the European Union issued a decision in Case C-232/22, Cabot Plastics, regarding the concept of fixed establishment in EU VAT law.
- A fixed establishment refers to the presence of a business in a jurisdiction that possesses a significant level of human capital and resources.
- The case revolved around Cabot Switzerland and Cabot Plastics, two legally independent entities based in Switzerland and Belgium, respectively.
- The Belgian tax authorities claimed that Cabot Plastics supplied its products to Cabot Switzerland’s fixed establishment in Belgium, making Belgian VAT applicable.
- The Court ruled that there was no fixed establishment in Belgium, and the services were deemed to be received in Switzerland.
- The Court emphasized the importance of economic realities over the legal relationship between the parties and gave little weight to their belonging to the same corporate group.
- Preparatory or auxiliary activities for the recipient’s business do not create a fixed establishment.
Source WH Partners
See also
- ECJ C-232/22 (Cabot Plastics Belgium) – Judgment – Toll manufacturing with ancillary services does not lead to Fixed Establishment
- Summary of ECJ-232/22 (Cabot) – No fixed establishment due to lack of human and technical resources even if ancillary services are performed, exclusivity
- Join the Linkedin Group on ECJ VAT Cases, click HERE
- For an overview of ECJ cases per article of the EU VAT Directive, click HERE
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