- The Court of Justice of the European Union (CJEU) ruled on Case C-232/22, which dealt with the issue of a fixed establishment (FE) in relation to the provision of toll manufacturing services to a taxpayer from another country.
- The case involved Cabot Plastics Belgium SA and Cabot Switzerland GmbH, which were linked by capital ties but not legally dependent on each other.
- Cabot Plastics provided manufacturing services on entrusted materials and other ancillary services to Cabot Switzerland, with sales of the manufactured goods being taxed in Belgium.
- Cabot Plastics treated the services provided as taxable in Switzerland, but the Belgian tax authorities disputed this and argued that Cabot Switzerland had an FE in Belgium.
- The CJEU found that Cabot Switzerland did not have an FE in Belgium because it did not have an adequate structure in terms of human and technical resources there.
- The CJEU emphasized that in order to identify an FE, it is necessary to fulfil the criterion of constancy and an adequate structure in terms of personnel and technical facilities to enable it to receive and use the services provided for its own needs of that FE.
- The CJEU also pointed out that the mere fact that two entities belong to the same capital group does not necessarily mean that an FE has been created.
Source PwC
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
