Comments on ECJ C-533/22: Further practical guidance from the Advocate General on fixed establishment

• The case involved a German company and a Romanian company belonging to the same group, both suppliers to automotive manufacturers for complete seating systems.
• The German company ordered various services from the Romanian company, including processing services, assembly of upholstery elements, and ancillary and administrative services.
• The German company, registered for VAT purposes in Romania, purchased these services as a German VAT payer, resulting in the Romanian company not charging Romanian VAT.
• The Romanian tax authorities argued that the recipient of the services was the fixed establishment of the German company in Romania.
• The Advocate General stated that the existence of a fixed establishment is determined by economic and commercial realities. Factors such as belonging to the same group or the nature of the services provided are not relevant. The key considerations are whether the fixed establishment provides services comparable to the main company and whether the contract includes the provision of human and technical resources.

In VAT, recent judgments have brought taxpayers closer to determining the factors for establishing a fixed establishment. However, there is still a lack of clear criteria in the CJEU case law, as evidenced by Juliane Kokott’s opinion on a fixed establishment.