A German company (DE) and a Romanian company (RO) in the automotive sector are part of the same group. RO provides various services to DE, including processing, assembly, administrative, and logistics services. All raw materials and final products in Romania are owned by DE, which sells the processed goods in Romania. The Romanian tax authority determined that DE controls RO’s resources and has a VAT fixed establishment in Romania, so the services provided by RO to DE should be taxed in Romania.
The court ruled that DE does not have a VAT fixed establishment in Romania simply because the two companies belong to the same group and have a service contract. The main connecting factor for determining the place of supply of services is the place of main establishment. A VAT fixed establishment is a secondary connecting factor and exists only if one company disposes of another company’s resources as if it were its own. In this case, all companies in the group have the same IT and accounting system, and RO employees have access to DE’s accounting system.
Source Pawel Mikula
See also
- C-533/22 (Adient) – Judgment – NO Fixed establishment solely on the basis that the two companies belong to the same group
- Roadtrip through ECJ Cases – Focus on ”Fixed Establishments” (Art. 44 & 45)
- Join the Linkedin Group on ECJ VAT Cases, click HERE
- VATupdate.com – Your FREE source of information on ECJ VAT Cases
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