European Court – T-555/26 (Gemeinde A) – Questions – Automated facility and subcontractor staff: fixed establishment for VAT liability

Summary

The Bundesfinanzhof (Federal Fiscal Court, Germany) has submitted a request for a preliminary ruling concerning the interpretation of the fixed establishment concept under Article 192a of the EU VAT Directive.
The dispute is between Finanzamt R and Gemeinde A, a German municipality operating a sewage treatment plant. Austrian service providers supplied sewage-sludge draining, drying and disposal services using a largely automated drying facility located at the municipality’s site in Germany.
The facility was remotely monitored and maintained from Austria, while a German subcontractor performed the necessary on-site work.
The central question is whether the facility had a suitable structure in terms of human and technical resources to constitute a fixed establishment, notwithstanding the remote operation and use of subcontractor personnel.
The answer will determine whether the Austrian suppliers or the German municipality, under the reverse-charge mechanism, were liable for the German VAT.

Articles of the EU VAT Directive 2006/112/EC discussed

Article 24(1) – Treats any transaction that does not constitute a supply of goods as a supply of services. It is relevant because the draining, drying and disposal of the sewage sludge were characterised as services supplied to Gemeinde A. The referred question does not directly request an interpretation of this provision.
Article 43(2) – Provides that, for the rules governing the place of supply of services, a VAT-identified non-taxable legal person is regarded as a taxable person. It is relevant because Gemeinde A carried out both economic and non-economic activities but held and used a German VAT identification number. The referred question does not directly concern this provision.
Article 44 – Provides, as a general rule, that services supplied to a taxable person are taxable where that person has established its business. It establishes Germany as the place of supply because Gemeinde A was established there and was treated as a taxable person for the place-of-supply rules. It also provides the underlying connection to the reverse-charge rule in Article 196.
Article 192a – Provides that a taxable person with a fixed establishment in the Member State where VAT is due is nevertheless regarded as not established there where the local establishment does not intervene in the relevant supply. This is the provision expressly identified in the referred question. The issue is whether the automated drying facility, together with remotely supplied functions and subcontractor personnel, constitutes a fixed establishment with a suitable structure in terms of human and technical resources.
Article 193 – Establishes the general rule that VAT is payable by the taxable person making the taxable supply, except where another person is liable under the Directive’s specific rules. It is relevant because the Austrian service providers would be liable if they supplied the services through an intervening fixed establishment in Germany. The referred question does not expressly request an interpretation of Article 193.
Article 196 – Makes the VAT-identified recipient liable for VAT on services covered by Article 44 where those services are supplied by a taxable person not established in the Member State concerned. Its application depends on whether the Austrian suppliers must be regarded as established in Germany through an intervening fixed establishment. If they were not so established, Gemeinde A would be liable under the reverse-charge mechanism.

Preliminary Ruling Questions

Does a facility (in the present case, a drying facility) which intervenes in the provision of a service (in the present case, a waste disposal service) constitute a fixed establishment within the meaning of Article 192a of the VAT Directive with regard to the requirement of a suitable structure in terms of human and technical resources, where a taxable person which has established its place of business within the territory of another Member State remotely monitors and maintains the facility situated within national territory from its place of business and engages, for the operation of that facility otherwise, a subcontractor whose staff intervene at the facility?

Other CJEU cases referred to

C-459/19, Wellcome Trust – Cited regarding the application of Article 44 of the VAT Directive. The Court held that where a taxable person carrying on a non-economic activity acquires services for that activity, it is generally regarded as acting as a taxable person, except for services intended for its own private use or that of its staff.
C-931/19, Titanium – The principal authority cited on the human-resources requirement for a fixed establishment. The Court held that a property without its own staff enabling it to act independently did not constitute a fixed establishment. The referring court considers whether this reasoning also excludes a largely automated drying facility operated through occasional subcontractor interventions.
C-333/20, Berlin Chemie A. Menarini – Cited on when resources belonging to another person may be treated as being available to a taxable person as if they were its own. The judgment is relevant to whether the personnel of the German subcontractor can constitute the human resources of the Austrian suppliers’ alleged fixed establishment.
C-533/22, Adient – Cited concerning the conditions for treating third-party human and technical resources as available to a taxable person and the need for a rational result when identifying a fixed establishment. The referring court draws on this judgment when examining whether subcontractor staff may be attributed to the Austrian suppliers and whether automation affects the human-resources requirement.

The order also refers to the Opinion of Advocate General Kokott in C-533/22, Adient. The Opinion discussed whether technical resources alone may be sufficient where automated services require no, or only occasional, human intervention. The Bundesfinanzhof notes, however, that the Court did not adopt those considerations in its judgment.

Key Takeaways

The case may clarify whether a largely automated facility can constitute a fixed establishment when the supplier performs monitoring, maintenance and decision-making remotely from another Member State.
The ruling may determine when subcontractor personnel can be attributed to a foreign supplier as the human resources of a fixed establishment, particularly where the supplier cannot directly instruct those personnel.
The fixed establishment analysis directly affects VAT liability: an intervening German fixed establishment would make the Austrian suppliers liable, while the absence of such an establishment would support application of the reverse charge to Gemeinde A.

Source

Request for a preliminary ruling in Case T-555/26, Gemeinde A