Also in 2021, the concept of Fixed Establishment remains a poorly explained concept and consequently causes a major risk for businesses. The impact of having a Fixed Establishment for businesses having the full right to deduct VAT is a roundtrip of cash (cash flow impact) and may eventually create an argument for claiming a Permanent Establishment for Direct Tax purposes.
Hightlights in 2021
- The European Court of Justice (ECJ) issued its decision in the case C-931/19 (Titanium). The ECJ decided that the rental out of building does not conctitute a Fixed Establishment if the non-established entity renting out the building does not have its own human and technical resources.
- Another ECJ case C-812/19 (Danske Bank) is about the impact of a Fixed Establishment. A Head Office part of VAT group & its Branch are separate taxable persons for VAT purposes.
- A decision is expected in 2022 in the case C-333/20 (Berlin Chemie A. Menarini SRL). The question in this case is whether an ”affiliate” leads to a Fixed establishment.
- A Romanian court decided to ask a question to the ECJ whether a Toll Manufacturer constitutes a Fixed Establishment for VAT purposes. We understand that the question is under preparation by the Romanian authorities, and as such has not yet been passed to the ECJ.
- The EU VAT Expert Group has presented the issue on Fixed Establishment to the European Commission, with many examples on the different interpretation in the different EU countries.
- The EU Member States still give their own interpretation to the concept of Fixed Establishment, creating even more uncertainty for businesses. Poland, Italy and Spain remain the countries being very active. At the other side, the Netherlands issued a Decree on the concept of Fixed Establishment.
- The issue is also referred to outside Europe .. in Saudi-Arbia, India, United States, …
As a reminder …. Overview of all ECJ cases on ‘’Fixed Establishments’’
ECJ Case C-931/19 decided in 2021
- Commentary to ECJ C-931/19 (Titanium) – Property companies holding real estate assets in Germany – state of play on the input VAT deduction right
- ECJ C-931/19 – Commentary: No fixed establishment for buildings rented without staff
- New ruling on Fixed Establishments (C-931/19 Titanium)
- Titanium case and fixed establishments for VAT purposes: Has anything really changed?
- Commentary to ECJ C-931/19 (Titanium) – ECJ ruling on VAT fixed establishment has broader domestic consequences
- No fixed establishment in case of property rental
- Commentary to ECJ C-931/19 (Titanium) – No fixed establishment for VAT purposes, foreign person without Austrian staff
- No fixed establishment for VAT purposes for property companies without staff
- ECJ further defines the notion of a VAT fixed establishment
- Commentary to ECJ C-931/19 (Titanium) – VAT fixed establishment non-existing without staff
- Commentary to ECJ C-931/19 (Titanium) – Can an immovable property for itself be a fixed establishment in VAT?
ECJ Case decided on Transactions between Head Office and Branch (C-812/19 – Danske Bank)
- Transactions between head office and fixed establishment VAT taxable due to the presence of a VAT group
- Provision of services by a head office to a foreign branch is VAT taxable
- CJEU separates Danish head office from Swedish branch for VAT purposes
- More clarity on VAT in intra-company transactions
- CJEU confirms VAT on intracompany supplies across EU member states if VAT group exists
- VAT on services provided by head office to fixed establishment involving VAT group
- ECJ Danske Bank – Services between head office and branch attract VAT
ECJ Pending Case
ECJ: Romanian case expected to be submitted to ECJ soon related to toll manufacturing structures
- A tax dispute concerning VAT fixed establishments brought before the Court of Justice of the European Union (CJEU), after obtaining its referral to the Luxembourg…
- Another case on Fixed Establishment to the ECJ connected with the provision of toll manufacturing services?
References to the ECJ Titanium Case
- Germany: How non-resident landlords in Germany can prepare for VAT rule changes
- Germany/Luxembourg: VAT deduction right of Lux PropCos owning/exploiting German real estate
- Spain: Commentary to ECJ C-931/19 (Titanium) – Concept of “fixed establishment” regarding letting of property: A Spanish perspective
VAT Expert Group/EU VAT Committee/EU Policy
- Remember … VAT Committee WP#791 on ”Clarifications of the concept of fixed establishment”
- Remember … VAT Expert Group WP#54 on ”Fixed Establishments – Welmory sp. z o.o. (Case 605/12)”
- VAT Expert Group: Contribution on ”Fixed Establishment” – reference to many issues in the EU MS
- EU Survey (from 2015) on ECJ Cases Skandia and Welmory
- Published 1 year ago …. the EC Action plan – 25 priorities defined
- The EC will explain the concepts from the VAT Directive. Does this mean the end of disputes over the place of taxation?
Belarus
- Guidance on the taxation of foreign organizations operating through a Fixed/Permanent establishment
- Permanent establishments: What is new in 2021?
Czech
Denmark
France
- Permanent Establishment: An Extensive Approach Adopted by the French Supreme Court
- Permanent Establishment Approach by French Supreme Court
- France expanding Fixed Establishment definition, overturning previous case law
- Territoriality – Characterisation of fixed establishments for VAT purpose
- Conseil d’Etat recharacterises the existence of a PE in the digital economy
Germany
Greece
India
- Place of GST Registration for Immovable Property and Works Contract Services with Examples
- Whether nexus is required between ITC and Output tax liability
- Understanding the concept of ‘Fixed Establishment’ under GST regime
- Import of Services received from Supplier having Fixed Establishment in India is taxable under GST
Italy
- EU approach on the concept of intervention of the VAT fixed establishment with specific focus on Italian and Czech approach…
- Answer # 52 to ruling on Fixed Establishment through Gas Pipeline
- Fixed establishment also deemed to be involved/intervene in case of passive operation
Moldova
Netherlands
- New policy statement on VAT fixed establishments
- Fixed establishment for VAT? Understanding the consequences
- Three decrees have been issued of great importance: Quick Fixes, Fixed Establishment, Deduction of VAT
- Dutch Government releases decree on fixed establishments for VAT purposes
Poland
- Supreme Administrative Court: No Fixed Establishment as no employees, no infrastructure, no decision taking in Poland
- Provincial Administrative Court in Gliwice: A German entity involved in the implementation of projects related to renewable energy sources leads to a Fixed…
- A natural person who signs acceptance protocols, communicates during the performance of service or in the settlement of payments and…
Portugal
Romania
- Another case on Fixed Establishment to the ECJ connected with the provision of toll manufacturing services?
- Fixed establishment for VAT – Focus on toll manufacturer structures
Saudi Arabia
- Suggested amendments to the VAT Implementing Regulations
- Permanent and Fixed Establishment risks for UAE companies operating in KSA
Spain
- Spanish Tax Court issues judgments on fixed establishments and cancelling a transaction in which VAT charged
- VAT treatment of intra-group services; possible implications of CJEU judgment (C-812/19)
- Supreme Court considered that Spanish subsidiary of Swiss entity was permanent establishment
Sweden
United States
- Wayfair Three Years Later- What Has Changed?
- The Expanded Reach Of States For Sales & Use Tax Purposes – More Than Just E-Commerce Retailers Are Impacted
- State-by-State Guide: Where Will Hiring Independent Contractors Create Sales Tax Nexus?
- SALT Alert: Florida Adopts Economic Nexus Rules For Sales And Use Taxes
- All You Need To Know About Sales Tax Economic Nexus
- The First Sales Tax Mistake Businesses Made In 2020: Nexus Due To Remote Employees (Part 1 of 3)
- The Second Sales Tax Mistake Businesses Made In 2020: Economic Nexus (Part 2 of 3)
- The Third Sales Tax Mistake Businesses Made In 2020: Exemption Certificate (Part 3 of 3)
Articles/Master thesis
- Master thesis of Juliana Silva: The concept of fixed establishment: relevance, difficulties and achievements
- Paper: On the Evolving VAT Concept of Fixed Establishment by Rita de le Feria
- European Court of Justice Clarifies Concept of VAT Fixed Establishment
- The subsidiary as the permanent establishment of the parent company?
Link to Permanent Establishment for Direct Tax purposes
- PE Watch | Latest developments and trends, October 2021
- PE Watch – Latest developments and trends, August 2021
- PE Watch – Latest developments and trends, July 2021
- PE Watch – Latest developments and trends, June 2021
- PE Watch | Latest developments and trends, May 2021
- Permanent Establishment: when is business carried on?
- Does your business have a permanent establishment for VAT purposes?
- VAT consequences of the permanent establishment for entrepreneurs
Check also the previous articles on ”Looking back @2021”
