Comments on ECJ C-232/22: VAT fixed establishment – new CJEU ruling

A Swiss company (S) entered into a tolling agreement with a Belgian company (B), which provides services for the processing of raw materials into products that remain the property of S. B uses its equipment exclusively to provide those services under the direction of S, and stores S’s raw materials and products before they are sold in Belgium or abroad.
The Belgian tax authorities claimed that S had a fixed establishment (FE) in Belgium, and that the toll services were therefore taxable in Belgium.
However, according to Article 44 of the VAT Directive, the general rule is that the service is taxed where the customer has established his business, and qualification as an FE cannot depend solely on legal status. It should be done in light of economic and commercial realities. It is not necessary to own human and technical resources, but rather to be entitled to dispose of these resources in the same way as if they were his own.
Additionally, even in circumstances where one company provides services exclusively to another, it cannot be concluded that the provider’s facilities become the recipient’s facilities.
With the additional services provided by B, it is important to distinguish between the FE VAT resulting from the purchase of services and the fact of the sales activity. One does not affect the other.