New Developments in the 'fixed Establishment' Concept for VAT Purposes
Author | : M. van de Leur |
Publisher | : |
Total Pages | : |
Release | : 2020 |
Genre | : |
ISBN | : |
Download New Developments in the 'fixed Establishment' Concept for VAT Purposes Book in PDF, ePub and Kindle
Whether an establishment owned by a foreign company qualifies as a fixed establishment (FE) for VAT purposes is important to determine the place of supply of services and the liability to pay VAT. In many cases, the relevance of the FE is limited to 'cash flow', the taxable person's attention being focused on 'doing it right' in order to avoid the FE issue becoming a source of interest and fines for the tax authorities. However, especially where services are concerned, the existence of an FE can help to prevent or reduce the tax burden in cases where customers who cannot deduct VAT should otherwise be charged VAT. It is therefore no surprise that the FE has regularly been a topic before the Court of Justice of the European Union (ECJ), in particular in the cases Günther Berkholz (Case 168/84), DFDS A/S (Case C-260/95), ARO Lease BV (Case C-190/95), Lease Plan Luxembourg SA (Case C-390/96), Planzer Luxembourg (Case C-73/06), Daimler AG and Widex A/S (Case C-318/11) and Welmory (Case C-605/12). From these decisions, the author can summarize that in order to qualify as an FE for VAT purposes, an establishment should have a sufficient degree of stability or permanence as well as structure in terms of personnel and technical equipment to allow for the independent provision of supplies of goods or services. Moreover, a subsidiary as a separate legal entity may also qualify as an FE of a foreign company if the subsidiary is wholly subordinate to the parent company in making supplies to third parties.