On 16th October 2014, the European Court of Justice issued the judgment in Polish case C-605/12 Welmory v the Director of the Tax Chamber in Gdańsk. We informed about the …
ECJ: Rented infrastructure and the fixed establishment for VAT purposes – Tax Alert No. 4/2014
On 16th October 2014, the European Court of Justice issued the judgment in Polish case C-605/12 Welmory v the Director of the Tax Chamber in Gdańsk. We informed about the opinion of the Advocate General in the Tax Alert No. 2/2014.
The key issue was whether the foreign company can have a fixed establishment also in the case where the human and technical resources are not owned by the foreign company but are provided by the third entity.
In the judgment, the ECJ stated that “a first taxable person who has established his business in one Member State, and receives services supplied by a second taxable person established in another Member State, must be regarded as having a ‘fixed establishment’ within the meaning of Article 44 of Council Directive 2006/112/EC (…), in that other Member State, for the purpose of determining the place of taxation of those services, if that establishment is characterised by a sufficient degree of permanence and a suitable structure in terms of human and technical resources to enable it to receive the services supplied to it and use them for its business (…).”
The above judgment may have significant importance for companies who purchase in other countries different services of e.g. day-to-day assistance concerning the core business of the company. If these services are such to create a permanent and suitable structure to receive services supplied to it and use them for its business, such companies may be recognized as having a fixed establishment in that other country.
Dorota Baczewska-Golinska
Independent Tax Advisers
