The CJEU’s statement that the same technical and human resources cannot be used both to provide and receive the same services is of upmost importance. Learnings from the case and further precisions The final word is however for the referring national judge, based on the factual circumstances. In those circumstances and taken into account that the same resources cannot be used both to provide and receive the same services, the CJEU concludes that BCG should in principle not be deemed to have a fixed establishment in Romania. In the Global Chemie case, the CJEU notes that the human and technical resources made available to BCG by BCR are also those through which the Romanian company supplies the services to the German company. Shall this be the case, article 11 of the Implementing Regulation further requires that these resources enable BCG to receive the services supplied and to use them for its own business needs. Therefore, it must be assessed whether BCG had the technical and human resources of BCR at its disposal as if they were its own. According to the CJEU, a restrictive interpretation of this condition ( i.e. the staff is contractually bound with the foreign company and the material resources must be its ownership), would allow to transfer the place of supply of services by merely having recourse to various service providers. The Implementing Regulation does not provide any details as to whether these human and technical resources must belong to the foreign company. The Romanian Tax Authorities however considered that BCG should be deemed to have a fixed establishment in Romania, through the human and technical resources of its Romanian (sub-)subsidiary, and claimed the payment of Romanian VAT on BCR's services.Ī VAT fixed establishment requires in the first place a sufficient degree of permanence and a suitable structure in terms of technical and human resources (article 11 of Implementing Regulation No 282/2011). It also deals with the invoices which it sends to BCG's customers.īCR invoiced its services without application of VAT as these services were deemed to take place in Germany according to the general place of supply rule of services. BCR furthermore takes orders for pharmaceutical products from wholesale distributors in Romania and forwards them to BCG. BCG has held (for decades) for this purpose a stock in Romania.Ī Romanian (sub-)subsidiary of the group (" BCR"), created in 2011, supplies marketing, promotional and regulatory services exclusively for the benefits of BCG. This decision provides very useful clarifications and arguments for companies as to the interpretation of the aforementioned notion of “fixed establishment”.īerlin Chemie AG (" BCG"), a German company, sells pharmaceutical products in, amongst others, Romania.
Less than a year after its decision in the Titanium case, the Court of Justice of the European Union (" CJEU") rendered its long-awaited decision in the Berlin Chemie case on the notion of "fixed establishment" for VAT purposes.
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