Tax Alert, 22 May 2014

Advocate General’s opinion settling the case of Welmory Sp. z o.o. concerning the notion of fixed establishment

On 15 May 2014, the Advocate General of the Court of Justice of the European Union gave an opinion on the preliminary question concerning the fixed establishment.

The reference for a preliminary ruling was made on 24 December 2012 by the Supreme Administrative Court (Poland) in the case of Welmory Sp. z o.o. against the Head of Tax Chamber in Gdansk (case C-605/12) in which the Court asked whether the fixed establishment in the sense of article 44 of the Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax for purposes of taxation of services provided by the company A with its seat in Poland for the company B with its seat in another Member State, considering that the company B carries out business activity using the company A infrastructure, shall be the place where the company A has its seat.

In his preliminary ruling the Advocate General stated that the fixed establishment shall be understood as the place which is characterized by a sufficient degree of permanence and human and technical resources to allow it to receive and use the services for its economic activities. However, if the company has access to another resources which are available to a comparable extent as its own resources, then own resources, both human and technical, are unnecessary.

In addition, in response to the question, the Advocate General observed that the national court in considering the case should examine what kind of independent business is run by the Cypriot company using the resources available in Poland and whether the services of the company Welmory Sp. z o.o. are used for this business because – according to the Advocate General - all these elements are necessary to determine whether fixed establishment exists or not.

Should you be interested in discussing this topic in further detail, please do not hesitate to contact Mazars Tax Advisory Department.


Tax Alert 22 May 2014
Tax Alert 22 May 2014