C-605/12 The opinion of the Advocate General: own infrastructure is not necessary to have a fixed establishment
On 15th May, 2014, the Advocate General, delivered his opinion to Case C-605/12 Welmory Sp. z o.o. v Dyrektor Izby Skarbowej in Gdańsk concerning the issue of a fixed establishment for VAT purposes.
Welmory Sp. z o.o., the Company established in Poland, concluded an agreement on cooperation with the Cypriot Company, Welmory Limited. The Cypriot Company run a website with auctions. On this website Welmory Sp. z o.o. was empowered to offer and sell its goods at auction. Welmory Sp. z o.o. collected the purchase price, which was usually lower than the market value of the product. The Cypriot Company obtains revenue through the sale of rights to bids.
In order to run the website, the Cypriot Company involved personnel as well as technical resources of Welmory (Welmory supplies services to the Cypriot Company). Additionally, on the base of cooperation agreement Welmory Sp. z o.o. received from the Cypriot Company the consideration for the service of selling products and related services, such as advertising.
Consequently, doubts arose in which country (in Poland or in Cyprus), services supplied by the Polish Company should be taxed VAT. In order to resolve this issue, the Supreme Administrative Court asked preliminary question to the Court of Justice of the European Union: “for the purposes of the taxation of services supplied by Company A, which is established in Poland, to Company B, which is established in another Member State of the European Union, in circumstances where Company B carries out its economic activity by making use of Company A’s infrastructure, is the fixed establishment within the meaning of Article 44 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax situated in the place in which Company A is established?”
The Advocate General considered that in accordance with Article 44 of Council Directive 2006/112/EC, the fixed establishment is characterized by a sufficient degree of permanence and a suitable structure in terms of human and technical resources to enable it to receive and use the services supplied to it for its own needs. In the opinion of the Advocate General, own human and technical resources are not necessary if there is availability of other resources comparable to the own one.