The Facts: When analysing whether a taxable person has a Fixed Establishment (“FE”) in a Member State, reference should be made in particular to Article 11 of Council Implementing Regulation (EU) No. 282/2011 (“Implementing Regulation”). However, it is equally important to consider the extensive case law of the Court of Justice of the European Union (“CJEU”) on this subject, as the notion of a fixed establishment remains a complex and evolving concept, with various aspects still subject to interpretation and clarification through CJEU decisions.
According to Article 11(1) and (2) of the Implementing Regulation, a fixed establishment is defined by the cumulative presence of the following three elements:
A sufficient degree of permanence in that Member State.
The presence of a suitable structure in terms of human and technical resources.
These same human and technical resources must enable the establishment to receive and use services for its own needs.
Article 11 explicitly states that VAT registration alone is not sufficient to consider that a taxable person has a fixed establishment. In fact, Article 11(3) of the Implementing Regulation clarifies that:
“The fact of having a VAT identification number shall not in itself be sufficient to consider that a taxable person has a fixed establishment.”
In essence, VAT registration is an administrative obligation and should not be confused with the concept of a fixed establishment for VAT purposes.
Conclusion: Holding a VAT number in a Member State does not automatically create a fixed establishment.
Verdict: Statement is false.
Authors: Brandon Gatt, Partner, Zampa Partners & Valentina Bruno, VAT Associate, Zampa Partners
