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Fixed establishment ECJ decision

11th Aug 2021
VAT Consultant
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Although European Court decisions now longer apply directly, and the UK Supreme Court is now ‘supreme’ in any UK VAT litigation, many of us still keep an eye on the European Court for its thoughts on VAT.

Titanium Ltd, a Jersey based company, let two properties in Austria, appointing a local agent to deal with issues arising from those lettings and maintaining business records, including VAT. There was a dispute with the Austrian tax authorities, over whether the existence of rental properties constituted a permanent establishment in Austria (see paras 25 & 26 of the decision).

The ECJ held that, since Titanium did not have its own staff in Austria, that could not constitute a fixed establishment.

I did note that the provisions of VAT Act 1994, s9 are pretty basic in that it does not define a business establishment or fixed establishment. HMRC Notice 741A tries to do that.

Where, as in this case, the taxpayer had appointed a third party to act on its behalf, I wonder if there is an argument that it has created a fixed establishment. Now that the UK is adrift from the European PVD and Implementing Regulations, perhaps we will see this issue litigated in the UK.

The short Titanium decision is here: 

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By Justin Bryant
12th Aug 2021 13:35

I doubt it. It is fairly well establishment that generally independent 3Ps do not create PEs (unlike dependent agents). Also, for a business there must be real/proper substance to the purported PE operations/activities in the 1st place.

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