VAT fixed establishment – Positive decision of the ECJ in the “Berlin Chemie” case


The issue with parent-subsidiary VAT fixed establishment

The concept of VAT fixed establishment has recently been the source of litigation in several Member States. In those cases, tax authorities argue that a subsidiary is the VAT fixed establishment of its parent company.  

In Belgium, we have seen this growing trend whereby the Belgian VAT authorities deem a foreign parent company to have a fixed establishment in Belgium through its daughter company, or more broadly in an intra-group context (specifically toll manufacturers and distributors). 

This causes lots of legal uncertainty for businesses as the notion of fixed establishment is of particular importance when assessing the place of supply rule, the VAT liability as well as in terms of cash flow. Indeed, when tax authorities are retroactively claiming VAT, with interest and penalties, VAT becomes a huge cost for businesses.

Berlin Chemie C‑333/20 

The European Court of Justice (“ECJ”) rendered its long-awaited decision in the Berlin Chemie case on April 7th, 2022. In essence, the ECJ confirmed that a subsidiary rendering exclusive marketing and publicity services through the availability of its human and technical resources, to its parent company, does not constitute a VAT fixed establishment of that parent.

The key argument of the ECJ is that “the same human and technical means cannot be used at the same time to render and receive services”. This contradiction had already been pointed out by Advocate General Kokott in her conclusions in the Dong Yang case (C-547/18), but the judgment of the ECJ finally raised more questions than it answered.

The Berlin Chemie case is therefore very positive for businesses as it provides more clarity on the interpretation of VAT fixed establishment and it offers strong arguments against positions of tax authorities.

Is it the end of the story? Not necessarily. In a major Belgian case where PwC and PwC Legal are assisting, the Belgian Court of Appeal of Liege recently referred a question to the ECJ for a preliminary ruling in a (similar) FE context.

Key takeaways

This decision is positive going forward but we recommend businesses to remain careful. In view of current developments in EU case law, we recommend assessing whether your cross-border activities could lead to the existence of a VAT fixed establishment. PwC and PwC Legal together have a specialized cross-department team ready to help you, notably with:

  • Review of your structure in Belgium
  • Assessment of a potential risk of VAT  fixed establishment
  • Impact of the existence of a VAT fixed establishment and how to secure your position

For any question, get in touch with your PwC contact or with Emilie Vandermeuse and Gauthier Vael ( /