The European Court of Justice held that a German resident company (limited partnership) has no establishment for VAT purposes in Romania under a service contract with a Romanian group company. The court also addressed the question of the place of performance under the circumstances in the case referred.
The requirements for a permanent establishment pursuant to Section 12 sentence 1 German Fiscal Code, which are also characteristic for the concept of a permanent establishment under the double tax treaty with the United Kingdom, are met if the person providing the service (here: an aircraft mechanic/engineer) is given only restricted use of site-related business facilities (here: locker and safe deposit box in common rooms on the airport premises) in the course of his services (here: maintenance work on aircraft). This was decided by the Supreme Tax Court in a most recent judgment.
The European Court of Justice (ECJ) ruled that the reverse charge is applicable to the leasing of real property located in Austria because the Jersey based lessor, in lieu of own local staff to perform services relating to the letting, does not have a permanent establishment (fixed place of business) in Austria.
The Supreme Tax Court refused to overturn the tax court’s decision to refuse leave to appeal, agreeing with the lower court that a locker can constitute a fixed place of business within the meaning of Article XI Paragraph 1 of the German/British double tax treaty.
