Comments on ECJ C-232/22: CJEU clarifies concept of fixed establishment

  • By:Melissa Speigner
  • The Court of Justice of the EU (CJEU) clarified the concept of a fixed establishment (FE) for VAT purposes in its recent decision in the case C-232/22 (Cabot Plastics Belgium SA).
  • The CJEU held that a toll manufacturer in Belgium acting under an exclusive contract did not constitute an FE for its affiliated Swiss principal.
  • The CJEU previously ruled on whether a legally independent entity can constitute an FE of another company, stating that it can if it can dispose of the former entity’s resources as if they were its own. In the Cabot Plastics case, the CJEU followed this judgment and stated that toll manufacturing and ancillary logistical and sales’ support services do not create an FE for a receiving company, even if they are provided exclusively.
  • The case involved a Swiss company, Cabot Switzerland GmbH, and its legally independent Belgian company, Cabot Plastics, which provided toll manufacturing services and additional services under an exclusive agreement.
  • The Belgian tax authority concluded that Cabot Switzerland had an FE in Belgium for VAT purposes, but the CJEU disagreed.
  • The CJEU referred to its previous decision in case Welmory (C-605/12) and stated that to be considered as having an FE in another country, a company must have a sufficiently permanent and suitable structure in that country to receive and use the services concerned for its business.
  • The CJEU also stated that an exclusive contract does not mean that an FE is created.



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