International VAT: three important judgments of the European Court of Justice
In addition to the updating of the decree on permanent establishments and the addition to the rules on stock on call, there have been a number of rulings by the European Court of Justice that have implications for VAT in the international field. The three most important are listed below.

1. EU Court of Justice: Danske Bank
On March 11, 2021, the ECJ ruled that Danske Bank's head office in Denmark and its Swedish permanent establishment should be considered two separate taxpayers if the head office provides services for the permanent establishment and the head office is part of a Danish tax group. In the Skandia judgment, the ECJ previously reached a similar opinion. However, then it concerned services between a US head office and a Swedish permanent establishment that is part of a Swedish tax group.
This means that, in the view of the ECJ, VAT is due when services are provided between a head office and a permanent establishment if one of the two belongs to a (European) fiscal unit for VAT. However, the Supreme Court of the Netherlands does not follow this view. In a 2002 ruling, the Supreme Court in fact considered that both the foreign head office and the permanent establishment in the Netherlands belong to the Dutch fiscal unit if the permanent establishment in the Netherlands belongs to a Dutch fiscal unit. This also applies in the reverse situation: if there is a Dutch main house belonging to a Dutch fiscal unity with foreign permanent establishments.
2. EU Court of Justice: Titanium Ltd
Titanium Ltd is a Jersey-based property management company. Through an Austrian property management company, Titanium rents out real estate in Austria to Austrian entrepreneurs. The Austrian tax authorities find that Titanium Ltd has a permanent establishment in Austria with the leased real estate. Titanium Ltd disagrees.
Ultimately, the ECJ ruled that Titanium Ltd did not have a permanent establishment in Austria. A permanent establishment requires a sufficient degree of permanence and an appropriate structure to enable the independent performance of the services in question. This requires both technical resources and (own) personnel.
The structure of Titanium Ltd does have the necessary technical means to rent out (the real estate), but it does not have its own staff at its disposal to enable the rental service. In fact, the Austrian property manager is not employed by Titanium Ltd. For this reason, the ECJ rules that there is no permanent establishment in Austria.
Do you want to rent out property in another EU country or are you already doing so? If so, this ruling is important. In some cases, a registration requirement in the relevant EU country can be avoided if there is no permanent establishment.
3. Court of Justice: Radio Popular
This judgment concerns a Portuguese entrepreneur who sells household appliances and other electronic products. He also offers the possibility to extend the warranty on the purchased products with an insurance contract with a third party. The entrepreneur thus acts as an intermediary for the insurer. He does not charge VAT for this service, but deducts all VAT charged to him as input tax.
In this judgment, the ECJ assumes that the mediation service constitutes an independent supply, in addition to the sale of the household and electronic appliances. The ECJ considers that the entrepreneur's mediation service constitutes an exempt insurance transaction, because he is in direct contact with both the insurer and the (potential) insured, and in doing so he performs acts to bring these two parties into contact with each other so that they can conclude an insurance contract.
Finally, the ECJ considers that insurance operations cannot be incidental financial operations. This means that the entrepreneur must make a pro-rata calculation and that the turnover obtained with the intermediary services provided by him may not be eliminated from this calculation. This results for the entrepreneur in a deduction limitation for VAT charged on purchased services that relate to both the VAT taxed sale of the electronic devices and the VAT exempt intermediary services.
Review the most important VAT changes in the international arena
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Do you have any questions about the ECJ rulings? Please contact Anne Kin, tax advisor, at telephone number +31135915125 or send Anne an e-mail.