Summary of AG Opinion in ECJ C-533/22 (Adient) – The same means cannot be used at the same time to provide and receive the same services

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1. Background and Legal Trend:The ECJ issued an AG Opinion on January 30, 2024, in the case ECJ C-533/22 (Adient). There's a notable increase in preliminary rulings on fixed establishment criteria for VAT, particularly in the context of controlled/group companies. A Romanian court seeks clarification on whether a group company in Romania can be the fixed establishment of its German contract partner, impacting service provision and tax implications.
2. Facts of the Case:Adient DE, a German company, contracted Adient RO in Romania for manufacturing and assembly services. Adient DE is registered for VAT in Romania, but the Romanian tax authority claimed it had a fixed establishment in Romania. Dispute arose, with Adient DE contesting the fixed establishment status in Romania.
3. Key Questions Raised:Questions revolve around Article 44 of the VAT Directive and VAT Implementing Regulation Articles 10 and 11.Inquiry includes the classification of a resident legal person as a fixed establishment based on group affiliation, nature of services supplied, manufacturing services, place of supply determination, and relevance of activities linked to goods treatment.
4. Argumentation by the AG:AG divides the questions into three groups: taxable transactions, definition of fixed establishment within a group, and concerns about applying VAT Directive for establishing residency. Emphasizes the need for two distinct persons for a taxable transaction, internal transactions within the same taxable person being non-taxable. Clarifies that group membership alone is insufficient for fixed establishment status, highlighting the importance of legal certainty and economic reality.
5. Fixed Establishment Criteria and Abusive Practices:AG addresses the possibility of one company providing resources constituting a fixed establishment for another. Emphasizes the quality and quantity of resources as determinative factors, distinguishing between contracts for services and provision of resources.Rejects the relevance of distinctions in output transactions and the specific consumption location in determining the place of taxation.
6. Conclusion and Independent Company Status:AG concludes that an independent company cannot be considered a fixed establishment of another independent company simultaneously. States that even a complex service contract does not inherently imply a taxable transaction in favor of a fixed establishment. Affirms that the place of supply for services is not influenced by the nature of output transactions or the location of consumption of individual manufacturing services.