The Court of Justice of the European Union (hereinafter: CJEU) provided further interpretation to the concept of VAT fixed establishment in the context of exclusive intra-group toll-manufacturing arrangements in its Cabot-judgment (C-232/22) of 29 June 2023. The concept of a fixed establishment for VAT purposes plays a crucial role in the context of the localisation of services. As such, it determines where the VAT will be due as well as who will be liable for the payment of the VAT. 


Cabot Plastics Belgium SA (hereinafter: Cabot-BE) provided toll manufacturing services and ancillary services exclusively for its affiliated company named Cabot Switzerland GmbH (hereinafter: Cabot-CH). The ancillary services included warehousing, packaging and logistical assistance, and thus facilitated the sale of the manufactured products by Cabot-CH to third parties, directly from the premises of Cabot-BE.

Cabot-BE considered that the place of supply of its services was located in Switzerland and did not charge any VAT to Cabot-CH. The Belgian VAT authorities, however, claimed that Cabot-CH had a fixed establishment in Belgium for VAT purposes because Cabot-BE’s equipment and human resources were made available to it in such a way that this constituted such establishment. The Belgian VAT authorities took the position that this Belgian fixed establishment was the actual beneficiary of the services and thus that the place of supply of the services was Belgium instead of Switzerland. Accordingly, the VAT authorities argued that Belgian VAT should have been charged on the fees for the services rendered by Cabot-BE. A judicial dispute was triggered and this eventually ended up before the Belgian Court of Appeal of Liège. The Court of Appeal referred preliminary questions to the CJEU and the main question was whether the Belgian toll manufacturer constituted a VAT fixed establishment for its Swiss principal.    


In paragraph 38 of its judgment, the CJEU considers that – although the human and technical resources concerned do not belong to Cabot-CH but to Cabot-BE – this, as such, does not exclude the possibility that the former company would have a fixed establishment in Belgium. However, for the existence of such fixed establishment, it is necessary that Cabot-CH has immediate and permanent access to these resources as if these were its own. In this respect, the CJEU goes on to say that – since the service provider remains responsible for its own resources and provides the services at its own risk, the contract for the provision of services, although exclusive, does not have the effect on its own that the means of the service provider become those of its client.

Subsequently, the CJEU repeats its earlier principle that the same human and technical means cannot be used both to provide services and to receive those same services. In this respect the CJEU establishes that it is not possible to distinguish the means used by Cabot-BE for its contract work from those which would be used by Cabot-CH to receive these services in Belgium within its alleged fixed establishment (in other words: it concerns the same means).

The CJEU finally concludes that a non-EU recipient (here: Cabot-CH) does not have a fixed establishment in the Member State of its service provider (here: Cabot-BE) if the latter supplies it, pursuant to an exclusive contractual undertaking, with tolling services as well as a series of ancillary services that contribute to the economic activity of the non-EU recipient in that EU Member State.


The decision of the CJEU is in line with the earlier judgment in the “Berlin Chemie” case. For more information, please see:  No VAT fixed establishment in the Berlin Chemie case (

Over the past period, we encountered several situations where the Belgian VAT authorities searched for factual elements allowing them to consider that foreign companies have a fixed establishment in Belgium through the resources of an affiliated Belgian company. Both the “Cabot Plastics Belgium” and the “Berlin Chemie” case indicate that the current positions taken by the Belgian VAT authorities might not withstand the test of EU VAT law as interpreted by the CJEU. Hopefully the Belgian VAT authorities take note of these judgments, also when issuing their long-awaited new administrative guidelines on the VAT-concept of fixed establishment. This is a must to provide more legal certainty to foreign taxpayers as regards the potential existence of a VAT fixed establishment in Belgium.

If you have any questions in relation to the above, or in case you want us to perform a first assessment on the potential risk of having a VAT fixed establishment in Belgium, then please feel free to reach out to your contact at KPMG.