Belgium: Toll manufacturer does not constitute VAT fixed establishment (CJEU judgment)

A CJEU judgment concerning whether a toll manufacturer constitutes a VAT fixed establishment

Toll manufacturer does not constitute VAT fixed establishment

The Court of Justice of the European Union (CJEU) today held that a toll manufacturer in Belgium did not constitute a value added tax (VAT) “fixed establishment” for its affiliated Swiss principal.

The case is: Cabot Plastics Belgium C-232/22 (29 June 2023)


The taxpayer provided toll manufacturing services and ancillary services in Belgium exclusively for its affiliated company in Switzerland. The ancillary services included warehousing, packaging and logistical assistance, and thus facilitated the sale of the manufactured products by the principal to third parties, directly from the premises of the taxpayer.

The taxpayer took the position that the place of supply of its services was Switzerland and did not charge any VAT to its affiliated Swiss principal. The Belgian VAT authorities, however, claimed that the affiliated Swiss principal had a fixed establishment in Belgium for VAT purposes because the taxpayer’s equipment and human resources were made available to it and that the Belgian fixed establishment was the actual beneficiary of the services such that the place of supply of the services was Belgium instead of Switzerland. Accordingly, the authorities argued that Belgian VAT must be charged on the fees for the services rendered by the taxpayer.

Upon a referral from the Belgian Court of Appeal of Liège, the CJEU held that the taxpayer did not constitute a VAT fixed establishment for its affiliated Swiss principal. The CJEU found that although the fact that the human and technical resources belonged to the taxpayer and not the affiliated Swiss principal was not decisive, the affiliated Swiss principal must have immediate and permanent access to these resources for the taxpayer to be considered a VAT fixed establishment of the principal. Because the taxpayer remained responsible for its own resources and provided the services at its own risk, the contract for the provision of services, although exclusive, did not convert the taxpayer’s resources into those of the principal. The CJEU also found that the taxpayer could not be considered both the provider and the beneficiary of the same services. 

KPMG observation

The CJEU’s judgment is in line with its earlier judgment in Berlin Chemie C-333/20 (7 April 2022). Read TaxNewsFlash

Read a June 2023 report prepared by the KPMG member firm in Belgium


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