The German federal tax court (BFH) set out the rules for situations when there is a permanent establishment (PE) implications for the place where services are provided for value added tax (VAT) purposes.
The term “permanent establishment” is equal to the term “fixed establishment” as used in the EU law. A fixed establishment of the supplier therefore requires a sufficient level of stability and a structure that enables the supply of services from the staffing and technical equipment point. A fixed establishment does not necessarily require the trader to have its own staff and technical equipment. However, the trader needs to be authorize with a comparable respective power of disposition. Insofar, a trader may establish a fixed establishment of another trader with that trader’s own staff and technical equipment. At the same time, the trader may be a service provider to the fixed establishment in another respect.
With this background, the BFH denied that an German agent qualifies as permanent establishment of an EU betting operator. The case identifying information is: XI R 21/15 (15 February 2017).
Read a June 2017 report [PDF 272 KB] prepared by the KPMG member firm in Germany
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.