Judgment;Summary — ECLI:EU:C:2021:446
Date: 2021-06-03
Language of the case: German
Court formation: Tenth Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Austria

Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
20 December 2019 
Referring court: 
Bundesfinanzgericht (Austria) 
Date of the decision to refer: 
20 December 2019 
Appellant: 
Titanium Ltd 
Respondent authority: 
Finanzamt Wien 1/23 
Subject matter of the case in the main proceedings 
Appeal against decisions of the Finanzamt Wien 1/23 (Tax Office 1/23, Vienna) 
concerning turnover tax for 2004 to 2010 
Subject matter and legal basis of the reference 
Interpretation of EU law, Article 267 TFEU 
Question referred 
Is the term ‘fixed establishment’ to be interpreted as meaning that the existence of 
human and technical resources is always necessary and therefore that the service 
provider’s own staff must be present at the establishment, or can — in the specific 
case of the letting, subject to tax, of a property situated in national territory, which 
constitutes only a passive tolerance of an act or situation — that property, even 
without human resources, be regarded as a ‘fixed establishment’? 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-931/19 
 
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Provisions of EU law cited 
Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the 
laws of the Member States relating to turnover taxes — Common system of value 
added tax: uniform basis of assessment, Article 21 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax (‘the VAT Directive’), Articles 192a to 205 (in particular, 
Articles 192a, 193, 194, 196) 
Council Directive 2008/8/EC of 12 February 2008 amending Directive 
2006/112/EC as regards the place of supply of services 
Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying 
down implementing measures for Directive 2006/112/EC on the common system 
of value added tax (‘the CIR’), Articles 11, 53 
Provisions of national legislation cited 
Austrian Umsatzsteuergesetz 1994 (Law on turnover tax 1994, ‘the UStG’), 
Paragraphs 1, 3a, 11, 19, 28 
German Umsatzsteuergesetz (German Law on turnover tax), Paragraph 13b 
Brief summary of the facts and the proceedings to date 
1 The appellant is a company dealing with property, asset management and housing 
and urban development, which has its registered office and management in Jersey. 
Since 1995, it has owned a property in Austria which it let to two domestic traders 
subject to turnover tax. The turnover generated by the letting was its only 
domestic turnover. The appellant tasked the management of the property to an 
Austrian property management company which primarily carried out support and 
administrative tasks. The appellant retained authority to make key decisions (such 
as entering into or terminating tenancy agreements or decisions relating to capital 
expenditure and repairs). For its business, the property management company 
used its own office facilities and technical infrastructure, which had no 
geographical and/or functional connection with the appellant’s property.  
The tax authorities assessed the appellant’s VAT for, inter alia, 2009 and 2010, 
and required the appellant to pay the corresponding amounts of tax. The appellant 
challenged those decisions in an appeal before the Bundesfinanzgericht (Federal 
Finance Court).  
TITANIUM 
 
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Principal arguments of the parties in the main proceedings 
2 The appellant takes the view that, in the absence of human resources, the property 
it let is not a fixed establishment and that therefore the tax liability is transferred 
to the persons to whom the services were supplied in Austria, in accordance with 
Article 196 of the VAT Directive or Paragraph 19(1) of the UStG. Accordingly, 
the appellant did not account for any VAT in its accounts. Conversely, the tax 
authorities take the view that a property that is let in Austria does indeed 
constitute a fixed establishment in Austria.  
Brief summary of the basis for the reference 
3 Under Paragraph 19 of the UStG, the tax liability is transferred to the person to 
whom the services are supplied if the trader providing the services does not have a 
permanent address (registered office) or usual place of residence in Austria (which 
was the legal situation until 14 December 2012) or does not carry on a business or 
have another permanent establishment which intervenes in the provision of 
services in Austria (which has been the legal situation since 15 December 2012). 
In conformity with the VAT Directive, the term ‘permanent establishment’ is 
interpreted as a ‘fixed establishment’ within the meaning of the VAT Directive or 
the CIR. In its ruling of 29 April 2003, 2001/14/0226, the Austrian 
Verwaltungsgerichtshof (Supreme Administrative Court) interpreted the term 
‘permanent establishment’ in conformity with EU law: the characteristic feature is 
having a sufficient minimum level of human and technical resources which are 
necessary to provide the service, and a sufficient degree of stability in the sense of 
the human and technical resources being permanently present.  
Whereas the basic rule, laid down in Article 193 of the VAT Directive, is that any 
taxable person carrying out a taxable supply of goods or services is liable, in 
principle, for the VAT, certain cases involve the optional or compulsory transfer 
of tax liability to the person established in the national territory to whom the 
services are supplied, in accordance with Article 194 et seq. of the VAT Directive. 
In the version of the VAT Directive amended by Directive 2008/8/EC (which does 
not apply ratione temporis to the present case), a new Article 192a was inserted, 
which redefines the concept of a non-established taxable person for the purposes 
of applying the provisions on liability to tax. As regards the fixed establishment, 
that provision introduced the requirement that the fixed establishment does not 
intervene in the supply of goods or services. However, even before the insertion of 
Article 192a (or rather under Directive 77/388/EEC already), the fact that the 
service provider was not, in principle, established in the national territory meant 
that there was a transfer of tax liability. Regard was therefore had to the fact that 
in the national territory there was neither a registered office nor a fixed 
establishment (which, following the insertion of Article 192a into the VAT 
Directive, must be an establishment that does not intervene in the supply of goods 
or services). Before that, Article 21(1)(b) of Directive 77/388 required that, for the 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-931/19 
 
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tax liability to be transferred to the person to whom the services were supplied, the 
services were to be carried out by a ‘taxable person resident abroad’. 
The term ‘fixed establishment’ used in the VAT Directive is not defined in the 
directive itself, but has been interpreted broadly in the ECJ’s case-law; this 
interpretation has found its way into the CIR (not applicable ratione temporis to 
the present case) in Article 11 and, in Article 53, for the implementation of 
Article 192a of the VAT Directive. 
The explanatory notes on the ‘EU VAT place of supply rules on services 
connected with immovable property’ that came into force in 2017 specifically 
address the case of letting property. When a service connected with immovable 
property is supplied, explanatory note 28 states that VAT is due in the Member 
State where the immovable property is located. Consequently, it is irrelevant, for 
the purposes of determining the place of supply of services, whether or not the 
provider has a fixed establishment in that Member State. The mere fact that a 
business owns immovable property in a Member State does not allow the 
conclusion that it has a fixed establishment in that country. Although those 
explanatory notes are not legally binding and were only published after the period 
at issue in the present case, in light of the fact that all the EU Member States 
agreed on that interpretation being published, that interpretation must be given 
appropriate weight. 
The question of interpretation not only has particular relevance for the present 
appeal (the years at issue being 2009 and 2010), but is of general importance for 
the uniform application of EU law, since the term ‘fixed establishment’, at least in 
Austria and Germany, has not previously been given a uniform interpretation. It is 
true that the Court of Justice of the European Union has on several occasions 
already dealt with the interpretation of the term ‘fixed establishment’ (see, for 
example, judgments of 4 July 1985, Berkholz, 168/84, EU:C:1985:299; of 
20 February 1997, DFDS, C-260/95, EU:C:1997:77; of 17 July 1997, ARO Lease, 
C-190/95, EU:C:1997:374; of 28 June 2007, Planzer Luxembourg, C-73/06, 
EU:C:2007:397; see also judgment of 16 October 2014, Welmory, C-605/12, 
EU:C:2014:2298) and the interpretation given by the Court of Justice reflected, 
inter alia, in Article 53 CIR (not applicable ratione temporis to the present case), 
but reasonable doubts remain as to the interpretation of the term in conformity 
with EU law. According to the existing interpretation, a fixed establishment has, 
for the purposes of VAT, a sufficient degree of permanence and, in addition, a 
structure which, by reason of its human and technical resources, enables it to 
supply services. However, the issue that has not yet been definitively resolved is 
whether those two characteristics (that is to say, human and technical resources) 
are always cumulative or whether both are necessary only if they are required for 
the proper functioning of the economic activity in question. 
Article 196 of the VAT Directive goes on from there to state that the service is 
supplied by a taxable person not established in that Member State. In relation to 
TITANIUM 
 
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the issue of establishment, Article 192a of the VAT Directive requires, inter alia, 
the existence of a ‘fixed establishment’ which intervenes in the supply of services. 
It follows from the judgments in ARO Lease BV and Lease Plan Luxembourg SA 
that the staff must specifically belong to the business supplying the service; it is 
not sufficient that the staff belong to another undertaking concerned. That is 
especially the case where the staff of the property management company carry out 
only support and administrative tasks.  
Circumstances militating against the existence of a fixed establishment 
It is clear from both the Court of Justice’s case-law and from the definition in 
Article 53 CIR that the existence of a fixed establishment requires human (and 
technical) resources. The Court of Justice speaks of the permanent presence of the 
human and technical resources necessary for the supply of the services concerned. 
Since the present case concerns the mere letting of a domestic property and the 
appellant’s ‘own’ staff are not deployed at the property, the human resources 
requirement is not met, which is why it may be found that there is no fixed 
establishment in Austria. From a staffing perspective, in order to provide such 
letting services only a lessor is needed to take decisions, sign contracts or instruct 
a property management company. There is no human resources component at the 
place where the leased property is located in the present case. Consequently, even 
if the activities of the national property management company were taken into 
account, that would not lead to a different outcome, since, first, that company uses 
its own employed staff and not the appellant’s staff and, second, it only carries out 
support and administrative tasks in any event. 
Circumstances in favour of the existence of a fixed establishment 
(a) Interpretation by the Austrian tax authorities 
The Austrian tax authorities issued the ‘Guidelines on turnover tax 2000’ in order 
to ensure uniform interpretation. Under those guidelines, traders who own 
immovable property situated in Austria and who let property subject to tax are to 
be regarded (in relation to the turnover from the letting) as domestic traders. They 
are to declare that turnover in the tax assessment procedure. The person to whom 
the services are supplied is not liable to pay the tax on that turnover. The Austrian 
tax authorities always assume, therefore, that in relation to a property that is let, 
there is a fixed establishment or residence at the place where the property is 
located, so that the letting of the property does not involve a transfer of tax 
liability.  
(b) German case-law and the interpretation given by the German tax authorities 
According to case-law of the German Finanzgerichte (FG) (Finance Courts) on 
the operation of wind turbines by a company whose business is established 
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abroad, the wind turbines taken alone constitute a permanent establishment 
situated in Germany, even though no staff are employed there (see, for example, 
FG Münster 5 September 2013, 5 K 1768/10 U; FG Köln 14 March 2017, 2 K 
920/14; FG Schleswig-Holstein 17 May 2018, 4 K 47/17). According to that case-
law, the wind turbines constitute fixed installations of significant value, which 
exhibit the highest possible degree of permanence. The fact that the wind power 
station does not have its own staff in situ does not preclude the finding that it is a 
fixed establishment. While, in principle, having human resources is one of the 
essential elements of a fixed establishment, that does not mean, however, that the 
criteria of human and technical resources must always be satisfied to the same 
extent. On the contrary, human resources which are less developed or, in 
exceptional cases, non-existent could be compensated for by particularly highly-
developed material resources. Regard does not necessarily have to be had, 
therefore, to the existence of an undertaking’s own staff in order to determine the 
issue of establishment.  
As far as can be ascertained, there has been no case-law of the German 
Bundesfinanzhof (Federal Finance Court, ‘the BFH’) on this specific issue. In 
decision BFH 19 November 2014, V R 41/13, the question was left open. 
Similarly in its decision of 9 May 2017, XI B 13/17, the BFH offered no 
clarification of the issue, which is comparable to the point of law at issue in the 
present case, as to whether, in the case of a letting subject to tax, immovable 
property located in Germany is to be regarded as a fixed establishment of the 
trader (since the business was already established in Germany). Finally, reference 
can also be made to the German Umsatzsteueranwendungserlass (Decree on the 
Application of Turnover Tax) and to Paragraph 13b of the German Law on 
turnover tax, pursuant to which human resources are negligible in the context of 
passive services in the form of tolerance of an act or situation.