Commissioners of Customs and Excise v DFDS A/S.
Date: 1997-02-20
13 Article 26 of the Sixth Directive contains special VAT rules for travel agents and tour operators.  The services provided by those undertakings consist of multiple services, concerning, in particular, transport and accommodation, rendered both within and outside the territory of the Member State in which the undertaking has established its business or has a fixed establishment. Application of the general rules on place of taxation, taxable amount and deduction of input tax would therefore entail practical difficulties for those undertakings of such a nature as to obstruct their operations (see Case C-163/91 Van Ginkel [1992] ECR I-5723, paragraphs 12 to 14).
14 Article 26(1) makes the application of that article subject to the condition that the travel agent, or the tour operator, is to deal with customers in his own name and not as an intermediary (Van Ginkel, paragraph 21).
18 As the Court stated in paragraph 14 of its judgment in Case 168/84 Berkholz  v Finanzamt Hamburg-Mitte-Altstadt [1985] ECR 2251, Article 9 is designed to secure the rational delimitation of the respective areas covered by national VAT rules by determining in a uniform manner the place where services are deemed to be provided for tax purposes and in particular to avoid conflicts of jurisdiction between Member States.
19 It is for the tax authorities of each Member State to determine, from the range of options set forth in the Sixth Directive, which point of reference is most appropriate to determine tax jurisdiction in respect of a given service. According to Article 9(1), the place where the supplier has established his business is a primary point of reference inasmuch as regard is to be had to another establishment from which the services are supplied only if the reference to the place where the supplier has established his business does not lead to a rational result for tax purposes or creates a conflict with another Member State (Berkholz, paragraph 17).
20 Moreover, services cannot be deemed to be supplied at an establishment other than the place where the supplier has established his business unless that establishment is of a certain minimum size and both the human and technical resources necessary for the provision of the services are permanently present (Berkholz, paragraph 18).
23 As the Advocate General points out in paragraphs 32 to 34 of his Opinion, consideration of the actual economic situation is a fundamental criterion for the application of the common VAT system. The alternative approach for determining  the place of taxation of the services of travel agents, based on the fixed establishment from which these services are supplied, is specifically intended to take account of the possible diversification of travel agents' activities in different places within the Community.  Systematic reliance on the place where the supplier has established his business could in fact lead to distortions of competition, in that it might encourage undertakings trading in one Member State to establish their businesses, in order to avoid taxation, in another Member State which has availed itself of the possibility of maintaining the VAT exemption for the services in question.
26 The fact, mentioned by the VAT Tribunal, that the premises of the English subsidiary, which has its own legal personality, belong to it and not to DFDS is not sufficient in itself to establish that the subsidiary is in fact independent from DFDS.  On the contrary, information in the order for reference, in particular the fact that DFDS's subsidiary is wholly owned by it and as to the various contractual obligations imposed on the subsidiary by its parent, shows that the company established in the United Kingdom merely acts as an auxiliary organ of its parent.
27 Second, it is necessary to verify whether, in accordance with the case-law cited in paragraph 20 of this judgment, the establishment in question is of the requisite minimum size in terms of necessary human and technical resources.
28 It is apparent from the facts set out in the order for reference, particularly as regards the number of employees of the company established in the United Kingdom and the actual terms under which it provides services to customers, that that company does display the features of a fixed establishment within the meaning of the abovementioned provisions.
29 The answer to be given to the national court must therefore be that Article 26(2) of the Sixth Directive is to be interpreted as meaning that, where a tour operator established in one Member State provides services to travellers through the intermediary of a company operating as an agent in another Member State, VAT is payable on those services in the latter State if that company, which acts as a mere auxiliary organ of the tour operator, has the human and technical resources characteristic of a fixed establishment.