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Wednesday, 09 March 2022

International Tax update: Fixed establishment through an affiliate company in Belgium? The Court of Appeal of Liège affirms.

Recently, the concept ‘fixed establishment’(‘FE’) for VAT purposes is the subject of many discussions and it seems that the saga will continue. In a judgement of 22 October 2021, the Court of Appeal of Liège has affirmed the position of the Belgian VAT authorities stating that a foreign company has a FE through its affiliate companies in Belgium (Liège 22 October 2021, 2020/RG/765).

The case concerned a Slovakian company, ‘SRO A’, which was reputed to have a FE through - and in the infrastructure - of three affiliate companies of the same group in Belgium. The Belgian Special Tax Inspectorate (‘STI’) had considered the existence of a FE, characterized by a sufficient degree of permanence and an appropriate structure, in terms of human and technical resources, following the presence of accounting and other documents and company means of SRO A at the premises of the affiliated companies in Belgium. These concerned, amongst others, CMR’s, insurance contracts, letters, e-mails, stamps with its letterhead, a computer with its fleet management program, etc. In addition, the staff of one of the Belgian affiliate companies carried out tasks relating to the daily management of SRO A. As a result, the services of SRO A, which had been provided to the Belgian affiliate companies, should have been invoiced with Belgian VAT (which it also has been doing since 2014).

In its decision, the Court of Appeal of Liège affirms the position of the Belgian STI as concerns (i) the existence of a FE of SRO A in Belgium through its Belgian affiliate companies and (ii) the services of SRO A provided to the Belgian companies, having to be invoiced with Belgian VAT. Previously, it had already been confirmed by the Court of First Instance of Liège that a foreign company could have a FE in Belgium through the exclusive agreement concluded with a Belgian toll manufacturer (Trib. Liège 14 January 2020, 18/1759/A). The question whether a FE could be created through an affiliated company is currently also again pending before the Court of Justice of the European Union (case C-333/20, Berlin Chemie A. Menarini SRL). The foregoing seems to be in line with the ongoing search of the Belgian VAT authorities for factual elements that would allow them to consider that a foreign company has a FE in Belgium, resulting in Belgian VAT becoming due on the services received or performed by the FE.

The Belgian STI however went a step too far by arguing that the VAT exempt intra-Community supplies of goods performed by one of the Belgian affiliate companies to SRO A should have been subject to Belgian VAT (claim at stake: € 15k), given the existence of a FE of SRO A in Belgium. This incorrect reasoning has of course been declined by the Court of Appeal, as the existence of a FE solely affects the place of supply for the provision of services.

This case law illustrates once more that it is of the utmost importance for Belgian MNE’s to verify, based on the factual circumstances/their business model, whether foreign affiliated companies could have a FE in Belgium through the resources of the Belgian company. This of course can have a significant impact for both companies of the group involved.

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Tiberghien’s international tax team will continue to monitor these and other tax developments relevant for Belgium / Luxembourg based multinational enterprises. Our editorial board consists of: 

Koen Morbée (International and EU corporate tax,;

Michiel Boeren (International and EU corporate tax,;

Ahmed El Jilali (International and EU corporate tax,;

Katrien Bollen (HR tax and global mobility,;

Ben Plessers (Transfer Pricing and Valuations,;

Gert Vranckx (VAT, customs, excises and other indirect taxes,

Rik Smet (International and EU corporate tax,


In case you have further questions on this publication or want to discuss a tax query, please do not hesitate to contact the author(s) or one of the members of the editorial board. 

This newsflash is for information purposes only and cannot be relied upon as legal advice.