Internet and the concept of ‘fixed establishment’ of the recipient of a supply of services: Case C-605/12 (Welmory)

Under the EU VAT rules the place where a customer has established his business or has a fixed establishment is decisive in determining where services are (deemed to be) rendered. Defining the concept of the place where the undertaking has established its business does not, raise ‘problems’. It is clear that the term ‘should be understood in its technical sense [that is to say, as referring to] ... the registered office, as indicated by the statutes of the company owning the supplier undertaking’. The concept of a fixed establishment, however, is not the same in all Member States. It is remarkable that the VAT Directives do not provide for an accurate definition of a fixed establishment and (until recently) the only guidelines were therefore the judgments of the Court of Justice of the European Union (CJEU). The Welmory case is discussed below which should shed some light on internet activities to and from a fixed establishment in another (Member) State than where the business establishment is located. The case deals with a dispute concerning the VAT payable by Welmory sp Zoo (Welmory Poland) during the months January to April 2010. Welmory Poland had entered into a cooperation agreement with a Cypriot company, Welmory Ltd. According to the agreement the Cypriot company would run a website in Polish on which auctions could be held. On this website Welmory Poland would market and sell goods for its own account. It was however only possible to buy these products if the customers had acquired packets of ‘bids’ in advance, that is, the right to make an offer to purchase goods being auctioned at a