Joined Cases C-318/11 and C-319/11

Daimler AG

and

Widex A/S

v

Skatteverket

(References for a preliminary ruling from the Förvaltningsrätten i Falun)

‛Common system of value added tax — Directive 2006/112/EC — Articles 170 and 171 — Eighth VAT Directive — Article 1 — Directive 2008/9/EC — Article 3(a) — Arrangements for the refund of value added tax to taxable persons not established in the territory of the country — Taxable persons established in one Member State and carrying out in another Member State only technical testing or research activities’

Summary — Judgment of the Court (Eighth Chamber), 25 October 2012

Harmonisation of fiscal legislation — Common system of value added tax — Refund of the tax to taxable persons not established in the territory of the country — Scope ratione personae — Taxable person carrying out only technical tests or research work, excluding taxable transactions, from a fixed establishment — Included — Wholly-owned subsidiary in the Member State of refund — No effect

(Council Directive 79/1072, Art. 1, as amended by Directive 2006/98, and Directive 2008/9, Art. 3(a))

A taxable person for value added tax established in one Member State and carrying out in another Member State only technical testing or research work, not including taxable transactions, cannot be regarded as having in that other Member State a ‘fixed establishment from which business transactions are effected’ within the meaning of Article 1 of Eighth Directive 79/1072 on the harmonisation of the laws of the Member States relating to turnover taxes – Arrangements for the refund of value added tax to taxable persons not established in the territory of the country, as amended by Directive 2006/98, and Article 3(a) of Directive 2008/9 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State.

The concept of a ‘fixed establishment from which business transactions are effected’ includes two cumulative conditions, requiring, firstly, the existence of a ‘fixed establishment’ and, secondly, that ‘transactions’ be carried out from that establishment. For the purposes of exclusion of a right to refund, taxable transactions must actually be carried out by the fixed establishment in the State where the application for refund is made and a mere ability to carry out such transactions does not suffice.

Where it is not in dispute that the undertaking concerned does not carry out output taxable transactions in the Member State where the applications for refund have been made through their technical testing and research departments, a right to refund of the input value added tax paid must be granted, without it being necessary to examine, moreover, whether the undertaking in question does actually each have a ‘fixed establishment’ within the meaning of the provisions to be interpreted, since the two conditions forming the criterion of a ‘fixed establishment from which business transactions are effected’ are cumulative.

That interpretation is not called into question by the fact that the taxable person has, in the Member State where it has applied for refund, a wholly-owned subsidiary, the purpose of which is almost exclusively to supply the person with various services in respect of its technical testing activity. Such a wholly-owned subsidiary is a taxable legal person on its own account.

(see paras 32, 37-39, 44, 48, 51, operative part 1, 2)

Joined Cases C-318/11 and C-319/11

Daimler AG

and

Widex A/S

v

Skatteverket

(References for a preliminary ruling from the Förvaltningsrätten i Falun)

‛Common system of value added tax — Directive 2006/112/EC — Articles 170 and 171 — Eighth VAT Directive — Article 1 — Directive 2008/9/EC — Article 3(a) — Arrangements for the refund of value added tax to taxable persons not established in the territory of the country — Taxable persons established in one Member State and carrying out in another Member State only technical testing or research activities’

Summary — Judgment of the Court (Eighth Chamber), 25 October 2012

Harmonisation of fiscal legislation — Common system of value added tax — Refund of the tax to taxable persons not established in the territory of the country — Scope ratione personae — Taxable person carrying out only technical tests or research work, excluding taxable transactions, from a fixed establishment — Included — Wholly-owned subsidiary in the Member State of refund — No effect

(Council Directive 79/1072, Art. 1, as amended by Directive 2006/98, and Directive 2008/9, Art. 3(a))

A taxable person for value added tax established in one Member State and carrying out in another Member State only technical testing or research work, not including taxable transactions, cannot be regarded as having in that other Member State a ‘fixed establishment from which business transactions are effected’ within the meaning of Article 1 of Eighth Directive 79/1072 on the harmonisation of the laws of the Member States relating to turnover taxes – Arrangements for the refund of value added tax to taxable persons not established in the territory of the country, as amended by Directive 2006/98, and Article 3(a) of Directive 2008/9 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State.

The concept of a ‘fixed establishment from which business transactions are effected’ includes two cumulative conditions, requiring, firstly, the existence of a ‘fixed establishment’ and, secondly, that ‘transactions’ be carried out from that establishment. For the purposes of exclusion of a right to refund, taxable transactions must actually be carried out by the fixed establishment in the State where the application for refund is made and a mere ability to carry out such transactions does not suffice.

Where it is not in dispute that the undertaking concerned does not carry out output taxable transactions in the Member State where the applications for refund have been made through their technical testing and research departments, a right to refund of the input value added tax paid must be granted, without it being necessary to examine, moreover, whether the undertaking in question does actually each have a ‘fixed establishment’ within the meaning of the provisions to be interpreted, since the two conditions forming the criterion of a ‘fixed establishment from which business transactions are effected’ are cumulative.

That interpretation is not called into question by the fact that the taxable person has, in the Member State where it has applied for refund, a wholly-owned subsidiary, the purpose of which is almost exclusively to supply the person with various services in respect of its technical testing activity. Such a wholly-owned subsidiary is a taxable legal person on its own account.

(see paras 32, 37-39, 44, 48, 51, operative part 1, 2)