European Court of Justice Issues Preliminary Ruling on Romanian VAT, Permanent Establishment Rules

The European Court of Justice (ECJ) April 7 issued a preliminary ruling for Case No. C-333/20, clarifying Romanian VAT and permanent establishment rules. A German company and a Romanian company entered into a service contract, governed by German law, under which the Romanian company actively promoted the German company’s products in Romania, through marketing activities. The Romanian tax authority charged the Romanian company with VAT, arguing it was a permanent establishment of the German company. The German company argued the Romanian company was a subsidiary, not a permanent establishment. The ECJ held: 1) a permanent establishment can’t exist without a ...