The European Court of Justice ruled in its recent judgment C-547/18 Dong Yang Electronics that the existence of an EU-based subsidiary of a third-country parent company does not in itself give rise to an establishment for VAT purposes. The court further ruled that the service provider is not obliged to ascertain the contractual relationship between parent and its subsidiary for the purposes of assessing whether it is an establishment for VAT purposes. This is good news, but the ECJ has left open the possibility that, in certain circumstances, a subsidiary could give rise to an establishment for VAT purposes. Older ECJ case law on this issue, eg C ‑ 260/95 DFDS (subsidaiary may be the parent’s VAT establishment), C-318/11, 319/11 Daimler AG and Widex A / S (subsidiary may not be the parent’s etsablishment), C-605 / 12 Welmory (a taxable person has a permanent establishment for VAT purposes in another Member State, provided that that establishment has a sufficient level of stability and a structure capable of enabling him, in terms of human and technical resources, to receive and use services for his economic activity).
