Unmanned wind farms as permanent establishments

26 Sep 2017

The Fiscal Court of Cologne ruled on 14 March 2017 that unmanned wind turbines could be seen as permanent establishments for VAT purposes.

In the case presented to the court, the plaintiff (a foreign partnership), operated a wind power plant in Germany and sold the electricity generated this way. It requested a VAT tax refund via the electronic reclaim procedure. The Tax Office rejected the request on the grounds that the company was not an entrepreneur by following the German VAT rules; so the reclaim followed the wrong procedure. Instead, the company had to register for German VAT purposes.

By way of action, the plaintiff stated that its entrepreneurial status was constituted by its operation of the wind turbines in Germany. It referred to a similar case where the Fiscal Court of Münster (Germany) saw unmanned wind turbines as permanent establishments for VAT purposes.

The Fiscal Court dismissed the case. In its opinion the operation of the wind turbines constituted a permanent establishment for VAT purposes even without staff. The Fiscal Court stated that personnel resources are an important criterion of a permanent establishment for VAT purposes; but high-developed technical resources compensate non-existing personal resources. Since wind turbines are exceptionally constant, in the present case an unmanned establishment can be considered as permanent establishment for VAT purposes so that the plaintiff was not a foreign, but a domestic company. The transactions that affected the wind turbines were therefore subject to VAT in Germany. The plaintiff had no claim by following the electronic procedure.

The ruling turns away from the previous view of permanent establishments for VAT purposes as “fixed establishments”, characterised by a sufficient degree of permanence and a suitable structure in terms of human and technical resources to enable it to provide the services which it supplies (Article 11 of the Council Implementing Regulation (EU) No 282/2011 of 15 March 2011). On this basis, unmanned establishments can be seen as permanent establishments for VAT purposes in cases of overdeveloped technical resources enabling their operation without staff.

So in case of comparable sites in Germany, it’s likely that discussions with the tax authorities come up with respect to VAT.













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Lutz Meyer Lutz Meyer

Treuhand Oldenburg GmbH
Phone: +49 (0)441 9710 123

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