The taxation of travel services is a long-running issue in ECJ case law. The ECJ’s recent judgment in Dragoram Tour turns German practice on the taxation of travel services on its head.

The decision in which the German Federal Fiscal Court asked the ECJ whether internal supplies within a VAT group are subject to VAT was a big surprise. If the ECJ had agreed, the VAT group would no longer have made sense. The ECJ Advocate General, Mr Rantos, calmed the nerves of the businesses with his opinion in the proceedings. Very promptly, the ECJ itself adopted the Advocate General’s opinion in its judgement. It also considers internal supplies not to be subject to VAT. It is to be hoped that the Federal Fiscal Court will now also agree with this without any ifs or buts.

In the case Adient (C-533/22), the ECJ again addressed the criteria for determining fixed establishments. The core issue (once again) was to clarify in what circumstances a group company is to be considered a fixed establishment of another group company. The ECJ’s comments are pleasingly clear and should assist companies to identify fixed establishments in group structures.