German court rules on tax status of unmanned wind farms


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. The plaintiff 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 according to German VAT rules – meaning that the reclaim had followed the wrong procedure.

The plaintiff claimed entrepreneurial status on the basis of its operating of the wind turbines in Germany. It referred to a similar case where the Fiscal Court of Münster (Germany) had ruled that unmanned wind turbines were 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 for non-existing personnel resources. Since wind turbines are exceptionally constant, in this case an unmanned establishment can be considered as permanent establishment for VAT purposes. The Court ruled, therefore, 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 is a departure from the previous understanding of ‘permanent establishments’ for VAT purposes. Historically ‘fixed establishments’ were characterised by a sufficient degree of permanence and a suitable structure in terms of human and technical resources to enable them to provide the services which they supply (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 where developed technical resources can operate without staff.

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