The case concerned a UK-based aircraft engineer who performed aircraft maintenance work in Germany as a subcontractor between 2008 and 2010. He carried out this work in a hangar rented by the main contractor at a German airport, where he was provided with a locker for storing the tools he was contractually required to supply himself. Remuneration was paid in connection with this maintenance activity.
However, the tax authorities treated the remuneration as income attributable to a fixed base in Germany. They took the view that the engineer had a permanent establishment in Germany, as defined in the Germany-United Kingdom tax treaty, because he had a place permanently available to him for business purposes: the locker used exclusively to store his work equipment.
The taxpayer challenged this, arguing that only third-party premises was used and that a locker used to store tools could not constitute a permanent establishment. The taxpayer also sought permission to appeal against the judgment of the Finance Court, claiming divergence from existing case law and fundamental legal significance.
Decision
The Federal Finance Court rejected the appeal against non-admission as unfounded. It confirmed that a locker made available for the taxpayer’s exclusive and continuous use, and used to store essential business equipment, could constitute a permanent establishment. The court held that the lower court had applied the correct legal principles, and that there were no grounds to admit a further appeal.
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