Payment on account EU VAT case law

C-422/17 Skarpa Travel

Judgment · 19 December 2018 · Poland

VAT on payments on account under the travel agents' margin scheme

The special scheme is not a self-contained regime. Only the rules on place of supply, taxable amount and deduction are displaced, so Article 65 applies and VAT is chargeable on receipt of the payment on account, provided the tourist services are precisely designated at that time. Where actual costs are not yet incurred or cannot be determined, the margin may be estimated from the projected total cost, taking account of costs already incurred, with adjustment once the definitive individual cost is known. For tour operators and travel agents using the margin scheme, VAT on a deposit is due as received rather than on completion of the trip, provided the trip is identifiable by destination and dates.

C-660/16 Kollroß and Wirtl

Judgment · 31 May 2018 · Germany

Input VAT on advance payments for goods never delivered

Deduction cannot be refused where the advance was paid and received and, at that time, all relevant information about the future supply was known to the buyer and the supply appeared certain. An unfixed delivery date does not create uncertainty. Deduction may be refused if objective evidence shows the buyer knew or should reasonably have known the supply was uncertain. Articles 185 and 186 do not preclude national rules making adjustment conditional on the supplier refunding the advance. Advance payment deductions are tested at the moment of payment, so later non delivery through supplier fraud or insolvency does not retrospectively destroy the right where the goods and price were identified. Relevant to plant and equipment purchasers, prepayment arrangements generally, and any adviser handling failed supplier claims.

C-107/13 FIRIN

Judgment · 13 March 2014 · Bulgaria

Adjustment of VAT deducted on a prepayment where the supply never happens

Deduction taken on a prepayment invoice must be adjusted where the supply is ultimately not made. That is a change in the factors determining the deduction under Article 185(1). It is irrelevant that the supplier remains liable under Article 203 and has not refunded the advance. The two traders need not be treated alike. Article 65 does not apply at all where the chargeable event was uncertain at the time of payment, for instance in fraud. Whether the taxpayer knew or should have known is for the national court. Relevant wherever advance payments are invoiced and deducted, notably commodity trading and construction.

C-153/12 Sani treyd

Order · 21 March 2013 · Bulgaria

Building rights granted in exchange for construction make the tax chargeable at once

The Court holds that tax may become chargeable when the right is granted, provided all the relevant elements of the future supply are already known, so the services are precisely identified and the value of the right can be expressed in money. It is irrelevant that granting the right is an exempt transaction made by non taxable persons. Articles 73 and 80 do preclude a national rule imposing open market value in every barter, outside transactions between connected parties. A reasoned order under Article 99 of the Rules of Procedure that follows Orfey Balgaria closely.

C-19/12 Efir

Judgment · 7 March 2013 · Bulgaria

Value added tax · Directive 2006/112/EC · Articles 62, 63, 65, 73 and 80 · Establishment by natural persons of a building right in favour of a company in exchange for construction services by that company for those persons · Barter contract · VAT on construction services · Chargeable event · When chargeable · Whether…

C-549/11 Orfey

Judgment · 19 December 2012 · Bulgaria

Payments on account in kind and the taxable amount in barter construction deals

Article 65 covers payments on account in kind, including where they represent the entire consideration, so VAT on the construction services became chargeable when the building right was granted, provided all relevant information about the future supply was already known, the services were precisely identified, and the right's value could be expressed in money. A possible future extinction of the right is only a cancellation condition. Absent Article 80 ties between the parties, open market value cannot replace the subjective consideration. Articles 63, 65 and 73 have direct effect. Relevant to property developers and their advisers using land-for-build or building-right barter structures.