Taxable transactions EU VAT case law

T-356/25 Rapera

Judgment · 8 July 2026

Liability of the tax representative of a non-established taxable person

Article 204 does not preclude designating a representative as the person liable even where he takes no part in the taxable transactions, provided the taxable person has so designated him. Article 205, read with proportionality, does preclude joint and several liability of a representative not designated as person liable where involvement, knowledge and good faith cannot be examined. Which VAT identification number was used is not decisive. A person liable under Article 204 cannot simultaneously be jointly liable under Article 205. The dividing line is designation.

C-603/24 Stellantis Portugal

Judgment · 13 May 2026

Transfer pricing adjustments as consideration for a supply of services

Such an adjustment is not consideration for a supply of services for consideration, unless there is a legal relationship between the companies involving reciprocal obligations, the purchaser supplying services and the seller paying for them via the adjustment, creating a direct link. Here repair costs were only one parameter among several, adjustments could go either way, and full reimbursement was not assured, so any link was at most indirect. If instead the adjustment alters the purchase price, its effect on the taxable amount falls to be assessed nationally. Useful for groups operating limited-risk distributor models with year-end margin true-ups, and for the automotive sector in particular.

T-221/25 TUI Belgium

Judgment · 25 March 2026 · Belgium

Standstill clause and the taxation of travel agents' services for travel outside the EU

No express derogating provision is required. Member States may choose the legislative technique they consider appropriate, subject to legal certainty requiring clarity and precision as to the situations covered. Legislation which merely ceases to exempt, so that taxation follows implicitly, is an exercise of the standstill option. Removing an express derogation that had become redundant does not, of itself, make the new regime non-identical or based on a different logic, since the outcome and procedures are unchanged. The referring court must verify this. Tour operators and travel agents in Member States relying on Article 370 and Annex X, Part A, point 4 cannot found repayment claims on the mere absence of an express statutory derogation from the Article 309 exemption.

C-409/24 J-GmbH (Selective application of the reduced rate of VAT)

Judgment · 5 March 2026 · Germany

Selective reduced rate for hotel accommodation and ancillary supplies

Article 98(1) and (2) with Annex III, point 12 does not preclude such national rules, provided the legislation confines the reduced rate to concrete and specific aspects of the accommodation category, identified by objective, clear and precise criteria, and fiscal neutrality is respected. Where a Member State has exercised that discretion, whether the elements form a single supply for the average consumer is not decisive. Stadion Amsterdam concerned the situation where no such selective choice had been made. Hoteliers, holiday parks and campsites in Member States that split out non-accommodation elements can no longer rely on single-supply reasoning to pull breakfast, parking, wifi, gym and spa access into the reduced rate.

T-643/24 Credidam

Judgment · 11 February 2026 · Romania

Unlicensed communication to the public and the triple tariff surcharge

The General Court (Preliminary Ruling Chamber) held there is a taxable supply for consideration. Neither the absence of a licence, nor the rightholders' inability to object, nor the statutory origin of the remuneration, nor collection through a management organisation breaks the direct link. VAT applies to the entire sum due, including the element exceeding the notional licence fee, because that surcharge flows directly from the statutory framework governing unlicensed communication. Verification of the facts, including whether communication occurred, is for the referring court. For collecting societies and users of protected content, a statutory surcharge for unlicensed use is taxable consideration and not VAT-free damages, wherever the uplift is fixed by the same legal framework that governs the licensed use. Relevant to hotels, bars, broadcasters and other commercial users facing retrospective claims.

C-744/23 Zlakov

Judgment · 23 October 2025 · Bulgaria

Pro bono representation and fees paid by the losing party

Court representation supplied free of charge is nonetheless a supply for consideration under Article 2(1)(c) where national law obliges the losing party, when ordered to pay the costs, to pay the lawyer fees fixed by that legislation. The direct link rests on both the engagement contract and the statute. Payment by a third party rather than the client is irrelevant, and uncertainty as to the outcome of the litigation does not break the link. Articles 26(1)(b), 28 and 75 do not apply. Where a statutory costs award goes directly to the lawyer under a pro bono or conditional arrangement, the awarded fee is taxable consideration and not an exempt or out-of-scope recovery, so VAT falls due on it.

C-232/24 Kosmiro

Judgment · 23 October 2025 · Finland

VAT treatment of factoring fees and commissions

Both products are supplies of services for consideration and both fall within "debt collection" in Article 135(1)(d). The commission and arrangement fees are consideration for a single, indivisible taxable debt collection service. There is no separate exempt credit supply, since in trade factoring the funds are the price of the debts and in invoice factoring the financing is merely the corollary of collection. Article 135(1)(d)'s debt collection exception is unconditional and precise, so it has direct effect against the State. Factors and their advisers can no longer split factoring fees between taxable collection and exempt financing where the factor also runs the recovery.

C-726/23 Arcomet Towercranes

Judgment · 4 September 2025 · Romania

Transfer pricing adjustments as consideration for intra-group services

Contractually detailed intra-group services remunerated by reference to the margin above 2.74%, calculated on an OECD-recommended method, are consideration for a supply of services for consideration. The remuneration is variable but neither voluntary nor uncertain, being fixed in advance on precise criteria. The authority may require evidence beyond the invoice that the services were actually supplied and used for taxed output transactions, provided it is necessary and proportionate. It may not require proof that the services were necessary or economically appropriate. A group treating a year-end transfer pricing true-up as a pure profit adjustment outside VAT cannot maintain that position where the payment is tied to identified services under an intra-group agreement. Relevant to transfer pricing and indirect tax teams in multinational groups, and to advisers handling Romanian and other reverse-charge intra-group management fee audits.

C-277/24 Adjak

Judgment · 27 February 2025 · Poland

Directors' joint and several liability and the rights of the defence

Exclusion of the potentially liable director from the company's assessment proceedings is permissible. At that stage liability is only a possibility, and participation could compromise confidentiality and delay collection. But the exclusion is lawful only if, in the subsequent joint and several liability proceedings, the director can effectively challenge the findings of fact and legal classifications made in the assessment proceedings and can access the tax authority's file, subject to the rights of others. Member States may keep assessment and derivative liability in separate tracks, but the second track must be a genuine opportunity to reopen the quantum and characterisation of the debt, not merely to test the statutory conditions of liability.

C-622/23 rhtb

Judgment · 28 November 2024 · Austria

VAT treatment of sums due on early termination of a construction contract

The Court held that the amount contractually due following termination by the customer of a validly concluded, VAT-taxable services contract which the supplier had begun performing and was prepared to complete is remuneration for a supply for consideration. The consideration is the customer's right to have the contract performed, and the sum equals the agreed price less costs saved, so it is not fixed compensation for loss. Article 73 was not answered, no reasons for interpreting it having been given. Termination payments computed as contract price less costs saved should be treated as taxable consideration, not as damages, where the supplier had started work and remained willing to finish. Relevant to construction, engineering and long term services contracts, and to anyone drafting or invoicing withdrawal and cancellation clauses.

C-179/23 Credidam

Judgment · 4 July 2024 · Romania

VAT on management fees deducted by a collective rights management organisation

The Court held that such management activity is a supply of services for consideration. National law creates a legal relationship with reciprocal performance. The fee is due only if the management services are performed and is their actual consideration. It is irrelevant that the service and fee are prescribed by statute (Article 25(c)) or that the organisation is non profit. Article 28 does not apply because the rightholders supply nothing. The non taxable underlying remuneration cannot be taken into account, by analogy or as a principal supply, to untax the fee. Collective management organisations across the EU must account for VAT on management fees withheld from rightholders, even where the pooled remuneration collected (notably private copying and other statutory levies after SAWP) sits outside VAT.

C-696/22 C (Court-appointed administrators and liquidators)

Judgment · 13 June 2024 · Romania

Chargeability on continuous services and proof of the link for input deduction

Such continuous services fall within Article 64(1) where they give rise to successive statements of account or payments, so VAT becomes chargeable on expiry of each period irrespective of non-payment. Article 90(1) governs non-payment. Increased turnover or volume of taxable transactions is irrelevant to the deduction link. The objective content, actual use and exclusive reason for the purchase decide. A hearing breach requires annulment only if the outcome might have differed, suspension of enforcement being irrelevant. Suppliers billing periodically, insolvency practitioners, professional firms and any provider with milestone or periodic fee arrangements, cannot defer chargeability by making payment conditional on the customer's cash position.

C-207/23 Finanzamt X (Application and disposal of goods free of charge)

Judgment · 25 April 2024 · Germany

Free-of-charge disposal of surplus heat and calculation of cost price

Yes: where the goods (heat is tangible property) formed part of business assets and input VAT was wholly or partly deductible, the free transfer is a deemed supply for consideration, regardless of the recipient's tax status or use. The only exception is samples and gifts of small value under the second paragraph of Article 16. Cost price under Article 74 applies only absent a purchase price for the goods or similar goods, and then includes direct and indirect costs, including financing costs, whether or not they bore input VAT. Energy producers, biogas and CHP operators and anyone releasing surplus output free of charge cannot argue away Article 16 on the basis that the recipient is a taxable person using the goods in a deductible activity.

C-377/23 Sancra

Order · 5 February 2024 · Portugal

A price invoiced at a wrong zero rate is treated as including the correct VAT

The Court holds that the invoiced price must be regarded as already including VAT, unless national law gives the taxable person the possibility of passing the corrected tax on to the final consumers and recovering it from them. VAT is a tax borne by the final consumer, and adding the tax on top of a price already paid would make the supplier bear a burden the system does not intend. The natural companion to Tulica and Plavosin and to the Galicia case.

C-791/22 Hauptzollamt Braunschweig (Place where VAT is incurred III)

Judgment · 18 January 2024 · Germany

Place where import VAT is incurred on unlawfully introduced goods

Those provisions preclude such national legislation. The reference to customs legislation in the second subparagraph of Article 71(1) concerns only the chargeable event and chargeability, not the place of importation, which is governed by Article 60. There is no general link between the Directive and the Customs Code. Import VAT is incurred where the goods entered the EU economic network and were intended for consumption, here apparently Poland, subject to verification by the national court. Customs authorities cannot use customs place-of-debt fictions, including small-debt rules, to claim import VAT on goods smuggled in via another Member State. Relevant to excise and tobacco smuggling assessments, and to anyone facing dual customs and import VAT demands after irregular introduction.

C-505/22 Deco Proteste - Editores

Judgment · 5 October 2023 · Portugal

Subscription gifts as an ancillary supply, not a free transfer

The gift is a supply ancillary to the principal supply of the periodicals, forming part of a supply of goods for consideration under Article 2(1)(a), and is not a disposal of goods free of charge under the first paragraph of Article 16. It has no distinct purpose for the average consumer, who pays at least one month's subscription to obtain it, and it aids enjoyment of the magazines. Whether the criteria are met remains for the national court. The questions on the small-value gift ceiling were not answered. Publishers and any business using a device or gadget as an enrolment incentive can treat the item as following the tax treatment of the principal supply, here the reduced rate for periodicals, rather than accounting for output tax as a free transfer. Relevant to subscription media, telecoms bundles and loyalty and acquisition promotions generally.

C-677/21 Fluvius Antwerpen

Judgment · 27 April 2023 · Belgium

VAT on electricity taken unlawfully from the distribution network

Unlawful consumption of electricity is a taxable supply of goods for consideration under Article 14(1). Consumption of electricity coincides with disposal as owner, and the legal relationship criterion is met by the applicable energy legislation and connection regulation, so Article 14(2)(a), a lex specialis, does not apply. It is an economic activity under Article 9(1) because the loss is a risk inherent in operating the network. Even for a public law body acting as a public authority, the activity is negligible only if so minimal in space or time that resulting competitive distortion is insignificant. Where a network operator or utility recovers the cost of energy theft or unmetered consumption, the energy element of the compensation is consideration for a taxable supply and not damages outside VAT. Relevant to advisers on energy, water, gas and heat recovery billing.

C-512/21 Aquila Part Prod Com

Judgment · 1 December 2022 · Hungary

Proving participation in carousel fraud and the limits of the duty of diligence

The authority cannot rely merely on the existence of a circular invoicing chain. It must accurately describe the constituent elements of the fraud, prove the fraudulent conduct and establish either active participation or that the taxable person knew or ought to have known, though it need not identify every operator. Where fraud indicators exist, greater diligence may be required, but not complex checks equivalent to the authority's own investigations. Food safety breaches cannot alone justify refusal, but may be one element among others. Relevant to any business facing deduction refusals in chain transaction cases, particularly in Hungary and in the food sector.

C-293/21 Vittamed technologijos

Judgment · 6 October 2022 · Lithuania

Adjustment of deductions on voluntary liquidation and deregistration

Adjustment is required because once the taxable person no longer has, and will never have, any intention of using the capital goods for taxable transactions, the close and direct link with taxed output transactions is broken. The reasons for liquidating, even if beyond the taxable person's control, are irrelevant, and the tax authorities are not to assess them. The Court distinguished the position where liquidation itself generates taxed transactions, for example asset sales to discharge debts, or where economic activity continues. Here the assets remained unsold. Confirms that the INZO and Ryanair line protects abandoned investment only where the taxable person still intends taxable use.

C-294/21 Navitours

Judgment · 1 August 2022 · Luxembourg

Taxation of passenger transport in a shared-sovereignty territory

Sightseeing cruises moving passengers over non-negligible distances are transport services, even if circular and touristic. The Directive 2006/123 case law on "services in the field of transport" does not transpose. The condominium is within the territory of both Member States, so each may tax. The Member State concerned must tax provided the other has not already done so. Taxation by one precludes taxation by the other, unless they agree another allocation avoiding double taxation and non-taxation. Confirms that no Member State may leave a shared or disputed border territory as a de facto VAT-free zone pending an intergovernmental agreement.

C-146/21 DGRFP Bucureşti

Judgment · 30 June 2022 · Romania

VAT registration as a condition for applying the domestic reverse charge

The Directive and the principle of fiscal neutrality do not preclude such a condition. A Member State authorised to derogate from Article 193 may set conditions for applying the reverse charge, including prior VAT registration, provided fiscal neutrality is respected. Article 199(2) supports this and the exception must be read strictly. The case law treating registration as a mere formality applies to the right of deduction. Refusing the reverse charge does not deprive the customer of deduction, and the condition is objective and proportionate given control difficulties in the timber market. Confirms that the formalities case law on deduction does not transfer automatically to reverse charge eligibility.

C-90/20 Apcoa Parking Danmark

Judgment · 20 January 2022 · Denmark

VAT treatment of parking control fees

The fees are consideration for a supply of services and are subject to VAT. There is reciprocal performance and a direct link. The motorist actually had the benefit of a parking space, the fee reflects the higher operating cost of non-compliant parking, and the two supplies are interdependent. That the amount is predetermined, disproportionate to the service's value, or classified as a penalty in national law is irrelevant. Characterisation is a question of EU law, subject to the referring court's verification of economic reality. Car park operators, and shopping centres, hospitals, hotels and retail sites that outsource enforcement, must account for VAT on penalty-style control fees where the space was in fact used.

C-21/20 Balgarska natsionalna televizia

Judgment · 16 September 2021 · Bulgaria

Public broadcasting funded by State subsidy and the scope of deduction

The activity is not a supply for consideration. There is no legal relationship of reciprocal performance with viewers and no direct link between the services and the subsidy, which is set per programme hour regardless of viewership. Le Rayon d'Or is distinguished. The exemption question therefore falls away. Under Article 168, input VAT is deductible on purchases used for activities giving rise to deduction and not deductible on purchases used for out-of-scope activities. The method of financing is irrelevant. Member States set the apportionment method, respecting proportionality. Public broadcasters and comparable subsidy-funded bodies must treat free-to-air public service output as outside the scope of VAT, not exempt, and exclude it from the Articles 173 to 175 pro rata. Relevant to advisers to public bodies, cultural and media organisations and any taxable person with substantial grant funding alongside taxable supplies.

C-521/19 Tribunal Económico Administrativo Regional de Galicia

Judgment · 1 July 2021 · Spain

Undeclared consideration in a fraud is treated as VAT inclusive

The Court holds that they must be regarded as a price already including VAT, unless national law allows the taxable person to pass on and deduct the VAT afterwards notwithstanding the fraud. VAT is a tax on consumption borne by the final consumer, and treating the reconstituted sum as net would make the supplier bear a tax burden contrary to neutrality, even though the concealment was deliberate. An important judgment for the arithmetic of assessments, and a Spanish one.

C-81/20 Mitliv Exim

Order · 22 June 2021 · Romania

A provisional payment towards a real VAT debt earns no interest

Ruling by order, the Court held that it cannot. Once taxable transactions have taken place and the VAT on them has become chargeable, the tax debt exists. What matters is the occurrence of the chargeable event, not the later confirmation of the amount by an administrative or judicial decision. A payment made to honour that debt is therefore not undue and does not give rise to interest for the taxpayer. The symmetrical counterpart to the refund-interest cases.

C-182/20 Administraţia Judeţeană a Finanţelor Publice Suceava and Others

Judgment · 3 June 2021 · Romania

Automatic adjustment of deductions on entering insolvency

Articles 184 to 186 preclude national legislation or practice imposing automatic adjustment of pre-insolvency deductions where the initiation of the proceedings does not prevent the operator's economic activity, within the meaning of Article 9, from continuing, including for the purposes of liquidating the undertaking. Economic activity is objective and judged without regard to purpose or results. A change of purpose to realising assets does not of itself end it. Continued registration and output VAT charged on liquidation sales point to continuing activity. A later refund possibility does not cure the restriction. In Member States whose rules treat a liquidation declaration as ending taxable activity, a blanket clawback assessment on input tax recovered before the insolvency does not stand. Relevant to capital goods, stock and lease-related deductions alike.

C-501/19 UCMR - ADA

Judgment · 21 January 2021 · Romania

VAT treatment of public performance royalties collected by a collective management organisation

The Court answers both questions in the affirmative. There is a legal relationship of reciprocal performance and a direct link between the licence and the royalty. SAWP (fair compensation levies fixed by law) is distinguished. The society falls within Article 28, so it is deemed to receive and then supply the services. It must invoice the end user in its own name with VAT, and right holders who are taxable persons must invoice the society with VAT. Mandatory collective management and representation of non-members do not alter this, since the management method does not differ by category of holder. Collecting societies in Member States with mandatory or voluntary collective management must treat royalty collection as a chain of two taxable supplies rather than a mere transfer of funds, issuing VAT invoices to venues, promoters, broadcasters and other users, and receiving VAT invoices from right holders registered for VAT.

C-108/19 Krakvet sp. z o.o. sp.k

Order · 14 January 2021 · Romania

Distance selling where the customer picks a carrier suggested by the website

The Court holds that the goods must be regarded as transported by or on behalf of the supplier where the supplier role is predominant as regards both the initiative for the transport and the organisation of its essential stages. That is for the referring court to determine on all the relevant circumstances. The existence of a separate contract with the carrier is therefore not decisive. The order follows the judgment in KrakVet Marek Batko, delivered a month earlier on the same arrangement.

C-215/19 Veronsaajien oikeudenvalvontayksikkö (Computing centre services)

Judgment · 2 July 2020 · Finland

VAT treatment of colocation centre services

Such services are neither exempt letting nor services connected with immovable property, subject to verification by the national court. The supplier does not passively make space available with a right to occupy it as owner, and the customers cannot control or restrict access to the relevant part of the building, so there is no right of exclusive use. The cabinets themselves are not immovable property. They are not an integral part of the building and, being merely bolted down and removable, are not permanently installed. Data centre, hosting and colocation providers can normally treat these supplies as taxable under the general B2B rule in Article 44, accounting at the customer's place of establishment rather than registering where the servers sit. Relevant to telecoms and IT operators, and to advisers reviewing cross-border hosting contracts and access arrangements.

C-276/18 KrakVet Marek Batko

Judgment · 18 June 2020 · Hungary

Distance selling, when goods are transported "on behalf of the supplier"

Regulation 904/2010 provides only for exchange of information. It does not bind one authority to another's classification, so unilateral divergent treatment is permitted (with any overpaid VAT recoverable). Article 33 applies where the supplier's role is predominant in initiating and organising the essential stages of dispatch or transport, judged on economic reality rather than the contracts alone. That is for the national court. No abuse arises merely from the link with the carrier or the buyer's freedom to choose, where both companies genuinely trade independently. Relevant to e-commerce sellers and their advisers dealing with pre-2021 periods and to the reading of "indirect intervention" now in Article 33.

C-43/19 Vodafone Portugal

Judgment · 11 June 2020 · Portugal

Early termination charges under minimum tie-in contracts

Such amounts are remuneration for a supply of services for consideration. The consideration is the customer's right to have the operator perform the contract, whether or not the right is exercised, and the charge forms part of the price agreed for that performance, securing the operator a minimum contractual return. It is irrelevant that it falls short of the income the operator would otherwise have received, and it is neither a statutory levy nor compensation for damage, given that national law forbids charging indemnities. MEO now extends to termination charges built on recovery of costs and promotional benefits, not just to charges mirroring the remaining instalments.

C-94/19 San Domenico Vetraria

Judgment · 11 March 2020 · Italy

Secondment of staff at cost as a supply for consideration

Article 2, point 1 precludes such national legislation, provided the amounts paid by the subsidiary and the secondment are interdependent, that is, the secondment was made only on condition of payment and the payment made only in return for the secondment. That is for the national court to verify. Whether the consideration equals, exceeds or falls short of the provider's costs is irrelevant and does not break the direct link. Groups that second staff between entities on a pure cost recharge basis cannot assume the recharge is outside the scope.

C-707/18 Amărăşti Land Investment

Judgment · 19 December 2019 · Romania

Land registration costs borne by the purchaser as a deemed supply to the vendor

The Directive does not prevent the parties from agreeing that the purchaser bears some or all of the administrative costs, but such a clause is not decisive for the purchaser's right of deduction. Because first registration and entry of the proprietor are a statutory obligation of the vendor, a purchaser acting in its own name who performs those steps acts on behalf of the vendor and is deemed under Article 28 to have supplied the services to the vendor, even though the price excludes the value of the land-registration work and nothing was re-invoiced. Purchasers of unregistered immovable property who absorb the vendor's registration, notarial and surveying costs cannot simply treat the input VAT as their own investment expenditure.

C-242/18 UniCredit Leasing

Judgment · 3 July 2019 · Bulgaria

Reduction of the taxable amount on termination of a finance lease

A final notice of adjustment does not bar reduction under Article 90(1). It is not a formality justified by Article 273. Both the arrears up to termination and the termination compensation (itself taxable consideration for the leasing supply) are cases of non-payment, so a Member State which has not legislated for reduction on non-payment may refuse it. But the derogation cannot apply where the taxable person shows a reasonable probability that the debt will not be honoured, subject to upward re-evaluation if payment occurs. Lessors and other suppliers in Member States which exclude bad debt relief cannot be refused relief indefinitely.

C-568/17 Geelen

Judgment · 8 May 2019 · Netherlands

Place of supply of live interactive webcam entertainment

The complex supply of organising and offering the sessions is an entertainment activity, its principal objective being entertainment. No physical presence of recipients, and no single location of receipt, is required. It is physically carried out where the supplier has established his business or the fixed establishment from which the services are supplied, here the Netherlands. The electronically supplied services rule did not apply because all recipients were in the supplier's own Member State, so the Court did not classify the supply. Confirms that the entertainment rule is not confined to events at an identifiable venue, and that for remotely delivered interactive content the organiser's own establishment can be the place of physical performance, even where the performers are in a third country.

C-647/17 Srf konsulterna

Judgment · 13 March 2019 · Sweden

Place of supply of admission to educational seminars

Article 53 covers such courses, so VAT is due where the seminars actually take place. Admission to a paid seminar necessarily includes attending and participating in it, so no distinction can be drawn between a right to enter a place and a right to participate. Advance registration and payment are irrelevant. Article 53 is not a narrowly construed exception, and the administrative burden recognised in recital 6 of Directive 2008/8 cannot displace the wording. Training providers, professional bodies and conference organisers holding multi-day B2B events abroad must register or account for VAT in the country where the event physically takes place, even where all delegates are established elsewhere.

C-165/17 Morgan Stanley & Co International

Judgment · 24 January 2019 · France

Deductible proportion of a branch serving its foreign principal establishment

Branch and principal establishment are one taxable person, so internal flows are disregarded. For expenditure used exclusively for the principal establishment's transactions, the fraction's denominator is the turnover of those transactions alone. The numerator only its taxed transactions which would also give a right to deduct in the branch's Member State, including where deduction arises from an option exercised there. For the branch's general costs, the denominator covers the transactions of both establishments, the numerator the branch's taxed transactions plus those of the principal establishment meeting the same double test. Directly relevant to banks, insurers and other partly exempt groups operating through cross-border branches, and to anyone computing branch recovery rates.

C-295/17 Meo - Serviços de Comunicações e Multimédia

Judgment · 22 November 2018 · Portugal

Early termination charges as consideration for a supply

The sum is remuneration for a supply of services and subject to VAT, provided it corresponds to what the operator would have received had the contract run to term, which the national court must verify. The consideration is the customer's right to benefit from performance, whether or not exercised. The deterrent or compensatory purpose, the agent's commission structure and classification as a penalty under national law are all irrelevant. Where the sum is not actually collected, Article 90 adjustment may apply. In telecoms, utilities, gyms, subscription media and any business using minimum term contracts, an early termination charge calculated by reference to unexpired subscriptions is taxable consideration rather than compensation outside the scope.

C-153/17 Volkswagen Financial Services (UK)

Judgment · 18 October 2018 · United Kingdom

Residual input tax on vehicle hire purchase, apportionment method

General costs actually incurred, at least in part, for the taxable vehicle supplies are cost components of those supplies for VAT purposes, even though the taxable person passed them on only in the exempt interest. The commercial result is irrelevant. A special method which disregards an actual and non-negligible allocation of overheads to taxable supplies cannot be more precise than the turnover key and is therefore not permitted. Banco Mais is confined to its own circumstances. Relevant to lessors, hire purchase providers and captive finance companies with agreed special methods, and to tax authorities imposing use based apportionment.

C-140/17 Gmina Ryjewo

Judgment · 25 July 2018 · Poland

Adjustment of input tax where a public body changes the use of capital goods

Adjustment is not precluded, provided the national court finds on all the facts that the body acted as a taxable person when it acquired the goods. An express declaration of intended economic use is not required. Intention may be implied, and the concept of acquisition "as a taxable person" is to be construed generously. Relevant evidence includes the dual-use nature of the property and prior VAT registration. Waterschap Zeeuws Vlaanderen is distinguished because there the body acquired the goods acting as a public authority. Public bodies and other partly non-economic actors that failed to deduct on acquisition are not automatically shut out of capital goods adjustment when property is later put to taxable use.

C-421/17 Polfarmex

Judgment · 13 June 2018 · Poland

Transfer of property as consideration for a share buy-back

The two legs must be separated. The property transfer is a supply of goods for consideration, because each party acts as both supplier and beneficiary in a reciprocal legal relationship, and it is taxable provided the property is used in the company's economic activity, a matter for the national court. The share redemption itself is not an economic activity. The Court noted, without deciding, that the exemption in Article 135(1)(j) for supplies of old buildings may apply. Relevant to corporate restructurings and buy-backs settled in kind anywhere in the EU.

C-308/16 Kozuba Premium Selection

Judgment · 16 November 2017 · Poland

Meaning of first occupation and conversion of buildings

First occupation is an autonomous EU concept meaning first use by the owner or tenant. Member States may not add a condition, absent from the Directive, that it arise in a taxable transaction. A 30% of initial value threshold for upgrades is permissible, but only if upgrade is read as conversion, meaning substantial modifications intended to change the use or considerably alter the conditions of occupation. Whether the works met that qualitative test is for the national court.

C-36/16 Posnania Investment

Judgment · 11 May 2017 · Poland

Transfer of land in settlement of tax arrears is not a supply for consideration

Such a transfer is not a supply of goods for consideration. Although a legal relationship of creditor and debtor exists, payment of tax is unilateral. The public authority provides no performance in return, whether the charge is settled in money or in tangible property. There is therefore no reciprocal performance and no supply for consideration. The Court added that any risk of untaxed final consumption where input tax has been deducted on the property is addressed by Article 16 of the VAT Directive. Relevant wherever a Member State permits tax debts to be settled by transferring assets in kind.

C-37/16 SAWP

Judgment · 18 January 2017 · Poland

Private copying levies are outside the scope of VAT

No supply of services within the Directive. There is no legal relationship involving reciprocal performance. The obligation to pay arises from national law, which also sets the amount, and the fee funds fair compensation linked to the harm caused by unauthorised reproduction rather than being direct consideration for an identifiable service. Whether an assignment of intangible property under Article 25(a) exists was left open, since such a transaction would fall outside the Directive anyway. The second question fell away. Statutory private copying and reprography levies carry no VAT for collecting societies or rightholders in the music, audiovisual, publishing and reprographic sectors, and no invoices with VAT are required either from the society to producers and importers or from rightholders to the society.

C-543/14 Ordre des barreaux francophones et germanophone and Others

Judgment · 28 July 2016 · Belgium

VAT on lawyers' services and access to justice

Nothing affects the validity of those provisions. Article 47 does not confer a right to exemption for clients deemed to have sufficient resources. VAT can be challenged only if the cost is an insurmountable obstacle, and equality of arms does not require parties to bear equal financial costs. Aarhus Article 9(4) and (5) are not unconditional and sufficiently precise, so cannot be relied on. Legal aid work is not exempt. Lawyers are not bodies recognised as devoted to social wellbeing, such work being voluntary and one objective among many. Confirms that Member States abandoning the Article 371 grandfathered exemption for lawyers face no fundamental rights obstacle, and closes off exemption for court-appointed or legal aid work under Article 132(1)(g), consistent with the earlier refusal of a reduced rate. Relevant to law firms and their advisers in any Member State reviewing legal aid billing, and to publicly funded panel work generally.

C-393/15 ESET

Order · 21 June 2016 · Poland

A branch may deduct input tax used for its head office taxed transactions abroad

The Court holds that it does have that right. The branch and the head office are a single taxable person, so input tax incurred by the branch on goods and services used for the taxed transactions of the company in the Member State where it is established is deductible in the branch State of registration, under Article 169(a). The order confirms the practical consequence of FCE Bank.

C-229/15 Mateusiak

Judgment · 16 June 2016 · Poland

Taxation of business assets retained on cessation of activity

A Member State may treat the retained goods as a supply for consideration even after the adjustment period has expired. Article 18(c) imposes no time condition and does not cross-refer to the adjustment rules in Articles 184 to 192. It creates a new taxable transaction on cessation rather than a retroactive correction. Taxation therefore applies whatever the interval since acquisition, provided the goods still have a residual value at cessation, the taxable amount under Article 74 being the value determined at that time. Relevant to sole traders, professional practices and small companies in Member States that have implemented Article 18(c), and to advisers planning cessations, retirements and deregistrations.

C-186/15 Kreissparkasse Wiedenbrück

Judgment · 16 June 2016 · Germany

Rounding up the deductible proportion under a derogating method

Member States need not apply the rounding-up rule in Article 175(1) where the deductible proportion is calculated under a derogating method in Article 173(2). The point of those derogations is greater accuracy, so States may adopt their own or no rounding rule. On adjustment, the rounding-up rule must be applied only if it was in fact applied in determining the initial deduction. Continuity with Royal Bank of Scotland under the Sixth Directive confirmed. Confirms that businesses using a use-based or sectorised apportionment imposed or permitted by national law cannot import the Directive's round-up-to-the-next-whole-number rule where domestic law does not provide it.

C-226/14 Eurogate Distribution and DHL Hub Leipzig

Judgment · 2 June 2016 · Germany

Import VAT where a customs debt arises from a procedural breach on re-exported goods

No import VAT is due. The goods remained under customs warehousing or external transit until re-exportation and left the arrangement only because of it, so there was no importation under Article 2. That holds even though an Article 204 customs debt was incurred, the breach here being discovered after re-export, with no risk of entry into the EU economic network. Nobody is liable for the VAT, so the question of the debtor does not arise. Article 236 does not apply to VAT repayments.

C-128/14 Het Oudeland Beheer

Judgment · 28 April 2016 · Netherlands

Valuing a self-supply of an office building held under a long lease

The Court holds that both elements may be included, notwithstanding the earlier payment and full deduction. As to measurement, where the land and the building under construction were acquired through the grant of a right in rem, the value of that right corresponds to the amount payable each year for the remainder of the long lease, corrected or capitalised by the same method used to value the grant of the leasehold. One of the technical anchors of the self supply rules now in Articles 18(a) and 74.

C-424/14 Balogh

Order · 30 September 2015 · Hungary

Declaring the start of an activity below the small-business threshold, and the fine for not doing so

Ruling by reasoned order, the Court held that Article 213(1) does not preclude such an obligation. The duty to declare the start of an activity is an administrative requirement that Member States may impose on persons within the scope of the tax even where the exemption for small enterprises applies. Nor does EU law preclude a fine for failing to comply. It is for the national court to assess whether the penalty actually imposed complies with the principle of proportionality. A reminder that the small-business exemption relieves the charge, not the registration duties that let an administration monitor who is trading.

C-7/13 Skandia America (USA), filial Sverige

Judgment · 17 September 2014 · Sweden

Services from a third country head office to a branch inside a VAT group

Such supplies are taxable. The branch itself is not an independent taxable person, but by joining a VAT group it ceases to be identifiable separately. The services are treated as supplied to the group, which is a taxable person distinct from the head office. Since the services fall within Article 56 and the supplier is established in a third country, the VAT group as purchaser is liable for the VAT under Article 196. Grouping a branch changes the VAT analysis of internal cost allocations from head office.

C-92/13 Gemeente ‘s-Hertogenbosch

Judgment · 10 September 2014 · Netherlands

Self-supply charge on a building used mainly for public authority activities

Article 5(7)(a) applies to that situation where the Member State has exercised the option, the condition being that input VAT would not have been wholly deductible had the building been bought from another taxable person. Article 6(2)(a) allocation is not available where economic and non-economic activities are mixed. The full construction VAT is deductible, but the VAT due on the deemed self-supply (on the whole value of land and building) is recoverable only in the proportion used for taxable transactions. Relevant to public bodies and other partly non-taxable persons in Member States that have implemented the self-supply option for goods produced in the course of business, including works built by contractors on the owner's land.

C-155/12 RR Donnelley Global Turnkey Solutions Poland

Judgment · 27 June 2013 · Poland

Place of supply of complex warehousing services

Such a complex storage service falls within Article 47 only where storage is the principal service of a single transaction and the recipient is given a right to use all or part of expressly specified immovable property. Absent that, for example where customers have no right of access to the part of the warehouse holding their goods, or the property is not a central and essential element, Article 44 applies. Repackaging is a separate principal supply where not necessary for better storage. For warehousing and third-party logistics operators, and their customers abroad, the contract turns on whether a right of use over identified space is granted.

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-299/11 Gemeente Vlaardingen

Judgment · 8 November 2012 · Netherlands

Self-supply charge on goods improved by a third party on the taxable person's own land

The self-supply option covers not only goods produced entirely in-house but also goods constructed or improved by a third party using materials, including land, supplied by the business, and VAT may be charged on the aggregate of the transformation costs and the land value, measured by market value at the time of application. But no VAT may be charged on an element of value on which the taxable person has already paid VAT, and the charge cannot apply if the land falls within the exemption for land not built on that is not building land. Relevant to any exempt operator (local authorities, sports and leisure providers, healthcare, education, social housing) that refurbishes or develops its own land using contractors in a Member State applying the self-supply option.

C-318/11 Daimler and Widex

Judgment · 25 October 2012 · Sweden

Fixed establishment and refunds to non-established taxable persons

Such a taxable person has no fixed establishment of that kind. The test is cumulative because there must be a fixed establishment and actual output taxable transactions effected from it. A mere ability to make supplies is insufficient, so testing or research activities alone do not defeat the refund claim and there is no need to decide whether a fixed establishment exists. The presence of a wholly owned subsidiary supplying services for the testing activity does not alter this. The subsidiary is a separate taxable person and did not make the purchases. Tax authorities cannot refuse Eighth Directive or Directive 2008/9 refunds by pointing to permanent premises, staff or equipment alone.

C-530/09 Inter-Mark Group

Judgment · 27 October 2011 · Poland

Place of supply of fair and exhibition stands

All three heads may apply, depending on the facts. Article 56(1)(b) where the stand is designed or used for advertising, that is to convey a message about the exhibitor's goods or services or as an inseparable part of a campaign. Article 52(a) where it is designed and provided for one specific themed fair, or matches a model prescribed by the organiser. Article 56(1)(g) where temporary provision of the material elements for payment is the determining element, notably stands reused at events in several Member States. Never Article 45: no direct connection with immovable property. Stand builders, exhibition contractors and event agencies must classify each engagement rather than apply one place-of-supply rule across the business.

C-515/07 Vereniging Noordelijke Land- en Tuinbouw Organisatie

Judgment · 12 February 2009 · Netherlands

Input tax on goods used for non-economic activities of an association

Articles 6(2)(a) and 17(2) do not apply to the use of business goods and services for transactions other than the taxable person's taxed transactions. Input VAT attributable to those transactions is not deductible. Unlike private use of a capital asset (Charles and Charles-Tijmens), non-economic activities falling outside the scope of VAT are not purposes "other than those of the business" where, as here, they constitute the association's principal object. The second question did not require an answer. Confirms Securenta for mixed economic and non-economic actors.

C-174/07 Commission v Italy

Judgment · 11 December 2008 · Italy

Extending the Italian VAT amnesty to 2002 was a further infringement

The Court finds the infringement established. By that extension Italy failed to fulfil its obligations under Article 2(1)(a), (c) and (d) and Articles 193 to 273 of the VAT Directive, which from 01-01-2007 replaced Articles 2 and 22 of the Sixth Directive, and under Article 10 EC. A general and indiscriminate renunciation of verification and collection is incompatible with the duty to ensure that VAT is collected in full. The sequel to C-132/06 and, with it, the authority that closes off VAT amnesties.

C-291/07 Kollektivavtalsstiftelsen TRR Trygghetsrådet

Judgment · 6 November 2008 · Sweden

Taxable person status of a mixed activity recipient of consultancy services

Such a recipient is a taxable person for the purposes of those provisions even where the consultancy is acquired solely for activities falling outside the scope of the Directives, because Article 9(2)(e) says nothing about the services having to be acquired for the recipient's economic activity. It follows that the recipient is liable for the VAT under Article 21(1)(b) (now Article 196), regardless of the use made of the services. Relevant to any mixed activity body established in the EU.

C-132/06 Commission v Italy

Judgment · 17 July 2008 · Italy

General VAT amnesty and the duty to verify and collect

The Grand Chamber declared an infringement. Member States must take all legislative and administrative measures to collect the VAT due, checking returns and accounts. Their latitude in deploying resources is limited by effective collection of the Community's own resources and by fiscal neutrality. Replacing the Article 2 and 22 obligations shortly after the payment deadlines with payments bearing no relation to the tax due amounted to an exemption and rendered those articles meaningless. Conciliation or settlement of individual disputes was not condemned. A blanket, prior renunciation was. The judgment marks the outer limit of national discretion in enforcement.

C-204/03 Commission v Spain

Judgment · 6 October 2005 · Spain

Restriction of input tax deduction by reference to subsidies received

The Court declared Spain in breach of Articles 17(2) and (5) and 19. Article 19 is wholly related to Article 17(5) and so the subsidy option applies only to mixed taxable persons. Extending it to fully taxable persons exceeds the derogations expressly permitted. The special rule for specifically subsidised purchases has no basis in the directive at all. Fiscal neutrality arguments cannot override express wording, and there was no objective uncertainty justifying a temporal limitation. Confirms that the subsidy option in the deductible proportion is available only where a taxable person also makes exempt supplies.

C-33/03 Commission v United Kingdom

Judgment · 10 March 2005 · United Kingdom

Deduction of VAT on fuel reimbursed to employees

The Court upheld both of the Commission's complaints. Article 17(2)(a) leaves Member States no discretion. Deduction is available only in so far as the goods are used for the taxable person's taxable transactions, and the Order guaranteed no such link, since reimbursement could be computed on total mileage including private travel. General provisions of the VAT Act 1994 and a favourable administrative practice could not cure the defect. Incompatible legislation must be corrected by binding provisions of equal legal force. The invoice requirement in Article 18(1)(a) was likewise infringed. Employer mileage and fuel reimbursement schemes must be built on an evidenced link to business use and on invoices, not on a deeming rule. Relevant to advisers designing employee expense recovery arrangements and to any deduction mechanism where the purchase is made by a non-taxable person acting for a business.

C-169/02 Dansk Postordreforening

Order · 6 November 2003 · Denmark

Postal services exemption reference withdrawn before judgment

This is a reasoned order of the President of the Court, not a judgment. Following withdrawal of the reference, the case was removed from the register. Costs incurred by the Italian Government and the Commission are not recoverable. Costs as between the parties are for the national court. No ruling was given on the exemption.

C-305/01 MKG-Kraftfahrzeuge-Factoring

Judgment · 26 June 2003 · Germany

VAT treatment of true factoring

A business purchasing debts, assuming the debtors' default risk and invoicing commission in return supplies a service for consideration. It is a taxable person with a right to deduct under Article 17. Such activity constitutes "debt collection and factoring" within the final clause of Article 13B(d)(3) and is therefore outside the exemption. True and quasi-factoring cannot be treated differently. In the other language versions "debt collection" covers all forms of factoring. Factoring companies are fully taxable persons with full input tax recovery, and their commission and del credere fees are taxable, not exempt financial services.

C-185/01 Auto Lease Holland

Judgment · 6 February 2003 · Germany

Fuel cards and the supply of fuel to lessees

There is no supply of fuel by the lessor to the lessee where the lessee fills up at filling stations, even if this is done in the name and at the expense of the lessor. The lessee chooses quality, quantity and timing and disposes of the fuel as owner. The monthly payments are only advances and the lessee ultimately bears the whole cost. The fuel management agreement is a contract to finance the purchase, so the lessor acts as a supplier of credit. The second question fell away. Fuel card and fuel management structures cannot be treated as a chain of supplies to and from the card issuer or lessor where the cardholder controls the purchase and bears the cost. Relevant to vehicle leasing companies, fleet and fuel card providers, and advisers structuring fuel and other pass-through purchase arrangements.

C-396/98 Schloßstraße

Judgment · 8 June 2000 · Germany

Retention of input tax deduction after withdrawal of the option to tax letting

The right to deduct arises on supply to a taxable person and is retained where a later legislative amendment removes the option to tax before the letting begins. That is a circumstance beyond the trader's control, and the principles of legitimate expectations and legal certainty preclude retroactive removal. Provisional assessment subject to review does not change this. It permits recovery only in cases of fraud or abuse, or adjustment under Article 20. The national court must verify that the declared intention was in good faith and supported by objective evidence. Confirms that Member States may abolish an option to tax lettings prospectively but cannot claw back deductions already acquired on pre-amendment investment expenditure. Relevant to property developers and landlords in any Member State that narrows or repeals its option to tax, and to advisers handling assessments left open for review.

C-110/98 Gabalfrisa and Others

Judgment · 21 March 2000 · Spain

Deduction of pre-trading input tax and formal preconditions

Article 17 precludes such legislation. A person who intends, on objective evidence, to commence an economic activity and incurs first investment expenditure is already a taxable person and may deduct immediately, without waiting for actual exploitation. Member States may require objective evidence of the declared intention and may recover deductions retroactively in cases of fraud or abuse, but control obligations must not systematically undermine the right to deduct. The economic-administrative tribunals were held to be courts or tribunals for reference purposes. Confirms that start-up and investment costs are deductible from the moment of intention supported by objective evidence, and that registration or declaration formalities cannot be turned into substantive conditions for deduction.

C-305/97 Royscot and Others

Judgment · 5 October 1999 · United Kingdom

General exclusion from deduction on car purchases under the standstill clause

The Court held that such general exclusions were lawful under Article 11(4) of the Second Directive and may be retained under Article 17(6). The words "in particular" show the exclusion was never confined to goods capable of private use, so strictly business expenditure, including means of transport constituting the very tool of the trade, may be blocked. The discretion is not unlimited, but excluding a category such as cars does not negate the deduction system. The standstill survives the Council's inaction indefinitely. The ruling confirms that pre-existing national blocking orders on car purchases stand, whatever the commercial necessity of the vehicles and however impossible private use may be.

C-37/95 Ghent Coal Terminal

Judgment · 15 January 1998 · Belgium

Retention of input tax deduction where investment goods are never used

The deduction is allowed and, once it has arisen, remains acquired where circumstances beyond the taxable person's control mean the goods or services are never used for taxable transactions. In such cases there is no risk of fraud or abuse justifying retrospective recovery. Repayment may still be claimed where the claimed intention was a pretext for fraud or abuse. A supply of the capital goods during the adjustment period may trigger adjustment under Article 20(3). Confirms that intention at the time of acquisition, not eventual use, fixes the right to deduct, and that abandoned or displaced projects do not of themselves justify clawback.

C-110/94 INZO

Judgment · 29 February 1996 · Belgium

Preparatory acts and retroactive withdrawal of taxable person status

Where the authority has accepted taxable person status on the basis of a declared intention to carry out taxable transactions, commissioning a technical and economic viability study is itself an economic activity, even though its purpose is to test profitability, and the input VAT is in principle deductible. Except in cases of fraud or abuse, for example a false declaration of intention masking acquisition of private assets, that status and the deductions cannot be withdrawn retroactively merely because the operational phase was never reached. Confirms that feasibility and profitability studies for aborted projects carry a right of deduction, and that authorities cannot claw back refunds simply because the venture failed. Relevant to start-ups, project vehicles, infrastructure and energy joint ventures, and any special purpose company liquidated before trading.

C-291/92 Armbrecht

Judgment · 4 October 1995 · Germany

Retaining part of a mixed-use building in private assets on sale

A taxable person may keep part of an asset devoted to private use outside the VAT system. On sale of that part he does not act as a taxable person under Article 2(1), and a national option to tax under Article 13(C) cannot bring a supply outside the tax within it. Correspondingly, only the part assigned to the business counts for Article 17(2), and the Article 20(2) adjustment is limited to that part. Apportionment must follow the proportions of private and business use in the year of acquisition, not a geographical split, and the private intention must be maintained throughout ownership. Confirms the taxable person's choice, alongside Lennartz full allocation, to keep the privately used share of mixed-use immovable property wholly outside the VAT system, with deduction and capital goods adjustment restricted accordingly. Relevant to hoteliers, guesthouses, professionals and any trader occupying part of business premises as a dwelling, and to advisers structuring acquisitions and later disposals.