The Court of Justice of the European Union (CJEU) has recently published three decisions related to VAT law:
- In Case C-26/16 (Santogal), a motor vehicle dealership in Portugal sold a new vehicle to an Angolan national allegedly residing in Spain, and claimed a VAT exemption on the sale under Article 138(2) of Council Directive 2006/112/EC (“the EU VAT Directive”), which requires an exemption at origin on supplies of new means of transport between Member States. The Portuguese tax administration later concluded that: (a) the purchaser in fact resided in Portugal rather than Spain; (b) the purchaser had never carried out any economic activity in Spain; and (c) there was no evidence that any VAT was later paid in Spain on the vehicle. The tax administration retroactively assessed Portuguese VAT on the vendor, and the vendor challenged this assessment. In a win for the vendor, the CJEU held that the exemption under Article 138(2) cannot be disallowed simply based on lack of proof that the purchaser is establishment or domiciled in the Member State of acquisition, or on a mere suspicion that a vendor has colluded with a purchaser to commit VAT fraud.
- In Case C-38/16 (Compass), the CJEU held that the EU VAT Directive did not preclude the United Kingdom from establishing different effective dates for two three-year tolling periods, one for claims related to refunds of overpaid output VAT, and the other for claims related to deduction of input VAT. Compass, a catering service provider, had argued that having different tolling periods for the two sets of claims breached EU principles of equal treatment, fiscal neutrality, and effectiveness, and that the tolling periods for both sets of claims should start at the later effective date.
- Finally, in Case C-571/15 (Wallenborn Transports), the CJEU held that Import VAT could not be assessed on a transport company that had unloaded goods in a free zone without presenting them to the customs office, absent a finding that the goods later entered the economic network of the European Union. The CJEU also held that while a chargeable event for customs duties arose when the goods were removed from customs supervision in the free zone, this did not provide a basis for charging VAT.
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