Opinion of Advocate General KOKOTT of 6 September 2018 in case C-531/17 (Vetsch Int. Transporte GmbH), regarding exemption from VAT on importation and subsequent intra-Community supply where subsequent VAT fraud by the customer with regard to imported goods
Unofficial translation
Summary:
Bulgarian companies have purchased perfumery products in Switzerland, imported into Austria via a third person and put into free circulation and then moved on to Bulgaria. This all went according to the rules. Only in Bulgaria was it then apparently “forgotten” to properly declare the sales subject to VAT and to pay VAT in Bulgaria. As a result, the Court must once again consider the consequences of VAT fraud.
Facts (simplified):
- Two Bulgarian companies (B and K) acquired goods from a company in Switzerland and were given the power of disposal of these goods in Switzerland. These goods were imported into Austria, where B and K used Vetsch Int. Transporte GmbH (‘Vetsch’) as their customs agent. Subsequently, the goods were transported to Bulgaria on behalf of B and K by a forwarding agent – who had submitted the relevant consignment notes to Vetsch.
- Vetsch submitted declarations as an indirect representative of the respective Bulgarian recipients at an Austrian customs office for the release for free circulation of goods coming from Switzerland under the so-called ‘customs procedure 42’. At the same time, Vetsch applied for an exemption from VAT on import.
- It is clear from the facts that the goods were indeed transported from Austria to Bulgaria. B and K also reported the intra-Community transfer from Austria to Bulgaria, both in Austria and in Bulgaria, and paid the tax due. According to the referring court, it can be assumed that the goods arrived in Bulgaria and that B and K had the power to dispose of the goods during the entire duration of the transport.
- This is were it went wrong. Both Bulgarian companies B and K resold the goods (apparently with VAT). However, they did not indicate this sale but, on the contrary, filed a tax-free intra-Community supply to Vetsch which they had previously used for the customs declaration. That delivery, however, never happened. In the view of the national court, B and K were guilty of tax evasion in Bulgaria. Vetsch was not involved in any way in VAT fraud.
- Nevertheless, Vetsch was designated as the person liable for payment of VAT on importation, since, according to the Austrian tax authorities, the conditions for the exemption upon importation were not fulfilled. And as customs agent, Vetsch was the person liable for payment of VAT on importation.
- The reasoning by the Austrian court was that the VAT exemption for intra-Community supplies (or more precisely intra-Community transfers) in Austria must be refused, because of the subsequent tax evasion by the Bulgarian companies B and K. And therefore, the condition for the exemption from VAT on importation was not met, as this required an exempt supply to be made after importation.
Conclusion:
The AG is of the opinion that:
The reference to the tax exemption for intra-Community supplies relates only to its abstract existence. A refusal to grant the VAT exemption on importation for the declarant of the VAT on importation is therefore not applicable if only the recipient of the goods knew or ought to have known that he is participating in an operation which is part of a VAT fraud.
Source: Curia (Dutch) – English will follow soon
