On 28 March 2019, the European Court of Justice gave its judgment in Case C-275/18 (Vins) regarding the question if the documents issued by the postal services are sufficient evidence for charging 0% VAT on export deliveries.
Context: Reference for a preliminary ruling — Common system of value added tax — Directive 2006/112/EC — Article 131 and Article 146(1)(a) — Exemption for supplies of goods dispatched or transported to a destination outside the European Union — Condition of exemption laid down by national law — Placing of goods under a particular customs procedure — Proof of placing of goods under the export procedure
Articles in the EU VAT Directive
Articles 131 and 146(1)(a) of the EU VAT Directive 2006/112/EC
Article 131 (Exemption – General Provisions)
The exemptions provided for in Chapters 2 to 9 shall apply without prejudice to other Community provisions and in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse.
Article 146 (Exemptions on Exportation)
1. Member States shall exempt the following transactions:
(a) the supply of goods dispatched or transported to a destination outside the Community by or on behalf of the vendor;
- Vins, a company established in Czech Republic, sold and delivered goods by post – especially military memorabilia, about 400 to 500 pieces per month, at prices varying between 100 and 400 Czech crown (CZK) each (between approx. 3.90 EUR and 15.60) – to third countries outside the European Union.
- Vins argued that these goods were exported from the EU and charged 0% VAT.
- The Czech tax authorities did not agree with this, as they were of the opinion that Vins did not have sufficient evidence of the export transactions in its VAT bookkeeping.
- Vins claims that to fulfill the conditions of the VAT exemption for export does not require the goods to be placed under any of the customs procedures or that a customs document is necessary, but that is is sufficient to prove the export in another way, as long as it is clear that the goods have actually left the territory of the EU. According to Vins, documents issued by postal services which transport these goods to third countries ensured such proof.
- The Czech Court also also considers that the export of goods can be substantiated by a different piece of evidence than a
Customs declaration stating that the goods have been exported to a place outside the territory of the EU (referring also to ECJ Case C-563/12 (BDV Hungary Trading Kft.).
- However, here the question arises whether the national legislator is allowed to require a taxable person to have specific evidence, such as that the goods are placed under one of the customs procedures, and not accepting any other evidence.
According to the Court’s case-law, there are only two situations in which the failure to meet a formal requirement may result in the loss of entitlement to an exemption from VAT.
(33) First, the principle of fiscal neutrality cannot be relied on for the purposes of an exemption from VAT by a taxable person who has intentionally participated in tax evasion which has jeopardised the operation of the common system of VAT. According to the Court’s case-law, it is not contrary to EU law to require an operator to act in good faith and to take every step which could reasonably be asked of him to satisfy himself that the transaction which he is carrying out does not result in his participation in tax evasion. If it were concluded that the taxable person concerned knew or ought to have known that the transaction he carried out was part of a fraud committed by the purchaser and that he had not taken every step which could reasonably be asked of him to prevent that fraud from being committed, he would have to be refused the exemption.
(35) Second, a breach of a formal requirement may lead to the refusal of an exemption from VAT if the effect of the breach is to prevent the production of conclusive evidence that the substantive requirements have been satisfied.
May the right to an exemption from VAT on the export of goods (Article 146 of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax) be subject to the condition that the goods are previously placed under a special customs procedure?
Does the objective of preventing fraud, avoidance and abuse in Article 131 of the VAT Directive constitute a sufficient justification for such national legislation?
In circumstances such as those at issue in the main proceedings, the failure to comply with the formal requirement of placing the goods intended to be exported under the export customs procedure cannot lead to the exporter losing his right to the exemption on export, provided that it is established that the goods concerned have actually left the territory of the European Union.
The answer to the questions referred is that Article 146(1)(a) in conjunction with Article 131 of the VAT Directive must be interpreted as precluding a national legislative provision from making the exemption from VAT for goods intended to be exported outside the European Union conditional on the goods being placed under the export customs procedure, in a situation in which it is established that the substantive conditions of exemption, in particular the condition that the goods concerned actually leave the territory of the European Union, are satisfied.