ECJ Case C-94/19 (IT vs San Domenico Vetraria) – Questions – Is secondment of staff without markup subject to VAT?

Source: minbuza.nl (Dutch)

• A manager of Avir SpA, the parent company of San Domenico Vetraria SpA, was seconded to the latter as director of one of its sites.
• The costs were charged to San Domenico Vetraria SpA.
• San Domenico Vetraria SpA therefore received invoices from its parent company for the costs incurred for the seconded company manager, and applied VAT to the payment thereof and subsequently recovered this as input VAT.
• The tax authority, considered that the fees, because they did not relate to the provision of services between parent and subsidiary, were not subject to VAT.
• The tax authority therefore claimed the VAT deducted by the taxable person on this ground.
• The appeal court ruled that, in the absence of evidence that the employee received a higher amount or performed duties other than those he already had with the sending company, only non-taxable allowances were paid.
• The referring court has doubts as to whether the national legislation which excludes a service such as the secondment of staff from the scope of VAT, while the reimbursement of the costs of the services in question is taxable, is compatible with EU law. The national legislation appears to give rise to an unjustified difference in treatment between the various instruments used to achieve the “secondment of of staff”. As a result, the principle of fiscal neutrality can be undermined.

Preliminary question:

Are Articles 2 and 6 of the Sixth Council Directive (77/388 / EEC) of 17 May 1977 and the principle of fiscal neutrality to be interpreted as precluding national legislation according to which lending or secondment of employees of the parent company for which the subsidiary only reimburses the relevant costs should not be considered relevant for value added tax?

Cited (recent) case law: Asparuhovo Lake Investment Company OOD C-463/14; MEO – Servigos de Comunicagòes and Multimédia SA C-295/17; SAWP C-37/16; Municipality of Borsele C-520/14; AES-3C Maritza East 1 Eood C-124/12; Soc. Puligienica Facility Esco / Soc. Airgest C-689/13; Commission / Austria C-51/18.

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