The European Court of Justice received the following preliminary questions from the Najvyšší súd Slovenskej republiky (Slovak Republic) in case C-621/19 (Weindel Logistik Service SR spol. s r.o.)
Facts (simplified)
Weindel Logistik Service (WLS), as buyer and declarant, has imported goods from Switzerland, Hong Kong and China into Slovakia for repackaging. After repackaging, the goods are exported from Slovakia to or delivered to a third country.
The repackaging work has been charged to customers. During the entire period, the foreign customers remained the legal owner of the goods.
The tax authorities claimed that WLS is infringing the VAT law, as it was not the owner of the imported goods.
WLS states that it is entitled to claim input VAT, because the matter of ownership only sees to supplies of goods.
The question is whether the right to deduct VAT, which a taxpayer has to pay for importing goods, only arises if the taxpayer is the owner of the imported goods (or can dispose of those goods as an owner).
Questions referred
Must Article 167 and Article 168(e) of the VAT Directive be interpreted as meaning that the right to deduct the value added tax which a taxable person is required to pay on imported goods is conditional on a right of ownership in respect of the imported goods or on the right to dispose of the imported goods as owner?
Must Article 168(e) of the VAT Directive be interpreted as meaning that the right to deduct the value added tax which a taxable person is required to pay on imported goods arises only if the imported goods are used for the purposes of the taxable person’s taxable transactions in the form of the sale of the goods in the national territory or the supply of the goods to another Member State or the export of the goods to a third country?
In such circumstances, is the condition that there be a direct and immediate link between the goods purchased and the output transaction satisfied and, more specifically, is it permissible to apply, in the present case, the traditional interpretation of the right of deduction based on a direct and immediate link between the goods purchased and the output transactions with regard to cost components that have not arisen in relation to the goods and that cannot therefore be reflected in the price of the output supply?
Source: curia.europa.eu
Note: This question is interesting in the light of the recent publication of the UK tax authorities (Revenue and Customs Brief 2 (2019)), where HMRC states that import VAT is only recoverable by the legal owner of the imported goods.
This case is expected to build further on case C‑187/14 DSV Road A/S, where the ECJ decided that a carrier was not entitled to claim import VAT:
- A right to deduct exists only in so far as the goods imported are used for the purposes of the taxed transactions of a taxable person.
- In accordance with the settled case-law of the Court concerning the right to deduct VAT on the acquisition of goods or services, that condition is satisfied only where the cost of the input services is incorporated either in the cost of particular output transactions or in the cost of goods or services supplied by the taxable person as part of his economic activities (see judgments in SKF, C‑29/08, EU:C:2009:665, paragraph 60, and Eon Aset Menidjmunt, C‑118/11, EU:C:2012:97, paragraph 48).
- Since the value of the goods transported does not form part of the costs making up the prices invoiced by a transporter whose activity is limited to transporting those goods for consideration, the conditions for application of Article 168(e) of the VAT Directive are not satisfied in the present case.
- It follows from all the foregoing considerations that the answer to the fourth question is that Article 168(e) of the VAT Directive must be interpreted as not precluding national legislation which excludes the deduction of VAT on import which the carrier, who is neither the importer nor the owner of the goods in question and has merely carried out the transport and customs formalities as part of its activity as a transporter of freight subject to VAT, is required to pay.
