Flashback on ECJ Cases – C-155/12 (RR Donnelley Global Turnkey Solutions Poland sp. z o.o.) – Services related to Real Estate – Warehousing incl. Storage and Transport

On June 27, 2013, the ECJ issued its decision in the case C-155/12 (RR Donnelley Global Turnkey Solutions Poland).

VAT – Directive 2006/112/EC – Articles 44 and 47 – Place where taxable transactions are deemed to be carried out – Place of supply for tax purposes – Concept of ‘supply of services connected with immovable property’ – Complex cross-border service relating to the storage of goods

Article in the EU VAT Directive

Article 44 and 47 of the EU VAT Directive 2006/112/EU

Article 44 (Place of supply – general rule)
The place of supply of services to a taxable person acting as such shall be the place where that person has established his business. However, if those services are provided to a fixed establishment of the taxable person located in a place other than the place where he has established his business, the place of supply of those services shall be the place where that fixed establishment is located. In the absence of such place of establishment or fixed establishment, the place of supply of services shall be the place where the taxable person who receives such services has his permanent address or usually resides.

Article 47
The place of supply of services connected with immovable property, including the services of experts and estate agents, the provision of accommodation in the hotel sector or in sectors with a similar function, such as holiday camps or sites developed for use as camping sites, the granting of rights to use immovable property and services for the preparation and coordination of construction work, such as the services of architects and of firms providing on-site supervision, shall be the place where the immovable property is located.

Facts

Link to the EU VAT Directive 2006/112/EU Articles 44 and 47: Place of supply of services
Concept of ‘supply of services connected with immovable property’
Complex cross-border service relating to the storage of goods
RR provides to traders, who are subject to VAT and established in MS other than the Republic of Poland, a complex service relating to the storage of goods.
That service covers, inter alia, admission of the goods to a warehouse, placing them on the appropriate storage shelves, storing those goods, packaging the goods for customers and issuing, unloading and loading the goods. In addition, for certain contractual partners which are suppliers of goods to computer companies, the service at issue also includes the repackaging, into individual sets, of materials supplied in collective packaging.
The provision of storage space is only one of several elements of the logistics process which RR manages.
In addition, for the purpose of the service at issue, RR uses its own employees and packaging, the costs of which form an element of the consideration for the service. RR’s contractual partners which order the storage services do not have established businesses in Poland and do not have a fixed establishment within Polish territory.

Questions

Are the provisions of Articles 44 and 47 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax to be interpreted as meaning that complex services relating to the storage of goods, which comprise admission of the goods to the warehouse, placing the goods on the appropriate storage shelves, storing the goods for the customer, issuing the goods, unloading and loading and, in the case of certain customers, repackaging materials supplied in collective packaging into individual sets, constitute services connected with immovable property which are to be taxed, in accordance with Article 47 of Directive 2006/112, at the place where the immovable property is located?

Alternatively, should it be accepted that the services in question are to be taxed, pursuant to Article 44 of Directive 2006/112, at the place where the customer for whom the services are supplied has established his business on a permanent basis or has a fixed establishment or, in the absence of such a place, at the place where he has his permanent address or usually resides?

AG Opinion

1. Application of Article 47 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Directive 2008/8/EC, requires that the subject-matter of the service be the use of, work on or assessment of specific immovable property or that the service be explicitly listed in that provision.

2. Complex services relating to the storage of goods fulfil these requirements only if the storage of the goods is the principal supply of a single service and it is connected with a right to use specific immovable property or a specific part of such property.

Decision

Article 47 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2008/8/EC of 12 February 2008, must be interpreted as meaning that the supply of a complex storage service, comprising admission of goods to a warehouse, placing them on the appropriate storage shelves, storing them, packaging them, issuing them, unloading and loading them, comes within the scope of that article only if the storage constitutes the principal service of a single transaction and only if the recipients of that service are given a right to use all or part of expressly specific immovable property.

Summary

A combined service of storage, where goods are received in a storage area, placed on suitable storage racks and stored, packed, delivered, loaded and unloaded, is only covered by Article 47 of the VAT Directive if the storage is the main service of a single operation constitutes and the recipients of that service are granted a right of use on an expressly determined immovable property or part thereof.

Comments

Questions need to be answered in order to come to the right treatment:

Is the storage service provided together with the other services so closely linked to the storage that they form, objectively, a single, indivisible service, which it would be artificial to split, and the storage service being the main service sought by the customer?
Is the storage service provided together with other merely ancillary services that are not an end in themselves for the customers but simply a means of better enjoying the storage?

If the answer to one of these questions is positive, the multiple supply shall be treated as a single supply. Provided then that part of the property is assigned for the exclusive use of the customer, all multiple supply of services shall be subject to VAT at the place where the immovable property is located.

If the answer to one of these questions is negative then we have a single supply of services.

Services related to Real Estate Warehousing incl. Storage and Transport

If this is more a passive activity like putting a specific warehousing space assigned for the exclusive use of the customer (rental of space in a warehouse, storage of goods)

=> Service is linked to real estate = exception rule (art. 47)

If this is more an active activity like packing, unpacking, management of inventory , handling service within a warehouse , loading, offloading etc. (complex or bundled logistic/manipulation services) and/or storage of goods where no specific part of the building is assigned for exclusive use of the customer

=> These active services are treated as work on movable goods = main rule (art. 44)

Source