VATupdate

Flashback on ECJ Cases – C-84/09 (X) – Classification of a transaction as an EU supply or acquisition cannot depend on the observance of a period within which the transport of the goods in question must begin or end

On November 18. 2010, the ECJ issued its decision in the case C-84/09 (X).

Context: Directive 2006/112/EC – Article 2, first paragraph of Article 20 and Article 138(1) – Intra-Community acquisition of a new sailing boat – Immediate use of the goods purchased in the Member State of acquisition or in another Member State before transporting it to its final destination – Time-limit within which transport of goods to place of destination commences – Maximum duration of transport – Relevant point in time for determining whether a means of transport is new for the purposes of taxation thereof


Article in the EU VAT Directive

Article 20, 138(1) in the EU VAT Directive 2006/112/EC

Article 20 (Taxable transaction)

“Intra-Community acquisition of goods” shall mean the acquisition of the right to dispose as owner of movable tangible property dispatched or transported to the person acquiring the goods, by or on behalf of the vendor or the person acquiring the goods, in a Member State other than that in which dispatch or transport of the goods began.

Where goods acquired by a non-taxable legal person are dispatched or transported from a third territory or a third country and imported by that non-taxable legal person into a Member State other than the Member State in which dispatch or transport of the goods ends, the goods shall be regarded as having been dispatched or transported from the Member State of importation. That Member State shall grant the importer designated or recognised under Article 201 as liable for payment of VAT a refund of the VAT paid in respect of the importation of the goods, provided that the importer establishes that VAT has been applied to his acquisition in the Member State in which dispatch or transport of the goods ends.

Article 138 (Exemption related to Suppky of goods – Intra-Community Supply of goods)

1. Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, for another taxable person, or for a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods began.


Facts

  •  X, a private individual who is resident in Sweden, intends to acquire in the United Kingdom a newly manufactured sailing boat exceeding 7.5 metres in length for private use. After delivery of the sailing boat, X intends to use it for recreational purposes in the Member State of supply for three to five months and thus to sail the boat for more than 100 hours. Alternatively, the boat is to be transported out of the United Kingdom immediately after delivery for similar use in Member States other than Sweden. In both cases, after the planned use, the boat is to be sailed to Sweden, which is the final destination. In order to clarify the tax consequences of the acquisition, X applied to the Skatterättsnämnden for a preliminary decision as to whether the acquisition would be taxed in Sweden in either of the two cases.
  • The Skatterättsnämnden found that in both cases X must be regarded as making an intra-Community acquisition of a new means of transport for which he must pay VAT in Sweden. The Skatterättsnämnden’s reasoning was that the boat, on delivery from the shipyard, must be considered to be a new means of transport because, at the point in time when X acquires the right to dispose of the boat as owner, it will not have been used for more than three months since it first entered into service or have been sailed for more than 100 hours. The fact that those conditions will no longer be satisfied when the vessel does in fact reach Sweden has no bearing on that assessment. The Skatterättsnämnden further took the view that the transport begins at the time of the acquisition or the vendor’s delivery of the boat in question and that the place of the intra-Community acquisition is the place where the boat is at the time when transport of it ends, in this case Sweden.
  • Taking the view that the envisaged acquisition should be taxed as a supply effected in the United Kingdom, X appealed against that preliminary decision to the Regeringsrätten. The Skatteverket, for its part, asked the referring court to uphold the preliminary tax decision.

Questions

Are Articles 138 and 20 of Council Directive [2006/112/EC] on the common system of value added tax 1 to be interpreted as meaning that the transport out of the territory of the State of origin must begin within a certain period of time for the sale to be exempt from tax and for there to be an intra-Community acquisition?
Similarly, are those Articles to be interpreted as meaning that the transport must end in the country of destination within a certain period of time for the sale to be exempt from tax and for there to be an intra-Community acquisition?
Would the answers to questions 1 and 2 be affected if that which is acquired is a new means of transport and the person acquiring the goods is an individual who intends ultimately to use the means of transport in a particular Member State?
In connection with an intra-Community acquisition, at which time must the assessment be made as to whether a means of transport is new in accordance with Article 2(2)(b) of Council Directive [2006/112/EC] on the common system of value added tax?

AG Opinion

(1)      The classification of a transaction concerning a new vessel exceeding 7.5 metres in length as an intra-Community supply exempt from tax under Article 138 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and as an intra-Community acquisition taxable in the State of destination under Article 20 of that directive does not depend only on the condition that the vessel leave the Member State of origin or arrive in the Member State of destination within a certain period of time. Such classification should rather be made on the basis of an overall consideration of all the objective circumstances and having regard to the intention of the person acquiring the goods concerning their final consumption, as confirmed by factual evidence.

(2)      In order to determine whether a means of transport that is the subject‑matter of an intra-Community acquisition is new within the meaning of Article 2(2)(b) of Directive 2006/112, it is necessary to take into consideration the moment when the goods in question were supplied by the vendor to the purchaser.


Decision

1. The first paragraph of Article 20 and Article 138(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, are to be interpreted as meaning that the classification of a transaction as an intra-Community supply or acquisition cannot be made contingent on the observance of any time period during which the transport of the goods in question from the Member State of supply to the Member State of destination must be commenced or completed. In the specific case of the acquisition of a new means of transport within the meaning of Article 2(1)(b)(ii) of that directive, the determination of the intra-Community nature of the transaction must be made through an overall assessment of all the objective circumstances and the purchaser’s intentions, provided that it is supported by objective evidence which make it possible to identify the Member State in which final use of the goods concerned is envisaged.

2. The assessment of whether a means of transport which is the subject-matter of an intra-Community acquisition is new within the meaning of Article 2(2)(b) of Directive 2006/112 must be made at the time of the supply of the goods in question by the vendor to the purchaser.


Summary

The classification of a transaction as an intra-Community supply or acquisition cannot depend on the observance of a period within which the transport of the goods in question must begin or end from the Member State of supply to the Member State of destination.

In the specific case of the acquisition of a new means of transport (sailing boat), whether the transaction is intra-Community must be determined on the basis of an overall assessment of all objective circumstances and the intention of the purchaser, insofar as this intention is supported by objective data on basis for determining in which Member State the end-use of the good concerned is envisaged.

For the purpose of assessing whether a means of transport is new in the context of an intra-Community acquisition, the relevant time must be the time of delivery of the goods concerned by the seller to the buyer.


Source:


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