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Summary of ECJ C-677/21: Unlawful use of energy is a supply of goods

Background

  • MX was summoned by Fluvius to pay EUR 813.41 for electricity consumption from May 2017 to August 2019, along with default and statutory interest.
  • MX had not been invoiced before as Fluvius had been supplying electricity to them under a public service obligation.
  • However, MX had used electricity without a contract with a commercial supplier and was therefore supplied by Fluvius under the same obligation.
  • Fluvius invoiced MX for the actual usage, which was deemed unlawful. The magistrate asked Fluvius to clarify the VAT chargeability on the invoiced amount.

Questions

  • Does the unlawful usage of energy constitute a supply of goods under Article 2(1)(a) and Article 14(1) of Directive 2006/112/EC, or is it considered a transfer of ownership under Article 14(2)(a)?
  • If Fluvius Antwerpen is entitled to compensation for the unlawful usage of energy, does it qualify as a taxable person under Article 9(1) of Directive 2006/112/EC due to its economic activity of exploiting tangible property for income?
  • If so, does this make Fluvius Antwerpen a public authority under the first paragraph of Article 13(1), and is the unlawful usage of energy significant enough to not be considered negligible under the third paragraph of Article 13(1)?

Decision

  • The supply of electricity by a distribution network operator, even if involuntary and due to unlawful conduct by a third party, constitutes a supply of goods for consideration entailing the transfer of the right to dispose of tangible property.
  • This also constitutes an economic activity of the operator as it involves a risk inherent in its activity.
  • If carried out by a public authority, it may be considered negligible only if it has minimal impact on competition.

See also


  • Join the Linkedin Group on ECJ VAT Cases, click HERE
  • For an overview of ECJ cases per article of the EU VAT Directive, click HERE

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