- The compensation paid by a local authority to a transport company for losses in public transport services is not subject to VAT.
- The EU Court of Justice ruled on this in case C-615/23 on May 8.
- The case involved a Polish company planning a contract with a local authority for public transport services.
- Ticket prices set by the local authority are insufficient to cover costs, leading to compensation for losses.
- The national court asked if this compensation is a payment for services and subject to VAT.
- According to EU Directive 2006/112, VAT includes all payments for services, including subsidies directly linked to the price.
- For a subsidy to be directly connected to the price, it must be paid specifically for a service, affect the buyer’s price, and be determinable.
- The EU Court found the compensation is not specifically for a service to a determined recipient and does not affect the ticket price.
- The compensation is based on vehicle kilometers, not service usage, and is granted after the fact.
- The compensation does not qualify as a payment from a third party.
- The case is not comparable to case C-151/13, Le Rayon d’Or, involving a different type of payment.
Source: eutekne.info
- Join the Linkedin Group on ECJ/CJEU/General Court VAT Cases, click HERE
- VATupdate.com – Your FREE source of information on ECJ VAT Cases
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
