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European Union

Briefing Document & Podcast: ECJ Vega International (C-235/18) – VAT exemption for fuel card transactions

4 weeks ago
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Analysis of CJEU Judgment C-235/18 regarding VAT exemption for fuel card transactions.

Source:

  • ECLI:EU:C:2019:412 (Judgment of the Court (Eighth Chamber) of 15 May 2019)

Executive Summary:

This briefing summarises the key findings of the Court of Justice of the European Union (CJEU) in Case C-235/18, Vega International Car Transport and Logistic — Trading GmbH v Dyrektor Izby Skarbowej w Warszawie. The case concerns the VAT treatment of fuel card transactions between a parent company (Vega International) and its subsidiary (Vega Poland). The CJEU ruled that providing fuel cards by a parent company to its subsidiaries, enabling them to refuel their vehicles, can be classified as a credit granting service exempt from VAT under Article 135(1)(b) of Council Directive 2006/112/EC. This decision hinges on the determination that the parent company is not supplying fuel, but rather providing a financial service, similar to granting credit.

Background:

Vega International, an Austrian company, provides fuel cards to its subsidiaries, including Vega Poland, to facilitate refuelling of vehicles used in their transport operations. Vega International centralises fuel card transactions, receives invoices from fuel suppliers, and then passes on the costs to its subsidiaries with a 2% surcharge. Vega International sought a VAT reimbursement in Poland, which was refused. The case reached the Naczelny Sąd Administracyjny (Supreme Administrative Court, Poland), which referred a question to the CJEU for a preliminary ruling regarding the interpretation of Article 135(1)(b) of Directive 2006/112.

Key Issues and CJEU Ruling:

The core question was whether the provision of fuel cards and the associated financing activities should be considered:

  1. A VAT-exempt credit granting service, or
  2. A complex transaction primarily aimed at supplying fuel, thus constituting a supply of goods subject to VAT (allowing for VAT recovery).

The CJEU, referencing previous case law (Auto Lease Holland, C-185/01), determined that the supply of fuel was not made to Vega International. The court reasoned that it is Vega Poland who:

  • chooses the fuel quality and quantity at the service station.
  • bears the costs of the fuel consumption.

Therefore, Vega International does not exercise control over the fuel “as owner” and does not, therefore, constitute a supply of goods.

The Court stated: ” Vega International does not dispose of the fuel in respect of the purchase of which it seeks reimbursement of VAT as if it were the owner. That fuel is purchased by Vega Poland directly from the suppliers and at its sole discretion.”

Instead, Vega International’s actions constitute a supply of services, and in this case, specifically ” a genuine financial transaction which is akin, more specifically, to the granting of credit for the purposes of Article 135(1)(b) of Directive 2006/112“. This is further reinforced by Vega International adding a 2% surcharge for the service.

Key Quotes:

  • “Article 135(1)(b) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that, in circumstances such as those of the case in the main proceedings, the provision of fuel cards by a parent company to its subsidiaries, enabling those subsidiaries to refuel the vehicles they transport, may be classified as a service granting credit which is exempt from value added tax as referred to in that provision.”
  • “Vega International confines itself to providing its Polish subsidiary, by means of fuel cards, with a simple instrument enabling it to purchase that fuel, thereby playing no more than an intermediary role in the purchase transaction concerning that product.”
  • “…it must be found that the provision, by Vega International, of fuel cards to Vega Poland constitutes a genuine financial transaction which is akin, more specifically, to the granting of credit for the purposes of Article 135(1)(b) of Directive 2006/112”

Implications:

This ruling provides clarity on the VAT treatment of fuel card arrangements within corporate groups. Companies structuring similar arrangements should review their practices to ensure compliance with the CJEU’s interpretation. The key takeaway is that if the parent company acts as a facilitator of fuel purchase rather than a supplier of fuel and charges a fee (such as the 2% surcharge in this case), the transaction is likely to be treated as a VAT-exempt credit granting service. This may have significant implications for VAT recovery claims.

Disclaimer: This briefing is for informational purposes only and does not constitute legal advice. Companies should consult with their tax advisors to determine the specific implications of this ruling for their own circumstances.

See also

 

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