- Clarification on Reverse Charge Mechanism: The Tax and Customs Administration confirmed that the reverse charge mechanism under Section 12(5) of the VAT Act 1968 applies exclusively to the construction, metal construction, and shipbuilding sectors, excluding other service providers.
- Specific Cases Reviewed: Two entrepreneurs sought clarification regarding their services—one providing safety equipment for railway maintenance and the other lending traffic controllers for roadworks. Both were informed that the reverse charge mechanism does not apply to their services since they do not perform physical work on immovable property.
- Strict Interpretation of VAT Regulations: The Tax and Customs Administration adheres to a strict interpretation aligned with CJEU case law, emphasizing that only services involving direct physical work on immovable property qualify for the reverse charge mechanism, thus categorizing facilitation services as outside its scope despite their importance for construction and maintenance activities.
Source
ECJ Cases referred to
- C-434/17 (Human Operator) – Determination of the taxable person liable for VAT – Retroactive application of a derogating measure – VATupdate
- C-63/96 (Skripalle) – ECJ Rules Against Minimum VAT Assessment for Family-Associated Transactions – VATupdate
