Last update: December 5, 2025
The recent rulings by the European Court of Justice (ECJ) highlight critical interpretations of VAT exemptions concerning both intra-Community supplies and the importation of goods. Cases such as C-639/24 (FLO VENEER), C-602/24 (W.), C-125/24 (Palmstråle), and C-405/24 (L.) address key issues regarding the documentation and procedural requirements for VAT exemptions, the impact of suppliers’ knowledge on tax liabilities, and the conditions under which exemptions can be denied. Additionally, these cases examine how import VAT exemptions apply, particularly in scenarios where customs formalities are not strictly followed. Central to these judgments is the principle of fiscal neutrality, which aims to ensure that legitimate transactions are not penalized by rigid adherence to formal requirements, thereby fostering a more cohesive VAT system across EU member states. As these rulings unfold, they set important precedents for businesses navigating the complexities of VAT compliance in cross-border trade and import scenarios.
Judgments released
- Case Overview and Background: The ECJ ruled in case C-639/24 (FLO VENEER), addressing whether VAT exemptions for intra-Community supplies can be denied solely due to missing specific documentation as outlined in Article 45a of Implementing Regulation No 282/2011. The case arose from FLO VENEER’s tax assessment by the Croatian Ministry of Finance regarding the sale of oak logs to a purchaser in Slovenia.
- Court’s Decision and Justification: The Court held that VAT exemptions under Article 138(1) cannot be refused merely for lack of specific evidence; instead, national tax authorities must evaluate all evidence presented to establish whether goods were transported from one Member State to another. The ruling emphasized that substantive conditions for VAT exemption should take precedence over formal documentation requirements, promoting fiscal neutrality.
- Implications for VAT Compliance: This judgment clarifies that tax authorities must consider all relevant evidence of physical movement when assessing VAT exemptions, thereby reducing barriers to intra-Community trade and ensuring businesses are not penalized for minor documentation shortcomings if they can demonstrate that an intra-Community supply occurred.
ECJ C-602/24 (W.) – Judgment – Exemption for I/C supplies even if goods are exported – VATupdate
- Case Overview and Context: The ECJ ruled in case C-602/24 (W.) regarding VAT exemptions for goods declared as intra-Community supplies but subsequently exported outside the EU without the supplier’s knowledge. The case arose from a dispute between W. sp. z o.o. and the Polish tax authorities over the classification of apple supplies that were exported to Belarus instead of another EU Member State.
- Court’s Decision on VAT Exemption: The Court determined that the exemption under Article 146(1)(b) of the VAT Directive applies even if the goods were initially declared as intra-Community supplies, provided that the export was confirmed by tax authorities based on customs documentation. The ruling emphasizes that the supplier’s lack of knowledge about the export does not negate the exemption.
- Implications for VAT Compliance: This judgment reinforces the principle of fiscal neutrality, allowing for VAT exemptions based on the actual movement of goods as verified by tax authorities, rather than strictly adhering to initial declarations by suppliers. It promotes a more flexible interpretation of VAT regulations to support intra-Community trade and mitigate the impact of strict formal requirements.
- Case Overview and Background: The ECJ ruled in case C-125/24 (Palmstråle) regarding the VAT exemption for re-imported goods, specifically horses exported to Norway for competitions and then re-imported to Sweden without following customs procedures. The Swedish customs authorities imposed VAT due to the failure to declare the goods upon re-entry.
- Court’s Decision on VAT Exemption: The Court determined that the failure to comply with customs formalities, such as presenting goods to customs, does not prevent entitlement to VAT exemption for re-imported goods unless there is an intent to evade customs regulations. The ruling emphasizes that substantive conditions for VAT exemptions should take precedence over procedural non-compliance.
- Implications for VAT and Customs Compliance: This judgment clarifies that VAT exemptions for re-imports can be granted even if customs procedures are not followed, as long as there is no attempt at deception. This promotes fiscal neutrality and ensures that minor procedural lapses do not hinder a trader’s ability to benefit from VAT exemptions for legitimate re-imported goods.
- Case Overview and Background: The ECJ ruled in case C-405/24 (L.) regarding VAT exemptions for small non-commercial consignments imported from third countries. The case involved a dispute where a forwarding company challenged a tax ruling that denied VAT exemption for goods intended for individuals in other EU Member States, based on Polish law restricting exemptions to goods consigned within Poland.
- Court’s Decision on VAT Exemption: The Court concluded that Article 143(1)(b) of the VAT Directive and Article 1 of Directive 2006/79 preclude Member States from excluding VAT exemptions for small non-commercial consignments sent from a third country to individuals residing in another EU Member State. The ruling emphasizes that VAT exemptions should apply regardless of the consignee’s location within the EU.
- Implications for VAT Compliance: This judgment clarifies that EU legislation supports uniform VAT exemptions for small consignments, promoting intra-EU trade and preventing Member States from imposing restrictions that could create barriers for non-commercial imports. The ruling reinforces the principle of fiscal neutrality in the application of VAT exemptions across the EU.
- MS Kljucarovci, a Slovenian VAT-registered company, faced a determination from the Slovenian tax authority that it was ineligible for simplification measures in a triangular transaction due to alleged VAT fraud involving multiple operators across three Member States.
- The Slovenian Administrative Court sought clarification on the VAT Directive regarding whether physical transport of goods to the final customer rather than the intermediary impacts compliance in triangular transactions, leading to a ruling that such transport does not affect the satisfaction of conditions under Article 141(c) if the customer is VAT-registered in the same Member State.
- The General Court concluded that an intermediary’s awareness of the delivery destination does not impact compliance with VAT conditions, and authorities can deny simplification benefits if a purchaser is found to have knowingly participated in VAT fraud, reinforcing the need to combat fraud while upholding VAT system integrity.
AG Opinion released
- Case Background and Legal Context: The General Court released the Advocate General’s opinion in case T-638/24, involving AS ‘D GmbH’ and the Austrian National Tax Authority regarding VAT on intra-Community acquisitions of goods. The dispute centers on whether VAT can be charged under Article 41 of Directive 2006/112 when VAT has been incorrectly invoiced for exempt intra-Community supplies.
- Key Legal Questions: The Austrian Supreme Administrative Court seeks clarification on whether the application of Article 203 (regarding incorrectly invoiced VAT) precludes the taxation of corresponding intra-Community acquisitions under Article 41, and whether subsequent adjustments of invoices affect the chargeable event for VAT.
- Advocate General’s Opinion: The Advocate General concludes that incorrectly invoiced VAT does not negate the tax jurisdiction of the Member State under Article 41, allowing for taxation in the originating state. Furthermore, the chargeable event for VAT occurs when the acquisition is made, reinforcing the importance of proper VAT compliance and highlighting the need for clarity in invoicing practices related to intra-Community transactions.
Questions released
- Case Overview and Background: The General Court is reviewing case T-614/25 involving AS ‘Trading 4’, a Latvian fuel wholesaler, and the Latvian National Tax Authority regarding the application of a 0% VAT rate on cross-border sales of hydrocarbons to intermediaries in Estonia and Britain, who then resell the goods within the EU. The key dispute centers on whether ownership transfer occurs before the goods leave Latvia, influencing the VAT treatment of the transactions.
- Tax Authority vs. Trading 4’s Position: The Latvian Tax Authority contends that ownership transferred domestically, making the sales subject to normal VAT, while Trading 4 argues that ownership only transfers upon delivery in the destination country, qualifying the transactions as intra-EU supplies eligible for 0% VAT. Trading 4 denies any involvement in VAT evasion.
- Legal Questions Presented to the Court: The Latvian Supreme Court has referred several questions to the Court of Justice of the EU, seeking clarification on the interpretation of Articles 138(1), 141, and 197(1) of the VAT Directive regarding VAT exemption in triangular transactions, particularly concerning the timing of ownership transfer, the conditions for VAT exemption, and the treatment of subsequent sales in a different member state.
Not yet published on Curia
- An Austrian supplier charged VAT on a B2B supply to a UK business in Sweden (deliver to Sweden) because the customer didn’t provide an EU VAT ID, prompting the customer to seek input tax recovery.
- The Austrian Federal Fiscal Court has referred questions to the ECJ concerning whether a customer’s EU VAT ID is a substantive requirement for zero-rating intra-EU supplies, the possibility of input tax deduction without it, and if corrections can be made retroactively.
- The author suggests that the EU VAT ID is not a substantive requirement and that input tax deduction would likely be refused if the supply is treated as taxable due to the absence of a valid EU VAT ID.
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