This is what happened in the ECJ/General Court (VAT) in April 2025 – 3 Decisions, 3 AG Opinions, 1 New Question

This summarises the key developments in European Court of Justice (ECJ) and General Court (GC) VAT cases, primarily focusing on information released in April 2025. They cover rulings on when individuals selling land can be taxable persons, the conditions under which company board members can be held liable for VAT debts, and the requirements for tax authorities removing a business from the VAT register, emphasising proportionality and legal certainty. Additionally, the summaries include opinions on the VAT treatment of app store services, factoring fees, and intra-group transfer pricing adjustments. New cases referred to the court concerning the VAT rules for travel services are also noted.

Highlights in April 2025

1 case Decided/ 1 Order
3 AG Opinions released
3 Question have been released
0 new cases, no details yet

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Judgment

ECJ C-213/24 (Grzera) – Judgment – Selling land through an agent can classify individuals as taxable persons
- Context of the Case: The case involves E.T. and W.T., spouses selling agricultural land through an agent, questioning their VAT liability under EU law.
- Key Legal Provisions: The Court interpreted Article 9(1) of the VAT Directive, defining who qualifies as a taxable person and what constitutes an economic activity.
- First Finding: Individuals selling land via a professional agent can be considered taxable persons engaging in economic activities, emphasizing the independence of their actions.
- Second Finding: The legal community of co-owner spouses can be regarded as a single taxable entity, provided they act jointly in sales, sharing the economic risks involved.
- Overall Implication: This ruling clarifies the VAT obligations for individuals involved in property sales and the treatment of co-owned property under EU VAT law.
ECJ C-278/24 (Genzyński) – Judgment – Board Members Jointly Liable for VAT Debts Under Proportionality and Legal Principles
- Facts: P.K. served as the chair of the board of directors of a company, E. sp. z o.o., which incurred VAT debts between May and August 2017. The Polish tax authorities sought to hold P.K. jointly and severally liable for these debts under national law, asserting that the company had failed to pay its VAT obligations and that enforcement against the company’s assets was unsuccessful.
- Legal Questions: The Regional Administrative Court in Wrocław referred questions to the Court of Justice of the European Union, asking whether the VAT Directive and principles of EU law (including proportionality, legal certainty, and equal treatment) preclude national legislation that imposes joint and several liability on board members without establishing fault, and whether it is fair to require a declaration of insolvency when the company has only one creditor.
- Decision: The Court ruled that the VAT Directive does not preclude a national system that holds board members jointly liable for a company’s VAT debts, provided that the liability is limited to debts arising during their term and that exemptions from liability exist, contingent on demonstrating due diligence in managing the company.
- Arguments: The Court noted that while Member States have discretion to enforce VAT collection, this must comply with EU principles. Specifically, the system must allow for the possibility of rebutting liability by showing that the board member acted diligently. Furthermore, the requirement to file for insolvency must not create unjustified burdens, especially when a company has only one creditor, which could effectively negate the board member’s ability to seek exemption.
- Conclusion: The Court emphasized that while joint and several liability can aid in VAT collection, it must respect principles of legal certainty and proportionality. The system should not result in unfair discrimination between board members of companies with multiple creditors versus those with a single creditor, as this could undermine the principle of equal treatment and lead to adverse outcomes for public interests.
ECJ Case C-164/24 (Cityland) – Judgment – EU law mandates analysis of taxpayer conduct before removing VAT registration
- Context of the Case: The case involves a request for a preliminary ruling from the Bulgarian Administrative Court regarding the removal of “Cityland” EOOD from the VAT register due to alleged systematic failures to comply with VAT obligations, raising questions about the compatibility of Bulgarian law with EU VAT regulations.
- Legal Provisions: The Court examined Articles 213 and 273 of the VAT Directive, which outline obligations for taxable persons to declare changes in their status and allow member states to impose necessary measures for VAT collection, respectively.
- Key Findings: The Court ruled that national legislation allowing for the removal of a taxable person from the VAT register without analyzing the nature of the infringements and the taxpayer’s conduct is incompatible with the principles of legal certainty and proportionality as outlined in EU VAT law.
- Principle of Proportionality: The Court emphasized that sanctions, such as removal from the VAT register, must consider the severity and nature of the infractions. A blanket removal without context could lead to unfair penalties and destabilize the taxable person’s business operations.
- Implications: The ruling establishes that tax authorities must conduct a thorough examination of a taxpayer’s conduct and the specifics of any infringements before imposing severe penalties, ensuring fairness and adherence to EU legal standards in VAT enforcement.

Order

None

AG Opinion

C-101/24 ( XYRALITY) – AG Opinion- VAT Liability for App Store Services
- Facts of the Case: XYRALITY GmbH, a German app developer, offered free apps via an Irish-operated app store, which facilitated optional in-app purchases.
- Legal Issues: The case centers on whether the app store qualifies as the supplier of services for VAT purposes, affecting VAT responsibility and payment location.
- Conclusions: Advocate General Szpunar determined that the app store is the supplier, with VAT liability resting on it, and the place of supply is based on the app store’s location in Ireland.
C-232/24 (Kosmiro) – AG Opinion – Factoring fees subject to VAT; direct effect of EU provisions
- Context of the Case: The case involves A Oy, a Finnish company providing factoring services, which sought clarification on the VAT treatment of commissions and fees charged in connection with its factoring activities. The case specifically examines whether these charges fall under VAT exemptions related to credit granting or debt collection.
- Key Questions: The Advocate General addressed several questions regarding whether the factoring commission and arrangement fees should be classified as services subject to VAT, and whether they could be considered as exempt financial services under the VAT Directive.
- Findings on Factoring Services: The AG concluded that both the factoring commission and arrangement fee are considered as remuneration for services provided under the VAT Directive, thus subject to VAT. This conclusion is based on the premise that factoring activities inherently involve the collection of debts, which aligns with the definition of taxable services.
- Classification of Fees: The AG determined that the fees charged for trade factoring and invoice factoring constitute a single and indivisible supply related to debt collection, which is subject to VAT, rather than exempt financial services. The relationship between the factor and the client is characterized by the provision of services for consideration.
- Direct Effect of VAT Provisions: The AG opined that the exemption related to debt collection in Article 135(1)(d) of the VAT Directive is sufficiently clear and unconditional, allowing it to have direct effect. This means that it can be invoked in national courts to challenge national laws that contradict EU VAT provisions.
C-726/23 (Arcomet Towercranes) – AG Opinion – Transfer Pricing Adjustment for intra-group services subject to VAT; documentation required
- Parties Involved: SC Arcomet Towercranes SRL (Arcomet Romania) is part of the Arcomet group, which operates in the crane hire sector. Arcomet Service NV Belgique (Arcomet Belgium) provides administrative services to its subsidiaries, including Arcomet Romania.
- Intra-Group Transactions: Between 2011 and 2013, Arcomet Romania received three invoices from Arcomet Belgium for services rendered. These invoices were related to a transfer pricing agreement, which ensured that Arcomet Belgium would maintain a specific operating profit margin.
- Tax Inspection and VAT Dispute: Following a tax inspection, the Romanian tax authorities denied Arcomet Romania’s right to deduct VAT on these invoices, arguing that the company failed to prove that the services were necessary for its taxable transactions. Consequently, additional VAT, interest, and penalties were imposed.
- Legal Action: Arcomet Romania contested this decision, leading to a referral to the Curtea de Apel Bucureşti (Court of Appeal, Bucharest) for a preliminary ruling on the VAT implications of the transactions.

Questions

New GC VAT Case – T-221/25 (TUI Belgium) – Facts & Questions – VAT Rules for Travel Services
- Prejudicial Questions to EU Court: The Belgian court has referred questions to the Court of Justice of the European Union regarding the necessity of explicit legal provisions for VAT exemptions on travel services outside the EU, particularly in light of changes made after the implementation of Directive 77/388/EEG.
- Impact of Legislative Changes: The court is evaluating whether the removal of an explicit provision that taxed travel agencies for services outside the EU, replaced with implicit regulations, constitutes a significant change from previous legislation that could affect compliance with EU law.
- Ongoing VAT Obligations: The case underscores the complexities of VAT regulations for travel agencies in Belgium, highlighting the need for clarity on whether recent legal adjustments align with EU directives and whether they maintain the intended exemptions for travel services.

ECJ VAT Case, details not yet known

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