Summary
On 9 October 2009, the Dutch Supreme Court referred a case to the ECJ for a preliminary ruling. The case deals with the question which facts are relevant and/or must be applied when determining which supply, as part of a number of subsequent supplies, should be considered the VAT exempt intra-Community supply because this is the supply to which the intra-Community transport of the goods must be allocated.
Full articleOn 9 October 2009, the Dutch Supreme Court referred a case to the ECJ for a preliminary ruling. The case deals with the question which facts are relevant and/or must be applied when determining which supply, as part of a number of subsequent supplies, should be considered the VAT exempt intra-Community supply because this is the supply to which the intra-Community transport of the goods must be allocated. Below you will find a summary of the case.
The facts
A Dutch established company traded in parts of cars and other vehicles. In the relevant taxable period, the company sold car tires on a number of occasions. During the period between 1 October 1997 and 31 January 1999, at several occasions, batches of car tires (the goods) were sold under the delivery condition "ex warehouse" (in the Netherlands) to two companies established in Belgium (the buyers). This condition (ex warehouse) meant that the company would supply the goods on demand of the buyers in or close to its warehouse and that the transport from the warehouse would be for the account and risk of the buyers.
At the conclusion of the relevant sales, the buyers informed the selling company that the goods would be transported to Belgium. In respect of these supplies, the company issued invoices to the purchasers without charging nor mentioning VAT. The buyers paid before the moment of the supplies.
Before the delivery of the goods as a result of the supply between the company and the buyers, each of the buyers subsequently sold the goods to another company, established in Belgium, under the condition that the transport of the goods to the place of establishment of the Belgian established company would be for the account and risk of the buyers (and not the latter company).
The goods were collected at the warehouse of the selling company in the Netherlands by a representative of the buyers and transported to the establishment of the buying company in Belgium, using a truck and drive that was put at the disposal of the buyers by the latter company (for a consideration). At each occasion, the driver provided the selling company (according to the statement "where required on behalf of the customer”) a statement signed by him, stating that the goods were transported to Belgium. The goods that were collected in the Netherlands were transported directly to the establishment of the buying company in Belgium and unloaded and stored there.
Afterwards, the selling company was informed that the goods were not transported to the address of the buyers. The company has not been involved with the actual transport. Prior to the supplies made by the company, the tax authorities have stated, at her request, that the VAT identification numbers of the buyers were correct. Furthermore, the selling company included these supplies in his EC sales listings.
How can VAT exemption be demonstrated?
After performing a VAT review, the Tax Inspector was of the view that the application of the 0% rate was not sufficiently demonstrated by the selling company. The inspector imposed an additional assessment on these supplies. The company appealed against this decision and eventually the case was judged by the Dutch Supreme Court.
The question which arises in this case is what objective information must (and can) be used as a basis by suppliers such as the selling company and the buyers at the time of issuing an invoice or receiving payment or fining a VAT return, for determining whether they are allowed to apply the VAT exemption in respect of an intra-Community supply.
The Dutch Supreme Court considerd that a supplier, at the time of issuing the invoice or receiving payment, is not always directly in the possession of all the relevant evidence that the goods are transported to another Member State and that he does not need to possess this evidence at that time. It also seems to be that the supplier, in order to be allowed to apply the VAT exemption on intra-Community supplies, does not have to know to which place in another Member State the goods are transported or shipped.
Assuming that the makers of the VAT directive wanted to create a system that is practicable for the taxpayers, it could be argued according to the Dutch Supreme Court that the VAT exemption regarding intra-Community supplies (automatically) applies to the supplies of goods by a taxpayer (the seller) to another taxable perso
n in another Member State (the buyer), where the buyer provides his tax-identification number from that other Member State to the supplier for the purpose of the transportation of the goods to that other Member State, and where those goods are actually transferred to that other Member State.
The correctness of this conclusion is, however, not beyond doubt. The Dutch Supreme Court will therefore request the Court of Justice of the European Communities (ECJ) for a preliminary ruling with regard to the question as stated below.
Decision
The Dutch Supreme Court asks the ECJ to decide on the question how, in the light of the Sixth Directive, where with regard to the same good two subsequent supplies are performed between taxable persons acting as such, involving a single intra-Community dispatch or a single intra-Community transport, should it be determined to which supply the intra-Community transport should be allocated, if the transport of the goods is performed by or on behalf of the person who has both the capacity of purchaser in the first supply and seller on the second supply?
The Dutch Supreme Court suspended the proceedings until the ECJ has given his preliminary ruling.
Source: Dutch Supreme Court, 9 October 2009, case no. 43945.