On 23 November 2018 the European Court of Justice received questions in case C-653/18 (Unitel) regarding the application of the VAT zero-rate on export sales whereby the recipient in the non-EU country is different from the customer mentioned on the sales invoice.
Unofficial translation
Facts (simplified):
Unitel SpZoo in Poland sells mobile telephones. This includes exports from Poland to Ukraine. Unitel charge 0% VAT on these export sales.
The Polish tax authorities raised questions about the sales to the Ukrainian companies A. (AJVA O.O.O.) and M.G. (Mikhail Gavriliv).
Unitel’s documents (VAT invoices and ED documents) showed that while the mobile phones were exported to a place outside the EU, Unitel did not supply them to the above-mentioned customers.
The Polish tax authorities argued that (thus) no export of goods took place and Unitel was therefore not entitled to apply a VAT rate of 0%.
Unitel argued that the goods were exported and that the conditions for applying the VAT zero-rate were met.
A not unimportant detail in this case is that the Ukrainian ‘customers’ (A and M.G.) were found to be fake, and the actual recipient of the mobile phones used these products to be sold onto the black market in both Poland and the Ukraine.
Questions:
The Polish Court asks the following questions:
1. Can the VAT zero-rate be applied to export supplies if the following (cumulative) conditions are met:
- The goods have been exported to an unidentified customer located outside the European Union, and
- There is clear evidence that the goods have left the territory of the Union without this circumstance being challenged?
2. Can a Member State disallow the VAT zero-rate on export supplies by arguing that there is no supply of goods if they have been undeniably exported to a place outside the European Union but the national tax authorities have established in the course of proceedings that the actual recipient is not the same as the recipient stated on the invoice?
3. If the argument of ‘no supply has taken place’ is accepted, can a Member State then argue that the sale is subject to the standard VAT rate, or should it be assumed in this case that no taxable transaction has taken place at all and that the taxpayer is not entitled to deduct the input VAT on the acquisition of the exported goods?
Source: MinBuza (Dutch)
Note: Especially the last question asked by the Polish Court is somewhat funny: the tax authorities think they have a good argument in no allowing the VAT zero-rate, but if that argument is accepted, it could work against them. Let’s see where this case ends up.
