On 6 February 2020, Advocate General SHARPSTON gave its opinion in case C-276/18 (KrakVet). The case deals with the question when goods dispatched or transported by or on behalf of the supplier, especially in the situation that the customer can choose.
The referring court has submitted five questions concerning those issues, but only the only the fourth and fifth questions are considered.
Simplified summary of the facts:
KrakVet Marek Batko sp. K. (‘KrakVet’) is a company registered and established in Poland. It has no establishment, office or warehouse in Hungary.
KrakVet sells products for animals, mainly food for dogs and cats in the neighbouring Member States, notably through its various ‘zoofast’ websites. It has numerous clients in Hungary who effect their purchases through www.zoofast.hu.
KrakVet used the so-called distance selling rules, meaning that in so far as the sales were below the threshold, KrakVet charged Polish VAT to the Hungarian non-business customers.
The products are transported by and on behalf of KrakVet from Poland to Hungary, using a Polish transport company (“KBGT”). The goods were delivered a two distribution points in Hungary, from where a Hungarian transportation company delivered the goods to customers.
The Hungarian tax authorities raised an assessment with KrakVet, arguing that KrakVet had performed domestic supplies in Hungary. According to the Hungarian tax authorities, the transport had started in Hungary, and not in Poland.
KrakVet did not agree, and argued that according to the Polish rules, it was making distance sales, subject to Polish VAT. This resulted in double taxation.
Questions asked to the ECJ (summary):
Do the Hungarian tax authorities infringe the VAT rules on administrative cooperation and the combating of VAT fraud by levying Hungarian VAT without consultation with the Polish tax authorities, thus creating a situation of double taxation?
How should the concept of ‘transport by or on behalf of the supplier’ (the transport requirement from the distance selling scheme) be interpreted in a situation where the seller gives the buyer the opportunity to opt for a carrier, with which the seller cooperates or for another carrier? This is a situation in which the buyer and the transporter conclude a transport agreement without the intervention of the seller. The Polish court also wants to know whether there is abuse of rights when KrakVet circumvents the application of the distance selling scheme by arranging transport in this way.
Considerations
The AG considers the following:
The fourth and fifth questions raise three issues concerning the interpretation of Article 33(1) of the VAT Directive. First, what was meant by the phrase ‘goods dispatched or transported by or on behalf of the supplier’, in Article 33(1) of the VAT Directive before its amendment by Directive 2017/2455? Second, did the amendment made to that provision by Directive 2017/2455, which generated the new version of Article 33(1), alter or merely confirm the previous legal situation? Third, should the type of operation described in the order for reference, having regard to the original version of Article 33(1), be regarded as an abusive practice?
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83. On that basis, it seems to me that the distinction being drawn may be illustrated thus. If a customer based in Hungary orders goods over the internet from a company based in Poland, it does not in principle matter whether the customer himself travels to the warehouse in Poland to collect those goods or whether someone else (the supplier or a third party) deals with the logistics on his behalf. In all three cases, provided what is happening is being done on behalf of the customer, supply takes place in Poland and VAT is due there at the rates charged by Polish authorities. If, however, the actions are being taken on behalf of the supplier, the supply takes place at the place of destination (Hungary) and VAT is due there at the rates charged by the Hungarian authorities.
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86. In the present case, KrakVet’s customers were consumers located in Hungary (that is, non-taxable persons), who made purchases through KrakVet’s website. KBGT covered transportation between the warehouse in Poland and the Hungarian border. Onward transportation within Hungary was carried out by the Hungarian courier companies.
87. It is, I think, fair to suggest that KrakVet’s customers were and are interested primarily in purchasing pet food. The transport service required to move the pet food from KrakVet’s warehouse in Poland to the customers’ delivery address in Hungary is an essential part of the transaction but unlikely, as such, to be the main focus of the customers’ interest. Probably, the essential components determining their choice of transportation method will have been convenience and cost.
107. On the basis of those elements and any other material presented to it, the referring court will have to decide whether the decisions governing dispatch or transportation of the goods were in reality taken by KrakVet (or a company owned or controlled by it) or by KrakVet’s individual Hungarian customers.
Conclusion:
The AG concludes as follows:
Question 4:
If the supplier, at his initiative and choice, takes most or all of the essential steps necessary to prepare the goods for transportation, makes the arrangements for the goods to be collected and start their journey and relinquishes possession of and control over the goods, there has been ‘dispatch’ by the supplier.
If the supplier either himself or through his agent physically carries out the transport operation, or owns or controls the legal entity that does so, there has been ‘transportation’ by the supplier.
Goods are dispatched or transported ‘on behalf of’ the supplier if the supplier, rather than the customer, effectively takes the decisions governing how those goods are to be dispatched or transported.
Question 5:
Where a taxpayer inquires of the competent authorities in the Member State in which he is registered for VAT as to the correct VAT treatment of an intended course of action (setting out in detail the arrangements that he proposes to put in place) is given a response that is legally binding upon him and upon those tax authorities, and then conducts his business in strict accordance with the proposal that he put forward to those authorities in his inquiry, the competent authorities in another Member State are precluded by the principle of sincere cooperation and the principle of protection of legitimate expectations from treating his actions as an abuse of rights under the test laid down in Case C‑255/02, Halifax and sanctioning that conduct accordingly.
Source curia
