Flashback on ECJ cases C-430/09 (Euro Tyre Holding) – Allocation of transport in case of chain supplies

On December 16, 2010, the ECJ issued its decision in the case C-430/09 (Euro Tyre Holding) related to the Allocation of transport in case of chain supplies.

Article in the EU VAT Directive

Article 8(1)(a) and (b), 28a(1)(a), 28b(A)(a), 28c(A)(a) of Sixth Council Directive 77/388/EEC

Article 8: Supply of goods

1. The place of supply of goods shall be deemed to be:

(a) in the case of goods dispatched or transported either by the supplier or by the person to whom they are supplied or by a third person : the place where the goods are at the time when dispatch or transport to the person to whom they are supplied begins. Where the goods are installed or assembled, with or without a trial run, by or on behalf of the supplier, the place of supply shall be deemed to be the place where the goods are installed or assembled. In cases where the installation or assembly is carried out in a country other than that of the supplier, the Member State into which the goods are imported shall take any necessary steps to avoid double taxation in that State;

(b) in the case of goods not dispatched or transported : the place where the goods are when the supply takes place.

Article 28a(1)(a) of the Sixth Directive:

‘The following shall also be subject to [VAT]:

(a) intra-Community acquisitions of goods for consideration within the territory of the country by a taxable person acting as such or by a non-taxable legal person where the vendor is a taxable person acting as such who is not eligible for the tax exemption provided for in Article 24 and who is not covered by the arrangements laid down in the second sentence of Article 8(1)(a) or in Article 28b(B)(1)’.

Article 28b(A)(1) of that directive provides:

‘The place of the intra-Community acquisition of goods shall be deemed to be the place where the goods are at the time when dispatch or transport to the person acquiring them ends.’

The first subparagraph of Article 28c(A)(a) of that directive is worded as follows:

‘Without prejudice to other Community provisions and subject to conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions provided for below and preventing any evasion, avoidance or abuse, Member States shall exempt:

(a) supplies of goods, as defined in Article 5, dispatched or transported by or on behalf of the vendor or the person acquiring the goods out of the territory referred to in Article 3 but within the Community, effected for another taxable person or a non-taxable legal person acting as such in a Member State other than that of the departure of the dispatch or transport of the goods’.

Facts

The Portuguese branch of Euro Tyre BV was engaged in the marketing of tyres for retailers based in Spain and Portugal. In Spain, it sold the tyres, in part, through a distributor, Euro Tyre Spain. Thus, it declared its sales in Portugal to be VAT exempt intra-Community supplies to Spain. Up until 1 July 2012, Euro Tyre Spain was registered in Spain as a taxable person for VAT purposes. However, it was not yet subject to the system of taxation on intra-Community acquisitions or registered in the VIES. Euro Tyre BV was aware of this fact but expected the Spanish tax authorities to grant the VIES registration with retrospective effect.

However, following a tax inspection covering the years 2010 to 2012, the Portuguese tax authorities considered that the conditions for the VAT exemption of intra-Community supplies were not met, since, at the time of the sales in question, Euro Tyre Spain was neither registered for intra-Community transactions in Spain nor registered in the VIES. Consequently, Euro Tyre BV was required to pay VAT and interest.

This may sound rather strange for German companies since a German VAT-ID assigned by the Federal Central Tax Office is registered in VIES automatically. However, in many other countries, a VAT-ID is created, by simply adding the country abbreviation to the domestic tax number. Furthermore, in some countries, such as Spain and Italy, the VAT-ID requires a separate registration for intra-Community supplies, which must be supported by certain evidence.

Questions

In the light of Article 28c(A)(a) of the Sixth Directive,¹ and of Article 8(1)(a) and (b), the first subparagraph of Article 28a(1)(a), and the first subparagraph of Article 28b(A)(a) of the Sixth Directive, where, with regard to the same goods, two successive supplies are effected between taxable persons acting as such, in respect of which there is one single intra-Community dispatch or one single intra-Community transport, how should one determine to which supply the intra-Community transport should be ascribed, when the transport of the goods is effected by or at the expense of the person who acts both in the capacity of purchaser for the first supply and in the capacity of vendor in the second supply?

AG Opinion

None

Decision

When goods are the subject of two successive supplies between different taxable persons acting as such, but of a single intra-Community transport, the determination of the transaction to which that transport should be ascribed, namely the first or second supply – given that that transaction therefore falls within the concept of an intra-Community supply for the purposes of the first subparagraph of Article 28c(A)(a) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, as amended by Council Directive 96/95/EC of 20 December 1996, read in conjunction with Article 8(1)(a) and (b), the first subparagraph of Article 28a(1)(a), and Article 28b(A)(1) of that directive – must be conducted in the light of an overall assessment of all the circumstances of the case in order to establish which of those two supplies fulfils all the conditions relating to an intra-Community supply.

In circumstances such as those at issue in the main proceedings, in which the first person acquiring the goods, having obtained the right to dispose of the goods as owner in the Member State of the first supply, expresses his intention to transport those goods to another Member State and presents his value added tax identification number attributed by that other State, the intra-Community transport should be ascribed to the first supply, on condition that the right to dispose of the goods as owner has been transferred to the second person acquiring the goods in the Member State of destination of the intra-Community transport. It is for the referring court to establish whether that condition has been fulfilled in the case pending before it.

Summary decision

Where two consecutive supplies of goods are made between different taxable persons acting as such, but only one intra-Community transport takes place, the transaction to which that transport is to be attributed must be the first or the second supply (which thus falls within the concept of intra-Community supply), are determined on the basis of an overall assessment of all the circumstances of the case in order to determine for which of these two supplies all the conditions relating to an intra-Community supply are fulfilled.

When the first customer, who has obtained the power to dispose of the good as owner in the territory of the Member State of the first supply, has expressed his intention to transport the good to another Member State and has made himself known with its VAT identification number assigned by the latter State, the intra-Community transport must be attributed to the first supply, provided that the power to dispose of the good as owner has passed to the second customer in the Member State of destination of the intra-Community transport . It is for the referring court to ascertain whether that condition is fulfilled in the proceedings on which it is called upon to rule.

Source