On Jan 14, 2021, the ECJ issued the Order in the case C-108/19 (Krakvet sp. z o.o. sp.k.). This case is about the place of supply of B2C supply of goods (E-Commerce) in case the supplier does not arrange the transport.
Articles in the EU VAT Directive
Article 33
1. By way of derogation from Article 32, the place of supply of goods dispatched or transported by or on behalf of the supplier from a Member State other than that in which dispatch or transport of the goods ends shall be deemed to be the place where the goods are located at the time when dispatch or transport of the goods to the customer ends, where the following conditions are met:
(a) the supply of goods is carried out for a taxable person, or a non-taxable legal person, whose intra-Community acquisitions of goods are not subject to VAT
pursuant to Article 3(1) or for any other non-taxable person;
(b) the goods supplied are neither new means of transport nor goods supplied after assembly or installation, with or without a trial run, by or on behalf of the supplier.
2. Where the goods supplied are dispatched or transported from a third territory or a third country and imported by the supplier into a Member State other than that in which dispatch or transport of the goods to the customer ends, they shall be regarded as having been dispatched or transported from the Member State of importation.
In the context of the sale of goods through an online retail outlet, is this article to be interpreted as not applying in the situation where the customer directly enters into a contract with the carrier for the transport of the goods from the Member State of the supplier to his own Member State, in accordance with the dispatching options offered by the supplier, and the goods are not transported on behalf of the supplier?
Facts
Unofficial translation/summary:
- Krakvet is a company established in Poland, which markets feed and accessories for animal husbandry through websites.
- The activities of that company target customers in several Member States and, for that purpose, it maintains a ‘zoofast’ domain on the Internet for each of those Member States. In particular, sales of products to customers located in Romania are made through the website, the home page of which is www.zoofast.ro.
- The terms of delivery of products ordered from Krakvet on the Internet are those corresponding, among the international trade clauses established by the International Chamber of Commerce, to the “Ex Works” clause, on departure from Wieliczka (Poland ).
- With regard to the sales process, buyers place an order on the site www.zoofast.ro. To finalize it on this website, they must choose between two methods of withdrawing the products from the Krakvet warehouse located in Poland. They can choose to withdraw these products themselves from this warehouse or to conclude a contract for the purpose of the transport of these either with Sendfast sp. z oo, or with another carrier. In this case, the invoice relating to the transport services is sent directly by one or other of these companies to these purchasers, who pay it directly to them.
- When the order is finalized, the buyers receive two contracts, one concluded with Krakvet for the products purchased and the other concluded, for the purpose of the delivery of these products, either with Sendfast or with another carrier, as well as two invoices, one, established by Krakvet for the purchase of the products, the other, established for the transport services by the company supporting this delivery, each invoice being accompanied by a proof of payment.
- In addition, the products can be paid by bank transfer, on the Krakvet website, or in cash, upon receipt.
Question
In the context of the sale of goods through an online retail outlet, is Article 33 of Directive 2006/112 1 to be interpreted as not applying in the situation where the customer directly enters into a contract with the carrier for the transport of the goods from the Member State of the supplier to his own Member State, in accordance with the dispatching options offered by the supplier, and the goods are not transported on behalf of the supplier?
AG Opinion
None
Decision
Article 33 of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that, in the case of goods sold by means of a website by a supplier established in one Member State to buyers located in another Member State, when, for the purpose of the delivery of these goods, these buyers, in accordance with the shipping options offered by this supplier, choose a company suggested through this site with which they conclude a contract distinct from that binding them to said supplier for the purchase of said goods, the latter must be considered as being transported “by the supplier or on his behalf”, within the meaning of this article 33, when the role of the same supplier is paramount as regards the initiative and the organization of the essential stages of the transport of the same goods, which is for the referring court to verify, taking into account all the relevant circumstances of the main dispute.
Source
Similar Cases
Argumentation of the Court
- In the event that the goods are dispatched or transported either by the supplier, or by the purchaser, or by a third person, the place of the delivery is deemed to be at the place where the good is at the time of the departure of the shipment or of the transport to the purchaser.
- However, the place of delivery of goods dispatched or transported, by the supplier or on his behalf, from a Member State other than that of arrival of the shipment or transport is deemed to be at the place where the goods are at the time of arrival of the shipment.
- In order to determine what is to be understood by a shipment or transport effected ‘by the supplier or on his behalf’ it should be recalled that taking into account the economic and commercial reality constitutes a fundamental criterion for the application of the common system of VAT
- Goods are shipped or transported on behalf of the supplier if it is the supplier, rather than the purchaser, who actually makes the decisions governing how such goods are to be shipped or transported.
- It follows that a supply of goods falls within Article 33 of Directive 2006/112 when the role of the supplier is preponderant as regards the initiative and the organization of the essential stages of the shipment or transport of goods.
- As the purchasers choose, in accordance with the shipping options offered by that supplier, a company suggested by this site, these buyers conclude with this company a contract distinct from that binding them to Krakvet for the purchase of these goods, on the one hand, and the transport services are the subject of an invoice as well as of a separate proof of payment, on the other hand.
- As regards the value of the contractual stipulations in the context of the qualification of a taxable transaction, it should be recalled that, insofar as the contractual situation normally reflects the economic and commercial reality of the transactions, the relevant contractual stipulations constitute an element to be taken into consideration. It may however turn out that, sometimes, certain contractual provisions do not fully reflect the economic and commercial reality of the operations.
- In the present case, it cannot be considered that contractual stipulations such as those at issue in the main proceedings reflect the economic and commercial reality of the transactions concerned if, by means of them, the purchasers only endorse the choices made by the supplier, what it is for the referring court to verify by an overall analysis of the circumstances of the dispute in the main proceedings
- In that regard, in order to determine whether the goods concerned have been transported on behalf of the supplier, account must be taken, first of all, of the importance of the issue of the transport of those goods to the purchasers in the light of commercial practices which characterize the activity carried out by the supplier concerned. It is, in particular, possible to consider that, if this activity consists in actively offering goods, for consideration, to buyers residing in a Member State other than that in which that supplier is established, the organization, by said supplier, means enabling the transport of the goods concerned to their purchasers constitutes, in principle, an essential part of said activity.
- In order to assess whether the supplier actively offers goods to buyers residing in a Member State, the referring court may, in particular, take into account the extension of the address of the website on which the goods concerned are offered as only the language in which this site is accessible.
- Secondly, it is necessary to assess to whom, the supplier or the purchaser, the choices relating to the modalities of dispatch or transport of the goods concerned can be effectively attributed,
- As such, even if the buyers enter into a contract with a company other than the supplier, separate from the one binding them to the latter for the purchase of the goods concerned, for the purpose of transporting the latter, can be excluded that these goods can be considered as being transported on behalf of this supplier if, by this contract, the purchasers only agree to the choices made by the said supplier, that these choices concern the designation of the company responsible for the ‘routing of said goods or the arrangements according to which they are transported.
- An assessment in this sense could in particular be deduced from elements such as the reduced choice of companies recommended by the supplier, or even limited to a single company, for the purposes of transporting the goods concerned or the fact that contracts relating to the The shipment or transport of these goods can be concluded directly from the website of this supplier without the purchasers having to take independent steps to contact the companies in charge of this delivery
- Third, it is necessary to examine the question of which economic agent bears the burden of the risk associated with the transport of the goods in question
- It appears from the information provided to the Court that the terms of delivery of those goods are those corresponding, among the international trade clauses established by the International Chamber of Commerce, to the “Ex Works” clause.
- This being the case, the Court held that it could be considered that, notwithstanding the contractual stipulations by virtue of which the supplier is relieved of the risk associated with the delivery of the goods, the transport of these is carried out on behalf of the supplier if the latter actually bears the costs linked to compensation for damage occurring during this transport
- In that regard, it is for the referring court to assess, in particular, the implications of the fact that, according to the information provided in the request for a preliminary ruling, in addition to payment on the Krakvet website when ordering, it is also possible to pay for the goods ordered upon receipt
- Fourth, although the buyers are formally linked to the supplier and to the company responsible for the delivery of the goods concerned by separate contracts, these buyers also receive two invoices, one established by the supplier for the purchase of these goods, the other established for the transport services by the company taking charge of this transport, as well as proof of payment for each of those invoices, it is for the referring court to determine whether the acquisition of the said goods and their transport are nevertheless subject to a single payment. If this is the case, this circumstance should be taken as an indication of the supplier’s significant involvement in the delivery of said goods
- In addition, it should be recalled that the Court held that such involvement of the supplier would be established, also, having regard to the economic and commercial reality of the transactions concerned, if, in principle or subject to certain conditions being fulfilled, such as reaching a minimum purchase amount, the amount of shipping or transport costs was only symbolic or that the supplier granted a discount on the price of the products which has the same effect
- In the present case, in the light of the information available to the Court and subject to verification by the referring court of all the relevant circumstances of the dispute in the main proceedings, it appears possible to consider that Krakvet played a preponderant role in this which concerns the initiative as well as the organization of the essential stages of the dispatch or transport of the goods at issue in the main proceedings, such that, where appropriate, it would be necessary to consider that those goods were dispatched for the supplier’s account, within the meaning of Article 33 of Directive 2006/112.
- Having regard to all the foregoing considerations, the answer to the question referred must be that Article 33 of Directive 2006/112 must be interpreted as meaning that, as regards goods sold by means of a website by a supplier established in one Member State to buyers located in another Member State, when, for the purpose of the delivery of these goods, these buyers, in accordance with the shipping options offered by that supplier, choose a company suggested by this site with which they conclude a contract distinct from that binding them to said supplier for the purchase of said goods, the latter must be considered as being transported “by the supplier or on his behalf”, within the meaning of this article 33,where the role of the same supplier is preponderant as regards the initiative and the organization of the essential stages of the transport of the same goods, which is for the referring court to verify, taking into account all the circumstances relevant to the main proceedings.
