A Oy sold telephone and other subscription services to its customers as a taxable business. The company’s subscription customer may enter into a payment agreement with the company in a situation where the invoice for subscription services in accordance with the company’s normal contract and payment terms was due or has just fallen due. By concluding a payment agreement, the customer avoided closing the subscription and collecting due to non-payment on the invoice due date. However, the payment agreement did not affect the due date of the invoice covered by the agreement and the default interest calculated therefrom. The payment agreement fee was a flat rate.
A Oy was deemed to provide a service to the customer in connection with the payment agreement, so the consideration received fell within the scope of VAT and there was no question of compensation for the damage caused to the company.
The payment agreement did not affect the due date of the customer’s subscription invoice or the default interest based on it. Compensation for the avoidance of a sanction otherwise arising from non-payment, ie the closure of a subscription, was not to be regarded as consideration for lending or other arranging financing within the meaning of section 42 (1) (2) of the VAT Act.
Pursuant to section 1 (1) (1) and section 18 (2) of the VAT Act, the company was required to pay VAT on the payment agreement fee.
VAT refund applications for the financial years 1 January to 31 December 2013 and 1 January to 31 December 2014.
Section 1 (1) (1), Section 18 (2), Section 41 and Section 42 (1) (2) of the VAT Act
Council Directive 2006/112 / EC on the common system of value added tax Articles 2 (1) (c), 24 (1) and 135 (1) (b)
Judgments of the Court of Justice in Cases C-295/17, MEO (ECLI: EU: C: 2018: 942) and C-153/17, Volkswagen Financial Services (ECLI: EU: C: 2018: 845)
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The question is whether the company ‘s contractual fee must be regarded as consideration for the sale of a service subject to VAT or as an item of compensation which falls outside the scope of VAT. It is also necessary to assess whether the service covered by the payment agreement fee is to be regarded as a financial service within the meaning of section 42 (1) of the VAT Act, which is not subject to tax under section 41 of the Act
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According to EUT case law, the payment of the purchase price in installments subject to the payment of interest may be regarded as the granting of a credit, which is an exempt transaction if the payment of interest is not part of the consideration for the provision of services but a consideration for that credit (C-153/17, Volkswagen Financial Services , paragraph 36). ).
Notwithstanding the payment of the payment agreement fee, the due date of the invoice for the subscription received by the customer remains unchanged, and the execution of the payment does not affect the interest on arrears charged to the customer after the due date. The customer cannot therefore be considered to receive an extension of the payment period in return for payment, but only the right to keep the subscription open despite the non-payment. Such compensation for the avoidance of a sanction otherwise arising from non-payment, ie the closure of a subscription, shall not be considered as consideration for lending or other arranging financing referred to in section 42 (1) (2) of the VAT Act.
Since the payment of the contract fee is not to be regarded as an item of compensation outside the scope of VAT or as consideration for an exempt financial service within the meaning of section 42 of the VAT Act, the company is required to make a VAT payment under sections 1 (1) and 18 (2) of the VAT Act. Since it is a question of consideration for a service provided for VAT, there is no need to assess the application of the principle of affiliation.
Source: kho.fi
