ECJ C-365/22 (Belgian State) – Judgment – Purchase of end-of life motor vehicles which are intended to be sold ‘for parts’ constitute second-hand goods

The ECJ issued the application and the questions in the case C-365/22 (Belgian State).

Context: Reference for a preliminary ruling – Value added tax (VAT) – Directive 2006/112/EC – Margin scheme – Article 311 – Concept of ‘second-hand goods’ – End-of-life vehicles sold for parts

Article in the EU VAT Directive

Article 311(1)(1) in the EU VAT Directive 2006/112/EC.

Article 311 (Special arrangements for second-hand goods, works of art, collectors’ items and antiques)
1. For the purposes of this Chapter, and without prejudice to other Community provisions, the following definitions shall apply:
(1) ‘second-hand goods’ means movable tangible property that is suitable for further use as it is or after repair, other than works of art, collectors’ items or antiques and other than precious metals or precious stones as defined by the Member States;

Facts

Since 1 October 2013, the appellant has been identified for the purposes of value added tax in respect of a business activity consisting in selling second-hand vehicles and wrecks; it purchases, among other things, scrapped (written-off) vehicles from insurance companies and resells them to third parties as wrecks or ‘for parts’.
In 2015, the appellant underwent an inspection which resulted in a statement of adjustment on account of infringements of the rules on VAT deduction and of the margin scheme; the taxing officer excluded invoices mentioning the words ‘cars sold for parts’ or invoices relating to wrecks from the margin scheme.

Questions

Is Article 311(1)(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax to be interpreted as meaning that end-of life motor vehicles purchased from persons referred to in Article 314 of the directive by an undertaking selling second-hand vehicles and wrecks, which are intended to be sold ‘for parts’ without the parts having been removed from them, constitute second-hand goods within the meaning of that provision?

AG Opinion

None

Decision

Article 311(1)(1) of Council Directive No 2006/112/EC of 28 November 2006 on the common system of value added tax,

must be interpreted as meaning that definitively end-of-life motor vehicles acquired by an undertaking from the persons referred to in Article 314 of that directive and intended to be sold ‘for parts’ without the parts having been removed are second-hand goods within the meaning of Article 311(1)(1) of that directive where, first, they still include parts which maintain the functionalities that they possessed when new so that they can be reused as such or after repair and, secondly, it is established that those vehicles remained in the same economic cycle because of that reuse of parts.

Summary