Background
- IT was registered for VAT purposes in 2013 for selling second-hand vehicles and wrecks.
- During an inspection in 2015, the tax authorities excluded invoices referring to “cars sold for parts” or invoices relating to wrecks from the margin scheme. IT brought an action against this decision, arguing that vehicles sold “for parts” were “second-hand goods” under Article 311(1)(1) of the VAT Directive.
- However, the cour d’appel de Liège dismissed IT’s claims, stating that the judgment in Sjelle Autogenbrug did not apply to the present case. The court held that it was necessary to ascertain whether the vehicles in question could be reused as they were or after repair and classified as “second-hand goods”. The court found that vehicles sold “for parts” and reduced to wrecks could not be classified as “second-hand goods” as they could not be put to further use having maintained the characteristics they possessed when new.
- IT appealed to the Cour de cassation, which asked whether the appellate court’s interpretation of Article 311(1)(1) of the VAT Directive was correct.
Questions
- Does Article 311(1)(1) of Directive 2006/112/EC mean that end-of-life motor vehicles bought from Article 314 persons by a second-hand vehicle seller, to be sold as-is for parts, qualify as second-hand goods under the directive?
Decision
- Definitively end-of-life motor vehicles acquired by an undertaking from Article 314 persons and intended to be sold “for parts” without removing any parts are considered second-hand goods under Article 311(1)(1) of Council Directive No. 2006/112/EC
- if they still have functional parts that can be reused or repaired and if the vehicles remain in the same economic cycle due to the reuse of those parts.
See also
