Articles in EU VAT Directive 2006/112/EC
Article 86 (Taxable amount – Importation of goods)
1. The taxable amount shall include the following factors, in so far as they are not already included:
(b) incidental expenses, such as commission, packing, transport and insurance costs, incurred up to the first place of destination within the territory of the Member State of importation as well as those resulting from transport to another place of destination within the Community, if that other place is known when the chargeable event occurs.
2. For the purposes of point (b) of paragraph 1, ‘first place of destination’ shall mean the place mentioned on the consignment note or on any other document under which the goods are imported into the Member State of importation. If no such mention is made, the first place of destination shall be deemed to be the place of the first transfer of cargo in the Member State of importation.
Article 144 (Exemption)
Member States shall exempt the supply of services relating to the importation of goods where the value of such services is included in the taxable amount in accordance with Article 86(1)(b).
Facts
- Cartrans, a company established in Romania, provides services for the carriage of goods by road.
- Following a tax inspection, the tax authority issued a tax assessment requiring it to pay additional VAT relating to services for the carriage of goods by road which it provided to another company. The carriage concerned a journey between the port of Rotterdam (Netherlands), where the goods carried had entered the European Union, and Cluj-Napoca (Romania) (‘the carriage services at issue’).
- The tax authority found that Cartrans had not submitted documents showing that the carriage services at issue were directly linked to the importation of the goods concerned and that the value of the services was included in the taxable amount of the imported goods. It therefore concluded that the entitlement to the VAT exemption to which those services had been subject had not been established.
- Cartrans submits that the tax authority erred in so far as it failed to grant it the VAT exemption for the carriage services at issue. It states that the costs of carrying the goods to the place of destination were mandatorily included by the customs authorities in the customs value of the goods when they entered the territory of the European Union and in the taxable amount for VAT purposes of the imported goods, in accordance with Article 86(1)(b) of the VAT Directive, since the ‘Cargo Movement Requirement’ consignment note (‘the CMR consignment note’) and the transit summary declaration, in respect of which it had been given a number known as the ‘master reference number’ (‘MRN’), made reference to the consignee of those goods as being located in Cluj-Napoca (Romania).
- Cartrans therefore submits that the carriage services at issue which it supplied in the present case satisfy the conditions for the exemption provided for in Article 144 of the VAT Directive for the supply of services relating to the importation of goods.
Questions
The questions in this case ask whether the recording of an import operation always includes transport costs in the customs value, and whether the VAT exemption for transport services relating to the importation of goods can be refused if there is no formal proof of the inclusion of transport costs in the customs value.
Argumentation Court on the first question
- The referring court asked whether the VAT exemption for carriage services connected with the importation of goods requires that the costs of transport are included in the taxable amount for VAT purposes of the imported goods when the carriage is carried out by a taxable person between the Member State in whose territory the place where those goods are introduced into the European Union is situated and a place of destination in another Member State.
- The Court ruled that, according to Article 144 of the VAT Directive, two conditions must be met for such a supply of carriage services to be exempt from VAT: first, that supply must be connected with the importation of the goods concerned, and second, the value of that supply must be included in the taxable amount for VAT purposes of the imported goods.
- The Court held that recording an import transaction does not mean that the costs of carriage are included in the taxable amount of the value for customs purposes, and that the existence of an MRN does not show that all the costs referred to in Article 86(1)(a) and (b) have been included in the taxable amount of the imported goods.
- However, documents such as the CMR consignment note and the transit accompanying document constitute evidence which the tax authorities must take into account in order to determine whether there is a right to exemption from VAT for carriage services connected with the importation of goods.
Decision
- The European Court of Justice has ruled that in order to benefit from the VAT exemption for carriage services connected with the importation of goods, the recording of the import transaction does not nessarilly mean that the costs of that carriage are included in the taxable amount for VAT purposes of the imported goods.
- Additionally, Member States cannot automatically refuse the exemption based on the lack of specific documents if other documents have been provided that establish entitlement to the exemption. These rulings are based on Article 86(1)(b) and (2) and Article 144 of Council Directive 2006/112/EC.
See also
