- Contract and Termination: The taxpayer, rhtb, was contracted to carry out a building project for Parkring for a total of EUR 5,377,399.69, including VAT. However, in June 2018, Parkring informed rhtb that it no longer wanted to proceed with the project for reasons not attributable to rhtb, leading rhtb to seek compensation of EUR 1,540,820.10, including VAT.
- Court’s VAT Ruling: The court ruled that no VAT was due on the compensation payment related to the uncompleted work, as there had been no actual exchange of services between the parties. The ruling referenced the VAT Directive, emphasizing that the consideration must reflect a direct link between the services supplied and the compensation received.
- Legal Interpretation and Conclusions: The court concluded that the amount due from Parkring constituted remuneration for a service supplied since rhtb had commenced work and was prepared to complete the contract. This interpretation aligns with the principle that amounts contractually owed following termination should still be considered for VAT, as the supplier had begun providing the service. The ruling distinguished this case from prior cases involving fixed compensation for cancellations, noting the identifiable supply of services already initiated.
Source KPMG
See also
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- VATupdate.com – Your FREE source of information on ECJ VAT Cases
