Tax alert 34 – CJEU’s Decision in the case C-495/17 Cartrans Spedition SRL
Supporting documents necessary for granting the VAT exemption in case of transport services directly linked to the export of goods and, also to services performed by intermediaries which participate in this supply of transport services
On 8 of November 2018, the Court of Justice of the European Union (“CJEU”) published its decision in Cartrans Spedition SRL case (C-495/17). The case is relevant, especially for the sector of transport services directly linked to the export of goods and tackles the conditions under which VAT exemption is granted with respect to the supporting documentation necessary in this respect.
According to the CJEU’s decision, the EU VAT legislation opposes to a tax practice of a Member State according to which the VAT exemption for the supply of transport services directly linked to the export of goods, and respectively for the supply of services by intermediaries participating in this supply of services, is conditioned of presenting by the taxable person of the customs export declaration concerning the goods in question.
In order to grant the above-mentioned VAT exemptions, the competent authorities have the obligation to examine the honest fulfilment of the condition concerning the export of goods under consideration.
In this context, the TIR Carnet, stamped by the custom authorities of the third country of goods destination, presented by the taxable person represents an element which the tax authorities should take into consideration accordingly, with the exception of the case in which there are precise grounds to contest the authenticity or reliability of this document.
Particularities of the case and the Court’s decision
Cartrans Spedition SRL, a company with its registered office in Romania is an intermediary operator of goods road transport services. Further to a tax inspection, they received a decision on tax liabilities according to which it is required to pay an amount representing supplementary payable VAT for road transport services directly linked to the export of goods.
As per the tax inspection report as well as the decision on tax liabilities, the Company is not granted the VAT exemption on those transport services due to the fact that, during the inspection it was not able to present the customs export declarations proving that the goods actually had been exported.
Following the notification of the local tax authorities, the case was suspended and the following preliminary questions were addressed to the CJEU:
– For the purpose of a VAT exemption for transport operations and services related to the export of goods under the VAT Directive, does the TIR Carnet certified by the customs office of the country of goods destination represent a supporting document attesting the export of the goods?
– Does the Article 153 of the VAT Directive (‘Exemptions for Service Provided by Intermediaries’) preclude a tax practice imposing the taxpayer to prove the exportation of the transported goods only by means of a customs export declaration, by refusing the right to deduct the input VAT on transport services of the goods exported in the absence of this declaration, even though there is a TIR Carnet certified by the Customs of the country of destination?
With regards to the preliminary questions, the CJEU reiterated, among others, the fact that the supply of transport services is exempt from VAT just because it represents the ancillary of an export of goods, which it completes and the fulfillment of which it facilitates, aiming at ensuring the taxation of the supplies of goods and services at their place of destination, namely where the exported products will be consumed.
Moreover, it is stated that when the background conditions are fulfilled, the VAT exemption must be granted even if some of the form conditions have not been respected by the taxable person.
One of the substantial conditions consists in the existence of a direct link, which firstly supposes that the supply of those services contributes to the actual performance of an export operation and, secondly, that those services are supplied directly to the exporter or recipient of the goods.
Moreover, the simple fact that a transport operator or an intermediary participating in a transport operation is not able to present a customs export declaration does not imply that such an export did not actually take place.
As regards the TIR Carnet, the CJEU mentions that, such a document, correctly certified by the customs authorities of the third country of destination represents an official proof attesting the physical movement of goods from the European Union to that country of destination.
Accordingly, as long as there is an authentic and reliable document it has a special pertinence for the purpose of recognizing the VAT exemption in the case of transport services directly linked to the export of goods and services performed by intermediaries involved in the provision of such transport services.
What is new about the CJEU’s decision in the Cartrans Spedition SRL case?
Through this decision, the CJEU restates some of the principles emphasized in cases analyzing similar operations (Case L. Č., C‑288/16), such as, defining the direct link between the transport services and the related export of goods.
As a novelty element, the decision clarifies the fact that granting the VAT exemption for the supply of transport services directly linked to the export of goods and, respectively, for the supply of services performed by intermediaries which participate in this supply of transport services does not depend on the customs export declaration of those goods to be presented by the supplier.
Moreover, a TIR Carnet correctly stamped by the customs authorities of the third country of destination is a reliable proof for granting the VAT exemption in the case of the aforementioned services.
Mihaela Bucurenciu, Senior Tax Manager, Indirect Tax