VAT recovery on of cross-border fuel supply to subsidiary’s employees in doubt
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VAT recovery on of cross-border fuel supply to subsidiary’s employees in doubt
VAT recovery on of cross-border fuel supply to subsidiary’s employees in doubt
Thu 13 Jun 2019
The CJEU has held that fuel cards operated by Vega International, based in Austria, did not give it entitlement to input VAT recovery in European jurisdictions where the fuel cards were used (Poland in the instant case) by the drivers of its subsidiary entities.
International businesses with centralised fuel purchasing systems may like to review their particular fuel supply chain to clarify whether the method they use for input VAT recovery is justified.
For a further discussion of the indirect tax issues involved with operating centralised functions cross border, please get in touch with a member of the Mazars indirect tax team.
Further background on the case
Vega International (Vega), an Austrian entity, received invoices from the various Polish-based fuel suppliers, for fuel used by the drivers of its Polish subsidiary. It settled these invoices and recharged its subsidiary with a mark-up of 2%. The subsidiary paid the marked-up amount, or off-set it against amounts due from Vega for services provided to it.
The CJEU held that Vega International operated as an intermediary, facilitating payment for the fuel. It did not receive or supply any fuel (goods) itself. It had no power to decide which fuel to buy, nor how the fuel was used. It therefore did not receive or supply goods (the fuel). However its work was compared to providing a finance service (the granting of credit), which would be VAT exempt. The 2% mark-up should therefore have been treated as a VAT exempt finance supply.
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