Recent Irish and Court of Justice of the European Union Cases
Indirect Tax Matters March 2020 Edition
Newsletter – Irish and CJEU Case Summarises
Ireland – Appeal Commissioners’ Cases
41TACD2019 – Name Redacted v Revenue Commissioners – October 2019
This appeal related to the VAT treatment applied to marked mineral oil supplied and road diesel purchased by the taxpayer. Revenue took to the view that the taxpayer had failed to comply with the Mineral Oil Tax Regulations and therefore raised an assessment on the basis that the taxpayer had incorrectly applied the reduced rate of VAT when the standard rate should have applied. Revenue also sought to disallow input VAT paid on diesel purchased on the basis that it was not satisfied that the transactions had actually occurred.
The commissioner upheld the assessment for VAT. In the first instance, the assessment was upheld on the basis that the taxpayer had not produced sufficient evidence to contest the position that they had contravened the relevant regulations and therefore could not support the position that they were not liable to the standard rate of VAT on supplies made. Secondly, the taxpayer could not produce sufficient evidence that they had acquired the diesel in question from the purported supplier. Revenue supported their position on the basis that the purported suppliers’ returns did not indicate supplies of the level reported by the taxpayer in this case and additionally, the premises of the taxpayer did not have storage facilities sufficient to store the amount of fuel supposedly purchased.
50TACD2019 – Appellant v The Revenue Commissioners – November 2019
This appeal related to the charging of VAT of €1,840 on the importation of a motor vehicle into Ireland from the UK. The VAT charge was imposed on the basis that the car had travelled less than 6,000 km at the time of its importation and as such was a new means of transport subject to VAT. The taxpayer conceded that the car had travelled less than the required mileage but sought to argue that the car was in fact not new at the time of importation and that the sole reason for the low mileage was due to the fact that the car was off the road for some time due to a crash.
In appeals cases the burden of proof falls on the taxpayer to demonstrate that the tax in question is not actually due. In the case, as the commissioner considered that the taxpayer had not produced sufficient evidence to overcome this burden of proof and had acknowledged that the car had travelled less than the required kilometres set out in legislation, the appeal was dismissed.
03TACD2020 – A Limited v Revenue Commissioners – January 2020
In December 2013, the taxpayer filed an amended November/December 2009 VAT return claiming a VAT refund of over €342k. A portion of the input VAT claimed related to periods within 2009 but before the November/December 2009 VAT period.
Revenue allowed the portion of the claim that related to the months November and December 2009 but denied reclaim of the VAT in respect of the earlier 2009 periods on the basis that the taxpayer was outside the 4 year time limit.
Prior to 2013, the taxpayer filed its VAT returns on the basis that it was not entitled to recover input VAT as it was engaged in exempt activities. However, following a review of its activities in 2013, the taxpayer took the view that a portion of its activities were in fact qualifying activities giving right to deduct input VAT. In its correspondence with Revenue in relation to the reclaim the taxpayer stated that the refund due related to an update to its VAT recovery position being an adjustment of its apportionment of dual-use inputs (annual adjustment calculation) and as such in line with Revenue practice and current regulation it sought to update its VAT inputs for the entire year of 2009. The taxpayer argued that as the time limit for making an annual adjustment was the taxable period immediately following the end of the tax year (i.e. the Jan/Feb 2010 VAT period for 2009), that the four year limitation period for reclaiming VAT had not yet expired at the time the amended return was filed in December 2013.
Revenue argued that the appeal concerned a case of mistake and that the correct approach for claiming a refund of VAT was to make a claim in writing to Revenue within 4 years. Furthermore, they submitted that the taxpayer could not seek to treat this matter as an annual adjustment on the basis that there was no original attempt to apportion dual use inputs, which could now be adjusted.
The Commissioners dismissed the appeal and agreed with Revenue’s assessment. They upheld that it was not possible for the taxpayer to operate an adjustment of apportioned dual use inputs on the basis that they applied no system of apportionment in 2009.
15TACD2020 – Appellant v The Revenue Commissioners – January 2020
This appeal is similar in circumstance to appeal 03TACD2020 in that it related to VAT charged on the importation of a motor vehicle into Ireland that had travelled less than 6,000 km. Similar to the earlier determination, the commissioner dismissed the appeal and rejected the taxpayers argument that as the vehicle in question was more than 5 years old it could no longer be considered a new means of transport. The commissioner held that where the mileage does not exceed that prescribed in law VAT is due on importation regardless of the age of the car.
16TACD2020 - Appellant v Revenue Commissioners - January 2020
This case relates to four consolidated appeals against four determinations/assessments made by Revenue in relation to the VAT treatment of supplies made by the taxpayer, an Irish telecommunications and internet service provider.
The four issues of appeal considered were as follows:
(i) Non-EU Roaming Charges
Revenue denied the taxpayer the right to a refund of VAT charged and paid on non-EU roaming services supplied to bill pay customers. Revenue contended that an adjustment to VAT already paid was only available in respect of non-EU roaming services used by prepay customers, on the basis that prepay packages constituted the supply of a telephone card and where such services are used and enjoyed outside the EU, they are taxable outside the EU and the supplier is entitled to a reduction of output VAT previously paid. Revenue contended that the supply of bill pay services are different to the supply of prepay services, as these services are not identical from the point of view of the customer do not meet the same needs of the customer.
Contrarily, the taxpayer argued that the two service types were identical and met the same needs of the customer, with the sole difference being the timing of payment for the services provided. However, the taxpayer argued that the difference in timing of payment should not distinguish the VAT treatment thereof as the underlying supplies were identical. In terms of the timing of payment, pre-pay customers pay in advance for the services used while bill pay customers may pay in advance or pay in arrears depending on whether the service is included in their bundle or is additional out-of-bundle services.
On this issue, the commissioner ruled in the favour of the taxpayer and up-held the appeal.
Firstly, the commissioner considered that in-bundle bill pay roaming services, having been paid for in advance by the taxpayer, were essentially the same as pre-pay services being the supply of telephone card. On this basis, the taxpayer was clearly entitled to a refund of VAT in respect in-bundle bill pay roaming services used and enjoyed outside the EU.
Secondly, in respect of out-of-bundle bill pay roaming services (i.e. where the customer pays for the service received after that service has been supplied), the commissioner considered that in light of the EU principle of fiscal neutrality, which precludes EU Member States from treating similar goods/services differently for VAT purposes, that such out-of-bundle services could not be treated differently to in-bundle services solely on the basis of the timing of payment. On this basis, these services should also be treated as outside the scope of Irish VAT, and the taxpayer entitled to reduce output VAT paid, where such services are used and enjoyed outside the EU.
(ii) Cancellation Charges
This issue concerned whether a charge levied on a customer for cancelling their contract early was subject to VAT. The taxpayer considered that as such charges were paid after the termination of a contract and as no further services would be supplied or received, there was no supply for VAT purposes.
The commissioner considered that the charge levied related to a right to access telecommunications services and as this amount equated to the remaining payments due under the contract, it was part of the consideration for that supply and was therefore subject to VAT. The commissioner considered that the charge in this case was not a cancellation charge outside the scope of VAT and as a result dismissed the taxpayers appeal on this issue.
(iii) Bill Pay Broadband
This issue concerned the VAT treatment of unused data allowances i.e. whether a charge to VAT arises on the proportion of data not used in a bill pay context. Similar to issue (ii), the commissioner considered that the supply in this case was right to access the data allowance paid for, and therefore even if the full amount of that allowance is not used, the consideration paid remained taxable in full.
(iv) Time Limits
The taxpayer claimed a repayment of VAT in respect cancellation charges and bill pay non-EU roaming for the periods 1 March 2012 to 28 April 2013, these claims were rejected by Revenue on the basis that they were outside of the four-year time limit.
The taxpayer argued that as a result of a disparity in the look back period between direct taxes, (such as corporation tax) which allowed an effective period of almost five years to reclaim overpaid tax, and VAT, under the EU principle of equivalence it was entitled to rely on the longer time limit.
The commissioner rejected the taxpayer’s argument, relying on the judgement of the UK Supreme Court in Totel, that VAT and direct taxes were not truly comparable and therefore the principle of equivalence could not be breached.
Europe – CJEU cases
C-400/18 - Infohos v Belgische Staat - 20 November 2019
Infohos, a cost sharing group (CSG), was setup to provide IT services to its member hospitals but it also supplied these services to third parties.
The Belgian tax authority sought to deny Infohos’s right to exempt transactions to its members under the cost sharing arrangements on the basis that the exemption no longer applied as Infohos was also making taxable supplies to third parties.
The CJEU ruled that its charges to members continued to qualify for the exemption. The Court concluded that there was nothing in the wording of the exemption, which made its application conditional on having no other customers.
C-707/18 – Amărăşti Land Investment SRL v. Directia Generala Regionala a Finantelor Publice Timisoara – 19 December 2019
Amărăşti Land Investment SRL, an agricultural business, contracted with a vendor to purchase land. The contract was made by way of a bi-lateral arrangement. Firstly, Amărăşti acquired a claim to ownership of the land and secondly, when the administrative formalities were completed by the purchaser, the contract for sale was concluded. The arrangement stipulated that Amărăşti must carry out certain administrative tasks, including the first registration of the land with the Land Registry. Amărăşti was to pay the vendor in full for the property excluding administrative costs, such as those relating to land registration. Amărăşti engaged third parties for assistance with this administrative work and incurred, and recovered the VAT on these costs.
The CJEU, in their judgement, ruled that Amărăşti should have accounted for VAT as it had purchased and subsequently supplied those administrative services on behalf of the vendor. The Court considered that as the statutory obligation, under Romanian law, to register the land rested with the vendor, Amărăşti was acting as an undisclosed agent on behalf of the vendor when registering the land and even in the absence of an onward charge or invoice there was a taxable supply for VAT purposes.
C-715/18 – Segler-Vereinigung Cuxhaven eV v Finanzamt Cuxhaven – 19 December 2019
Segler, a not-for profit boating club, maintained boat moorings on behalf of members and also supplied mooring facilities to non-member guests. During the years 2010-2012, it applied the reduced rate of VAT to payments made by these guests. Following an audit, the German tax office issued assessment notices to Segler on the basis that the standard rate of VAT should have applied to those supplies.
Upon referral, the CJEU was asked to confirm whether the reduced rate of VAT for the letting of places on camping or caravan sites also covered the letting of boat moorings. The Court, in its judgement, considered that as the reduced rate of VAT applicable to various supplies of accommodation was an exception to the standard rate of VAT, the scope of that exception must be interpreted strictly and should not be extended to cover services not included in the wording of that exception or services that are not intrinsically linked thereto. The Court ruled that as the letting of boat moorings was not included in the wording of the exception and was not intrinsically linked to the concept of accommodation that the reduced rate of VAT did not apply.