Recent Irish and Court of Justice of the European Union Cases

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Recent Irish and Court of Justice of the European Union Cases

August - November 2018

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C-16/17 - TGE Gas Engineering GmbH - Sucursal em Portugal v Autoridade Tributária e Aduaneira - 7 August 2018

TGE Gas Engineering GmbH (TGE Bonn), a German company, obtained a Portuguese VAT registration number as a non-resident entity for the purpose of acquiring shares in an Economic Interest Group, known as EIG Projesines. EIG Projesines was set up by TGE Bonn with Somague Engenharia SA and its’ purpose being to extend a natural gas terminal in Portugal.

A month later, a branch of TGE Bonn, TGE Sucursal em Portugal, also registered for VAT in Portugal as a non-resident entity with a fixed establishment.

For the purpose of re-invoicing TGE’s share of costs for the project, EIG Projesines, invoiced using the Portuguese VAT registration number of TGE Sucursal em Portugal instead of the VAT registration number of TGE Bonn.

The Portuguese tax authorities sought to deny input VAT recovery on the basis that TGE Bonn and not TGE Sucursal em Portugal had formed the EIG. The CJEU in its ruling determined that the fact that TGE Bonn’s VAT number was used for the purpose of creating the EIG whereas TGE Sucursal em Portugal’s VAT number was used for the purpose of invoicing did not preclude a VAT deduction right on the basis that both VAT numbers were attributable to TGE Bonn and its branch as a single taxable person.

C-69/17 - Siemens Gamesa Renewable Energy România SRL v Agenţia Naţională de Administrare Fiscală - 12 September 2018

The Romanian tax authority sought to deny Gamesa the right to deduct input VAT on goods and services purchased during a period when Gamesa had been designated as an inactive taxpayer as a result of its failure to file tax returns.

The CJEU in its judgement highlighted the fact that the right to deduct is an integral part of the VAT system which cannot be limited once the substantive requirements are met, even if a taxable person has failed to comply with some formal requirements. The Court ruled that national legislation was precluded from denying input deduction on the basis that the tax had been incurred during a period when the tax identification number had been revoked, once the substantive requirements for deduction had been met and the right of deduction is not being invoked fraudulently or abusively.

C-249/17 – Ryanair Ltd v The Revenue Commissioners - 17 October 2018

This case considered the deductibility of VAT on costs incurred by Ryanair in relation to the planned acquisition of shares in an aborted takeover of Aer Lingus. View our commentary analysis of this judgement on our Ryanair Case (C-249/17) webpage.

C-153/17 - Commissioners for Her Majesty's Revenue and Customs v Volkswagen Financial Services (UK) Ltd - 18 October 2018

In this case the CJEU ruled that taxpayers are entitled to partial VAT recovery on general costs incurred in the supply of vehicles by way of hire purchase agreement even where those costs are passed on to the customer not in the taxable supply of goods but in the exempt part of the transaction, being the amount of interest due.

While the Court did not specify the method of apportionment which should be used in such circumstances it did preclude any methods which do not take into account the initial value of the goods when they are supplied. This method was disallowed by the Court on the basis that it was not capable of producing a more precise apportionment method than turnover.

C-502/17 - C&D Foods Acquisition ApS v Skatteministeriet - 8 November 2018

In this case, Kaupthing Bank acquired C&D Foods (the holding company of the Arovit group) in August 2008, when its former owner defaulted on its loans. Kaupthing Bank subsequently commissioned a vendor due diligence with a view to selling the group.

C&D Foods was registered for VAT as it provided taxable management and IT services to one of the Arovit group companies and having paid fees associated with the proposed sale of the Arovit group, it deducted the corresponding VAT. However, the right to deduct this VAT was challenged by the tax authority on the basis that it had no link with C&D Food’s taxable transactions.

The Court ruled that the services were incurred pursuant to the objective of a disposal of shares in order for the proceeds to be used to settle the debts owed to Kaupthing Bank and as such were not connected with C&D Food’s trade of providing management and IT services to the Arovit group. On this basis the costs incurred were not recoverable.

C-495/17 - Cartrans Spedition Srl v Direcţia Generală Regională a Finanţelor Publice Ploieşti - 8 November 2018

This case involved Cartrans, a Romanian company acting as intermediary for transport services. Cartrans had invoiced and applied the VAT exemption for transport services relating to the export of goods. In order to substantiate the right to VAT exemption, Cartrans presented TIR Carnets and CMR transport documents to the Romanian tax authority. However, the Romanian authorities, despite the fact that Romanian VAT legislation does not specify which documents are required to demonstrate that the goods were exported for the purposes of applying the exemption for transport services, argued the exemption could only be supported by a customs export declaration.

The CJEU held in this case that the production of a customs export declaration is not a pre-requisite condition to apply the exemption for transport services relating to the export of goods nor for services carried out by intermediaries who participate in such transport services. The Court added that national tax authorities must examine, based on all the evidence at their disposal, whether it can be demonstrated that the goods were in fact exported and that the TIR carnet document provided by Cartrans, certified by the customs authorities of the third country of destination of goods, is a source of proof that the tax authorities must consider unless there is cause for doubting its authenticity and reliability.

This case clarifies the criteria that must be met to substantiate the application of the exemption and should prevent a Revenue authority from seeking to deny the application of the exemption on the basis that non-prescriptive documentation requirements have not been met.

 

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