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CJEU delivered judgment in Case Fast Bunkering Klaipeda (FBK)

C 526/13 VAT exemption concerning the supply of goods for the fueling and provisioning of vessels used for navigation on the high seas, made through intermediaries acting in their own name

The Court of Justice of the European Union (hereinafter the CJEU) delivered its judgment in case C 526/13, ruling that the exemption may apply if the transfer of the ownership of the goods supplied to the intermediaries has taken place at the earliest at the same time as the operators of the vessels are actually entitled to dispose of those goods as if they were the owners. In such a case, the transaction cannot be classified as a supply to intermediaries, but is to be interpreted as a supply made directly to the operator of a vessel, who is entitled to VAT exemption.

On 3 September 2015, the CJEU delivered its judgment in Case Fast Bunkering Klaipeda (FBK). The subject-matter of the case in question was the application of the VAT exemption (or zero-rating) for the supply of goods for the fuelling and provisioning of vessels by FBK.

Upon receiving the order, FBK took the corresponding fuel from the customs depot and carried out the necessary formalities. The fuel was then sold under the conditions “Free on Board”, i.e. without accounting for transport or other costs and related taxes and without insurance. However, the orders were sent to FBK not by the ships’ operators, but by intermediaries established in various Members States, to which FBK invoiced the sales. At this point, it is important to stress that it was only once the fuel was loaded into the fuel tanks of the vessels that FBK was in a position to determine the actual amount transferred and thus to draw up the corresponding invoice.

The Lithuanian Ministry of Finance expressed its concern that since the fuel at issue was not sold directly by FBK to the operators of the vessels but to intermediaries acting in their own name, the latter must be regarded as having sold the fuel to those operators. Consequently, FBK could not apply the VAT exemption as that exemption only applies where there is a supply of goods to the operators of vessels intended for international carriage of passengers and/or goods.

In the procedure concerned, the CJEU clarified that according to the case-law, just as the exemption provided for export transactions applies exclusively to the final supply of goods exported by the seller or by a third person on his behalf, the abovementioned exemption cannot be extended to the supply of those goods effected at a previous stage in a commercial chain. It follows that, in order to benefit from the exemption, a supply of goods for fueling and provisioning the vessels must be supplied directly to the operator of the vessel.

Furthermore, the CJEU stated that for the purposes of the given exemption, the transfer of goods made pursuant to a contract under which commission is payable on purchase or sale must be regarded as a supply of goods. A supply of goods for fueling and provisioning made to intermediaries acting in their own name, even if the latter act on behalf of the operators of vessels, who will use them, must be distinguished from a supply made directly to those operators. In order for a transaction to be classified as a supply of goods to a person, it is necessary that the transaction has the effect of authorizing that person actually to dispose of them as if he was the owner of the goods. The concept of “supply of goods” in this case thus refers to any transfer of tangible property by one party, which empowers the other party actually to dispose of it as if he were its owner.

Judgment

The exemption concerned shall, in principle, not be applied to the supplies of goods for fuelling and provisioning made to intermediaries acting in their own name, even where the ultimate use of those goods is known at the date of supply and duly established, and evidence confirming this is submitted to the tax authority in accordance with national legislation.

However, in circumstances such as those at issue in the main proceedings, that exemption may apply if the transfer to those intermediaries of the ownership in the goods concerned under the procedures laid down by the applicable national law took place at the earliest at the same time when the operators of vessels used for navigation on the high seas were actually entitled to dispose of those goods as if they were the owners.

The transfer of ownership to intermediaries in accordance with the procedures prescribed by the applicable national law as well as the right of operators to actually dispose of the goods as their owner is a matter for the national court to ascertain.

Judgment

The exemption concerned shall, in principle, not be applied to the supplies of goods for fuelling and provisioning made to intermediaries acting in their own name, even where the ultimate use of those goods is known at the date of supply and duly established, and evidence confirming this is submitted to the tax authority in accordance with national legislation.

However, in circumstances such as those at issue in the main proceedings, that exemption may apply if the transfer to those intermediaries of the ownership in the goods concerned under the procedures laid down by the applicable national law took place at the earliest at the same time when the operators of vessels used for navigation on the high seas were actually entitled to dispose of those goods as if they were the owners.

The transfer of ownership to intermediaries in accordance with the procedures prescribed by the applicable national law as well as the right of operators to actually dispose of the goods as their owner is a matter for the national court to ascertain.

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