ECJ Case-Law, of July 17th 2014, non-recovery of leasing goods by the company after the termination of the contract

This case concerns to the consideration as “self-consumption” when a company, aimed to the leasing of vehicles, does not retrieve the leased asset once it has cancelled the contract for non-payment of the leasing quotas.

Basically, the Court is asked whether such a situation can be treated as a supply of goods for VAT purposes, as provided in articles 16 and 18 of Directive 2006/112/EC, governing the situations treated as deemed supplies of goods.

However, the Court considers that in this case a deemed supply of goods does not take place because it cannot fit into any of the provisions assumed by the articles 16 and 18 of the Directive, since it concludes:

• As regards to article 16, neither the entrepreneur nor the employees dispose the goods thus it has not been affected to private use. The goods has not been given for free but the user disposes of it illicitly, nor it has been affected to purposes outside the company’s activity as it is still subject to a finance lease that is the activity of the company.

• As regards to article 18, any of the provisions stated in the paragraphs of the article does apply because the input VAT borne on the purchase of the goods was fully deductible, the goods has not been affected to a sector of activity in which the transactions are not taxed or the company has ceased its activity. 

A copy of the judgment C-438/13 is attached.

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ECJ C 438_13 VAT Leasing_non recovery of goods after termination of the contract.htm