VAT exemption on services directly related to exports. International transport of goods. Judgment of the ECJ. L.C.


Under article 146 (1) (e) of the VAT Directive 2006/112/EC, supply of services, including transport and ancillary services, which are directly linked to the export of goods are exempt from VAT. This exemption, like the one established for exports of goods, is intended to respect the principle of taxation at the place of destination of goods.

However, what should be understood by the concept: “directly related” to exports? Does the exemption only apply where there is a direct legal relationship between the service provider and the consignee or consignor of the goods?

This is mainly the case with the Court of Justice of the EU in the case of a carrier who was hired by the exporter of the goods for the carriage of goods under customs transit to the point of delivery outside of the EU, which in turn subcontracted to another company that was in charge of the driving of the vehicles as well as customs formalities at the border offices and the delivery of the goods to the recipient.

According to the criterion maintained by the Tax Administration, the service provided by the driving company to the carrier should not be exempt from VAT, since there was no legal relationship between the driving company and the exporter of the goods and, therefore, the service cannot be considered as directly related to exports.

The ECJ agrees with the Tax Administration and states that if this rule were interpreted extensively, including in the exemption services that were not provided directly to the exporter, it could cause restrictions that would be incompatible with the correct and simple application of the exemptions. Besides, reminds the Court that exemptions must be interpreted restrictively and that the existence of a direct link requires that the services contribute to the effective implementation of an export transaction and that those services are provided directly to the exporter, which is not the case here.

A copy of the judgment with case number C-288/16 and dated June 29, 2017 is attached.

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ECJ C 288 16

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