The supplies of fuel cards by the parent company to its subsidiary are financial services VAT exempted. Judgment of ECJ, Vega International.


The judgment of the European Court of Justice (ECJ) of March 28, 2019, Vega International’s case (C-235/18), has focused on the qualification of transactions, for VAT purposes, related to the provision of fuel cards for refuelling.

In this case, it is an Austrian parent company, Vega International, whose business activity is the transport of commercial vehicles of manufacturers, from the factory to the customer. For the development of the activity, it uses its subsidiaries in different countries, among which is its subsidiary in Poland, Vega Poland sp. Zoo.

The parent company organizes and supplies to all its subsidiaries with personal fuel cards, issued by different fuel suppliers, which are used to refuelling the vehicles. The parent company in Austria receives the purchase invoices from the different fuel suppliers, with local VAT. At the end of each month, the parent company invoices its subsidiaries the cost of the fuel purchased, plus a surcharge of 2%.

According to this operating structure, Vega International requested for the refund of the VAT paid on the acquisition of the fuel in Poland, but it was denied by the local Authorities. In response to the appeal filed by the company before the Supreme Court in Poland, the latter considered to apply the same criterion established by the ECJ’s judgment Auto Lease Holland (C-185/01), by which this transaction cannot be deemed as a supply of fuel but rather as a financing of the purchase thereof, since the user of the vehicle freely chose both, the quantity and the quality of the fuel, and the date of purchase as well, thus disposing of the product as if it were the owner. Therefore, being a financial service exempt from VAT in Poland, Vega International did not have the right to the refund of the input tax.

On the basis of this criterion, reference is made to the ECJ as to whether the transactions for which fuel cards are put at disposal of the subsidiary, as well as the negotiation, financing and liquidation of the purchase thereof through these cards should be considered as falling within the scope of Article 135.1.b) of the VAT Directive (granting and negotiating credits).

For the resolution of the litigation the ECJ refers to the aforementioned judgment of Auto Lease Holland. Firstly, it tries to determine if there is an actual supply of goods by the fuel supplier to the parent company or to the subsidiary, for which it must be remembered that the concept of delivery of goods in the VAT has an objective character that is applied with independence of the purposes and results of the transactions, so does not obey strictly to a legal concept of transfer of ownership. For this reason, it is necessary to determine who has been the actual and effective recipient of the delivery of the fuel.

In this sense, the user of the vehicle is entitled to dispose of the fuel as if it were the owner of the product, since it acquires it directly, while the parent company has no capacity to decide how it should be used or for what purposes it is intended. The subsidiary company buys the fuel directly from the suppliers, and decides at what station, the quality, quantity and type, as well as the time of purchase. In addition, it faces the costs of the purchase as the parent company bills the cost of this. Based on this scenario, it cannot be considered that the supply of fuel is made to Vega International, but the latter is just making available the fuel to its subsidiary by means of a purchase instrument, this not deemed as a supply of goods but as a provision of services.

Finally, the Court considers that, by applying the 2% surcharge to its subsidiary, Vega International receives a fee for the service provided, qualifying it as a financial service by financing in advance the purchase of the fuel, acting as a financial institution, so leaving this service exempt from VAT by article 135.1.b) of the Directive.

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