VAT NON-EXEMPT SERVICES PROVIDED TO THE BANK IN RELATION TO CASH WITHDRAWALS. JUDGMENT OF THE ECJ “CARDPOINT”
The judgment, dated October 3, 2019, discusses the interpretation of article 13, part B, letter d), point 3, of the former Sixth VAT Directive, in relation to the exemption of operations related to deposits of funds, checking accounts, payments, drafts, checks and other commercial effects, with the exception of credit collection. In particular, the main proceedings examine whether the services provided can be considered as a payment operation, exempt from VAT, or not.
In this case it is a company that provided to its client, a financial entity, services related to the management of ATMs. The scope of the service included the installation in the ATMs of a computer equipment and software necessary for its operation, the transport of bills and the supply into the ATMs. Cardpoint (litigation company) verified the bank card details and requested the bank’s approval of the operation, who was in charge of sending the corresponding authorization or denial of cash. Considering the company that these services were exempt from VAT as a payment operation, it submitted a rectifying VAT return, but the claim was denied by the Tax Authorities. The referring Court questions whether the mentioned services should be classified as technical and administrative, in which case they would not be within the concept of “transactions related to payments”, taking into account that the Company did not execute the operation, until the authorization was received.
The ECJ considers the withdrawal of cash from an ATM as a payment service and in order to be qualified as operations related to payments under Article 13 of the Sixth Directive, they must form a differentiated set, which is intended to fulfil the specific and essential functions of a payment and, therefore, that it has the effect of transmitting the funds and implying legal and financial modifications, so this VAT exempt service must be distinguished from the realization of a mere material or technical benefit. In addition, it considers that the functional aspects are decisive in determining whether the operation refers to payments within the meaning of article 13 and the criterion lies in determining whether the operation transmits, in an effective or potential way, the ownership of the funds of which it treats, or has the effect of fulfilling the specific and essential functions of that type of transfer.
Taking into account this criterion, the Court considers that the services provided by Cardpoint cannot be considered as transactions related to payments, exempt from VAT, given that the company did not carry out the charges in the bank accounts, but just delivered the money withdrawn from the ATMs. Therefore, these services are not a transfer of funds or imply a legal and financial modification. The delivery of the bills does not constitute a transfer of ownership of Cardpoint to the ATM’s user.