Moment in which the transmission of the power of disposal takes place in a supply of goods. ECJ’s judgment of April 23, 2020. Herst SRO
As it is known, the transfer of the power of disposal over a property that determines a taxable supply of goods in VAT does not necessarily coincide with the transmission of the power of disposal over a property with the faculties attributed to its owner, but it includes any transmission over goods that empowers the acquirer to actually dispose of said goods as if it were its owner.
Accordingly, on many occasions, there may be doubts about the moment in which the transmission of the disposition power actually takes place, since the powers and the temporality that the acquirer has over the goods in question may vary depending on what has been agreed between the parties.
Through the present judgment, the European Court of Justice (ECJ) has brought a little more light on this concept, establishing that the existence of the transmission of the power to dispose over goods as owner means that the party to whom said power has been transmitted has the possibility of adopting decisions that may affect the legal situation of the goods, including, in particular, the decision to sell it.
In the present case, it is a company from the Czech Republic, Herst, whose activity is road transport, which acted as a single transporter, under its own name and charge, of fuel from several Member States to the Czech Republic. However, it also acquired the fuel as a final part of a chain supply, where the goods was initially purchased by another economic operator established in the Czech Republic, as well.
During the single transport carried out by Herst, under suspension regime of excise duty, the fuel was sold successively to other operators established in the Czech Republic, while Herst obtained a commercial margin for the difference between the purchase-sale price. However, under the purchase contract with the first operator, Herst would only legally obtain the ownership of the goods once it was released for free circulation in the Czech Republic.
In accordance with this operation, Herst considered that it was carrying out a local purchase of goods in the Czech Republic, since it acquired the fuel once it was released for free circulation, while the Administration understood that it acquired the disposal power with the commencement of the transport, so it was actually carrying out a intra-community acquisition of goods, within a chain supply. The referring court therefore asks at what point did Herst obtain the power to dispose of the fuel, as the owner, within the meaning of the ECJ case-law.
ECJ recalls, firstly, that an intra-Community acquisition of goods takes place when the power to dispose of the goods as owner has been transferred and the supplier demonstrates that the goods has been dispatched to another Member State. In this sense, as already mentioned, the ECJ establishes that in order to consider that a transfer of the power of disposal for VAT purposes does exist, the party to whom the power has been transferred must have the possibility of taking decisions that may affect the legal status of the goods, such as the decision to sell it, like in this case where the fuel was bought and resold by different economic operators.
Therefore, it is relevant to determine at what moment in time the transmission to the final purchaser occurs, since if it took place before the intra-community transport occurs, it is a circumstance that may lead to classifying the acquisition as intra-community. In this case, it must be taken into account that Herst performed the intra-community transport to carry out his own economic activity.
In conclusion, the ECJ considers that the taxable person who carries out an intra-community transport of goods with the intention of acquiring them for his economic activity once they are released for free circulation, obtains the power to dispose of said goods as owner whenever he has the possibility of taking decisions that affect the legal status of the goods, such as the decision to sell them.
The sentence has case number C-401/18.