Who is entitled to reclaim VAT incurred on fuel – CJEU decision is Vega International Car Transport and Logistic Trading GmbH (‘Vega’)
On 15 May 2019 the CJEU gave its judgement in the Vega case, which concerns the supply of fuel and whether Vega, as the parent company of a larger group of subsidiaries, was entitled to a refund of VAT it had incurred on the purchase of fuel in Poland.
Vega provides transport for commercial vehicles, buses, trailers and cars throughout the world from the factory directly to the customer. Fuel cards are provided to its subsidiaries which entitle the subsidiary to fuel the vehicles it is transporting. The garage supplying the fuel sends an invoice to Vega which it settles and then recharges to each subsidiary with an uplift of 2% on the cost of the fuel. Each subsidiary must then settle the account with Vega (including the 2% uplift) within a certain period of time. Vega sought to reclaim this VAT, but the Polish tax authority rejected it and the case was eventually referred to the CJEU.
The CJEU concluded that Vega could not recover this VAT because, on the facts of the case, Vega was not the entity actually acquiring the fuel and so could not have re-supplied the fuel to its subsidiaries. Interestingly, although there was no supply of goods (i.e. the fuel), the CJEU did find that Vega had provided a service to its subsidiaries in the form of a short-term credit facility, which is exempt from VAT so no entitlement to associated input tax recovery.
Whilst this case considers the supply of fuel under a fuel card scheme, it’s not difficult to see that it has wider application, so please contact email@example.com for further information or to discuss how the facts of this case may have an impact on your business.