In Vega International Car Transport and Logistic – Trading GmbH (C-235/18) the court was asked whether the provision of fuel cards was an exempt supply of credit. The taxpayer, Vega International, organised and managed the supply of fuel cards – issued by different fuel suppliers – to all its subsidiaries. Vega International received the invoices from all of the fuel suppliers and at the end of each month passed on the costs of the fuel, together with a surcharge of 2%, to its subsidiaries.
In this particular case, vehicles transported by the Polish subsidiary were refuelled using personal fuel cards, issued to drivers. The Polish tax authority and court refused the taxpayer's input VAT recovery claim on the grounds that the supply made by Vega International was an exempt supply of credit to its subsidiaries rather than a taxable supply of goods (i.e. fuel). The CJEU held that Vega International was not making (i) an acquisition of fuel from the oil companies and (ii) a supply of fuel to its Polish subsidiary in respect of which it could recover input tax. Instead, Vega International was only providing a financial service to its subsidiary by financing the purchase of fuel and receiving a payment in the form of the surcharge for so doing. That service could be classified as the granting of credit and was exempt. Accordingly, Vega International could not recover any input tax on the fuel purchases.
DLA Piper comment: Following the principles set in the Auto Lease Holland case law (C-185/01), the CJEU excluded the existence of a double supply of goods (i.e. fuel). Vega International does not purchase and re-sell fuel to Vega Polish but provides the latter, by means of fuel cards, with a simple instrument that enables it to purchase fuel (thereby playing no more than an intermediary role in the purchase transaction concerning that product) for which a 2% mark-up is applied. This transaction must be qualified as a financial service subject to VAT exemption. It is important to stress that the rejection of the VAT reclaim confirmed by the CJEU resulted from the fact that Vega International is not considered to be performing an acquisition of goods subject to VAT from oil companies (paragraph 38).
The decision of the CJEU has a significant impact for all companies involved in fuel cards or similar arrangements (agent/commissioner schemes). Such companies should review their intragroup agreements in order to avoid their VAT paid to their suppliers becoming irrrecoverable. On this point, the court remains silent but at least the recoverability of VAT paid to oil companies should be granted to companies which are in the same position as Vega Polish. Moreover, the “double sale” scheme should continue to exist in cases where agent/commissioner schemes are properly implemented in accordance with the EU VAT rules.