Since automotive companies are genuinely dealing with cross-border movements of goods, sometimes even high volumes on a daily basis, they are well familiar with the discussions regarding the potential refusal of the VAT exemption for intra-Community supplies because of “lack of documentation” or other formal requirements.
In the recent case Plöckl (C-24/15, 20 October 2016), the European Court of Justice held that an EU Member State cannot refuse to exempt an intra-Community transfer from VAT merely on the ground that the taxable person has not provided a VAT identification number issued by the Member State of destination. This is on the condition that (i) there is no specific evidence of tax evasion, (ii) the goods have been moved to another Member State and (iii) the other conditions to benefit from the VAT exemption are also met.
More specifically, Plöckl was an entrepreneur who dispatched its vehicle from Germany to an automotive dealer in Spain. Because he could not present a Spanish VAT number, the VAT exemption was refused by the German VAT authorities. Nonetheless, he could prove the cross border transport by showing the CMR consignment note and the fact that the vehicle was subsequently locally sold to a Spanish company.
By stating that it was, given the facts, incorrect to refuse the VAT exemption for Intra-Community supplies, the ECJ thus confirms its already well established “substance over form” theory, as it also did in its recent judgements Barlis (C‑516/14, 15 September 2016) and Senatex GmbH (C‑518/14, 15 September 2016) where it waived formal (invoicing) requirements as long as the taxable person has met the substantive requirements to deduct input VAT.
These judgements will likely constitute a relief for economic operators within the automotive industry who often have to spend considerable time and efforts to make sure that incoming and outgoing invoices meet the formalistic requirements of the Member States they are operating in while they can provide full evidence that all substantive requirements under the common VAT system have been met.