On 15 May 2019, the Court of Justice of the European Union (CJEU) delivered its judgment in Vega International Car Transport and Logistic (Case C-235/18), which centred on the question of whether the supply of a fuel card scheme should be treated as a VAT taxable supply of fuel or as a VAT exempt supply of pre-financing services. The CJEU first concluded that — in line with the Auto Lease Holland (Case C-185/01) judgment — Vega did not supply goods but provided a service. The CJEU considered that this service fell within the scope of the VAT exemption for the granting of credit.  


Vega International provides ground transportation services via multiple subsidiaries by using vehicles. The subsidiaries use fuel cards to pay for fuel at the petrol station. The fuel card scheme is managed by Vega International, meaning that the petrol stations invoice Vega International for the fuel and Vega International passes on these costs to the relevant subsidiaries with a 2% surcharge on a monthly basis. As a result, the subsidiaries were able to refuel vehicles immediately and pay for that fuel at a later point in time.  

The judgment of the CJEU  

The questions referred to the CJEU were whether the provision of this fuel card scheme qualified for VAT as:  

(i) A VAT taxable supply of fuel by Vega International to it subsidiaries; or  
(ii) A VAT exempt supply of a financing service by Vega International to its subsidiaries.

The CJEU based a large part of its judgment on the Auto Lease Holland judgment, in which the CJEU concluded that a fuel management agreement between a lessor and a lessee did not form a supply of fuel by (i) a petrol station to the lessor and (ii) a subsequent supply of that fuel by the lessor to the lessee. In essence, this judgment was based on that the lessor did at no point in time have the power to dispose of the fuel as a true owner. Instead, it was the lessee that should be considered the true owner. The CJEU followed by stating that the lessor merely provided a financing service. The CJEU did not however consider whether this financing service fell inside the scope of the VAT exemption for the granting of credit, since this was not a question that was referred to the CJEU at that time.  

In its Vega International judgment, the CJEU takes the opportunity to further crystalize this matter by first applying the Auto Lease Holland to the case at issue and concluding that Vega International does not supply fuel to its subsidiaries but rather provides a financing service to its subsidiaries.  

Secondly, the CJEU considers that — based on the nature of this financing service — Vega International in essence grants credit to its subsidiaries. The fact that Vega International is not a financial institution and the fact that Vega International does not charge "interest" under an explicit "credit agreement" does not change this. By taking this "substance over form" approach, the CJEU reasons towards the conclusion that such an activity should be considered as the VAT exempt granting of credit.  

In practice  

In our view, this judgment is not only relevant for fuel card schemes, but may also be applied to any supply chain where customers can pay for goods or services at a later moment, e.g., through an intermediary such as a platform or an app. Carrying out VAT exempt activities will in most cases lead to input VAT recovery restrictions, but in certain cases it may lead to VAT optimization possibilities, depending on the nature of the costs (with VAT or free of VAT) and the type of customers ((EU- or non- EU based) businesses or private individuals). Of course, we would be happy to explore the possibilities for your business in this respect.