No requirement to prove the export of the goods in order to apply the VAT exemption for supplies of services directly connected with the export of goods

In brief

The Court of Justice of the European Union (the “Court”) has recently issued the Advocate General’s opinion in case C-495/17 Cartrans Spedition SRL. The opinion states that there is no requirement for a taxpayer to prove the export of the goods in order to apply the VAT exemption for supplies of services connected with the export of goods.

In detail

Romanian company Cartrans Spedition SRL is a road transport services broker, which transported goods from Romania outside the European Union. Cartrans applied the VAT exemption for supplies of services connected with the export of goods, based on TIR documents (which certified the completion of a customs transit from the customs office of departure to the customs office of destination) and CMR documents. Since Cartrans did not hold during a tax inspection the carriage contract concluded with the beneficiary of the goods, specific transport documents and documents showing that the transported goods had been indeed exported, the Romanian authorities rejected its VAT exemption application right.

According to the Advocate General, although TIR documents do not prove that the transported goods have been exported, taxpayers are not required to prove the export of the transported goods, in order to apply the VAT exemption, but only to prove the direct link between the transport and the export of the goods, which may consist in TIR documents.

The Advocate General’s opinion is that, where there is no proven fraud and / or where substantive conditions are met, the rejection of the application of the exemption on grounds of failure to meet formal requirements is contrary to the principle of VAT neutrality and to the principle of proportionality. Even assuming that holding documents proving the actual export of the transported goods were a substantive condition for the application of the VAT exemption for the supply of services connected with the export of goods, the mere fact that Romanian legislation does not indicate these documents may be contrary to the principle of legal certainty.

[Source: Opinion of the Advocate General in Case C-495/17, Cartrans Spedition SRL - Exemptions – Transport services connected with the export of goods – Proof that the goods have been exported outside EU territory – System established by the Customs Convention on the international transport of goods – TIR carnets, published on Curia.europa.eu, on 12 July 2018]

The takeaway

This conclusion emphasizes that supplies of services connected with the export of goods do benefit from the VAT exemption, even in the absence of evidence that the transported goods have been exported (e.g. only based on transportation documents).

If the Court follows the Advocate General's conclusions, note that such a decision could be extended to all supplies of services connected with the export / import of goods, for VAT exemption purposes.

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