VAT News

ECJ Case-Zero rated intra-community supplies

In a recent case, the European Court of Justice has found in favour of a Portuguese taxpayer (Euro Tyre, a Portuguese branch of a Dutch entity) who zero rated supplies of goods dispatched from Portugal to a seperate legal entity established in Spain.

Euro Tyre had made the dispatch of goods directly to the customer in Spain, and had displayed the customer's ES VAT number upon the invoice, whilst also retaining evidence of the transport of the goods. This in itself is generally regarded as sufficient evidence to make the supply free of VAT in the EU member state of dispatch.

However, the Portuguese tax authorities undertook an audit and made an assessment for Portuguese VAT on the basis that the ES VAT number of the customer was not registered on the EU VIES system. This system lists the EU VAT numbers of businesses who trade cross-border within the EU. As the customer had not previously traded this way, it was only registered on the domestic Spanish system, and not VIES.

Euro Tyre appealed this assessment on the basis that the substantive requirements for making the intra-community dispatch free of VAT were met, and the ECJ agreed with them.

Whilst this case had a positive outcome for the taxpayer, it is advisable for businesses to check their customer's VAT number using the VIES system.

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