SAC on VAT exemption for intra-community supply
The Supreme Administrative Court (SAC) did not recognise the right to VAT exemption for a supply of goods to another EU member state, as there were doubts whether the goods had been supplied to a person registered for tax in another member state, and whether the goods had been transported to another member state at all. The SAC pointed out that it is in the interest of the taxpayer to obtain conclusive evidence, and that it is the taxpayer who bears the burden of proof and is obliged to prove that the conditions for exemption have been met.
A taxpayer supplied frozen products to several EU countries and treated these supplies as exempt from value added tax. However, the tax authorities did not consider the CMRs to have been correctly filled in and true. Instead, the tax authorities claimed that the documents did not prove that the entities listed as customers in the tax documents were the actual recipients of the goods. In addition, in some cases the documents did not prove the actual course of transportation or gave untrue information, e.g., about the place of loading and unloading.
In their defence, the taxpayer explained all inaccuracies in the CMRs and provided the requested details. The taxpayer disagreed with the tax administration’s view that the documents proved that the goods had been transported to another member state but did not prove that the declared customer was the recipient of the goods. The taxpayer argued that as the customers had paid for the goods, no other conclusion than that they had received the goods was possible.
The SAC stated that the mere payment for the goods does not prove that all the conditions for VAT exemption were met, especially not if payment was made from a bank account of an entity other than the declared customer. The taxpayer also did not have any documents proving that the goods had been ordered or received by a particular person in another member state. Yet, according to the SAC, the customer not being contactable by the local tax authorities cannot be held against the supplier.
The SAC noted that it is in the interest of the taxpayer to obtain documents which can prove in a relevant manner that the goods were actually delivered to another member state. It is the taxpayer who bears the burden of proof and is obliged to prove that the conditions for exemption have been met. As in this case the taxpayer did not themselves transport the goods to another member state, they should have made sure that they had credible evidence that the goods were delivered in the manner agreed. The main reasons the SAC did not grant the tax exemption were the substantial discrepancies in the submitted documents and that the taxpayer subsequently failed to remove these discrepancies or support their argumentation otherwise.