Case law
10 January 2019

CJEU on transport: excise duty regime not relevant

The Court of Justice of the EU (CJEU) in its December judgement (C-414/17) regarding Czech company AREX CZ dealt yet again with the issue of allocating transport in a chain of transactions. This time, it concerned fuel subject to excise duty and its transport under the excise duty suspension arrangement.

Tomáš Havel
Kateřina Klepalová

Arex purchased fuel originating in Austria from Czech suppliers, while this was preceded by a chain of transactions.  The transport of the fuel from Austria to the Czech Republic was provided by Arex by means of its own vehicles. The fuel was transported to the Czech Republic under an excise duty suspension arrangement; the excise duty was paid by the Czech suppliers.

In its Czech tax return, Arex claimed VAT on tax documents issued by the Czech suppliers. In a tax inspection, the tax administrator challenged these entitlements, arguing that the place of acquisition was in Austria, as Arex obtained the right to dispose of the goods as an owner already in Austria.

Before the Supreme Administrative Court (SAC), Arex argued that when goods are transported under an excise duty suspension arrangement, economic ownership does not pass, as the goods cannot be disposed of during the transportation.

SAC referred several prejudicial questions to the CJEU, the key one being whether the transport should be allocated to the acquisition by the Czech suppliers who then sold the fuel to Arex, as they were the ones obliged to pay the excise duty.

As in many previous judgements, the CJEU confirmed that in chain transactions, transport has to be allocated to just one transaction. The SAC thus had to determine at what time the right to dispose of the goods as an owner had passed on to Arex. If this had happened before the transportation of fuel from Austria, then the transport must be allocated to the transaction effected by Arex, and that transaction has to be treated as acquisition of goods from another EU member state.

CJEU also held that it was not possible to allocate the transport automatically to the supply effected by the entity that is obliged to pay excise duty. CJEU thus confirmed its previous conclusions on allocating transport, while it also stated that the excise duty regime is not relevant for such allocations.

The financial administration commented on the judgement on its website, also with respect to issued tax securing orders. In our opinion, however, their interpretation goes beyond the wording of the judgment.

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