Fuel cards and VAT: What does new GFD’s information contain?
At the end of last year, the General Financial Directorate (GFD) issued long-awaited information on fuel cards following the much-discussed CJEU judgment of May 2019 in the Vega International Car Transport and Logistic case and the conclusions of the EU VAT Committee.
The GFD's information follows the conclusions of the EU VAT Committee, which we have already informed you about here. Thus, the activities of fuel card issuers can generally be considered as exempt financial activities. However, if the contract is set up correctly from the legal point of view, the issuers may act as a buyer and subsequent seller of fuel, i.e., use the ‘commissionaire’ model and claim full VAT deduction on the supplies received (if all other conditions are met).
In order to benefit from this scheme, it is necessary to fulfil the conditions specified in the GFD’s information, i.e., to prove the transfer of ownership from the fuel supplier to the fuel card issuer and subsequently from the fuel card issuer to the fuel card holder. One of the key elements to prove this is to identify the link in the chain that bears the risk of non-payment and damage to the goods. In the past, e.g., it was possible that if damage was caused to a vehicle due to the poor quality of fuel, the vehicle owner claimed this damage from the fuel supplier (i.e. the petrol station operator). However, the GFD’s information now provides that if the ‘commissionaire’ model is used, the person liable for damage should be the fuel card issuer, as it is the fuel card issuer who supplied the "defective" goods.
Furthermore, the fuel card issuer cannot change the fuel in any way (i.e., the supply received and effected by the fuel card issuer is of a similar nature) and must conclude a written contract with the fuel card holder that reflects the economic reality.
In case of doubt, we will be happy to check whether your contractual terms and conditions allow the existing practice to continue.