Operation of ATMs not VAT exempt

Cardpoint GmbH, a German entity, filed a corrective VAT return for 2005, requesting the existing tax assessment be amended on the grounds that they had declared services they provided with output VAT, while later identifying them as VAT exempt. The company was in charge of the operation and maintenance of ATMs, as a part of which they installed hardware and software in the ATMs. They also arranged the transportation of banknotes provided by the bank and placed them in the ATMs. The German tax administrator rejected the request, stating that the above activities were not transactions concerning payments and therefore not VAT exempt.

The company appealed the decision, and the case proceeded to the CJEU. The prejudicial question was whether the technical and administrative supplies provided by Cardpoint were VAT exempt.

Cardpoint itself neither debited the bank accounts (only physically delivered the cash to selected ATMs), nor authorised transactions. The CJEU thus concluded that the services provided by Cardpoint neither had the effect of transferring funds nor entailed legal or financial changes characteristic of transactions concerning payments. Furthermore, the court concluded that the purpose of the provision laying down the exemption for transactions concerning payments was namely to alleviate any possible difficulties connected with determining the consideration for the supplies, therefore the tax base. In the Cardpoint case, however, the consideration could easily be determined as the company generated a non-editable list of all transactions for the day at the end of each day.

For services to be viewed as transactions concerning payments, they must, viewed broadly, form a distinct whole, fulfilling in effect the specific, essential functions of a payment, i.e.  transferring funds or giving rise to changes in the legal and financial situation.