Unexpected CJEU judgment: commissionaire structure application

The vendor concluded a pre-contract with the purchaser, based on which the purchaser acquired an entitlement to purchase plots of land. Subsequently, both parties entered into a standard purchase contract. The pre-contract’s subject-matter was to ensure the administrative acts necessary for the sale of land. In the pre-contract, the purchaser undertook to perform at their own expense services associated with gathering the necessary documentation and registering the land in the Land Register, etc. Under Romanian legislation, the ensuring of these acts is necessary to be able to conclude a purchase contract in due manner.

The purchaser hired a third party to ensure the fulfilment of all administrative requirements arising from the pre-contract. Expenses for these administrative acts were therefore never invoiced to the vendor, as the purchaser treated them as expenses associated with the investment and incurred to generate taxable income.

However, the tax administrator assessed to the purchaser an additional VAT on the services associated with ensuring the registration in the Land Register by a third party, arguing that these services were provided by the purchaser in their own name but for the account of the vendor who had been legally obliged to perform the administrative acts concerned. Consequently, the tax administrator classified this as a typical commissionaire structure. The CJEU confirmed the tax administrator’s conclusions, claiming that even though no remuneration had been agreed for these services, the transaction at issue involved the provision of a taxable supply (as in the case of a commissionaire structure) and VAT should really be paid.