CJEU on fuel cards once again
The Court of Justice of the European Union (CJEU) denied the right to deduct VAT on fuel to a taxable person who provided fuel cards to transport companies; the CJEU thus confirmed the conclusions formulated in judgment C-235/18 Vega International.
In judgment C-48/20 UAB 'P', the CJEU dealt with a situation where P., a company based in Lithuania, provided fuel cards to Lithuanian transport companies that allowed them to purchase fuel at petrol stations in Poland. P. considered the purchase of fuel from Polish petrol stations for its subsequent sale to Lithuanian transport companies via the fuel cards to be P’s economic activity, where they themselves acquired the fuel and then resold it to the transport companies. Therefore, when purchasing fuel, P. claimed the right to deduct VAT, and subsequently, upon its delivery, paid output VAT.
The Polish tax administrator argued that P. did not purchase the fuel, as the transport companies were the actual customers. The tax administrator thus denied P. the right to deduct VAT on the acquired fuel. However, upon the delivery of the fuel, P. had stated the output VAT on the tax documents (invoices), and the tax administrator did not allow for their correction as, under Polish law, once a tax inspection has started, it is not possible to correct VAT improperly indicated in the invoices. The heart of the question referred to the CJEU for a preliminary ruling was whether such national legislation is compatible with the principles of proportionality and neutrality of VAT.
The CJEU noted that although member states may adopt measures to ensure the correct levying and collection of tax, these must not undermine the neutrality of VAT, which is a fundamental principle of the common system of VAT. The CJEU further noted that the refusal to allow the correction of fuel invoices improperly indicating output VAT would mean imposing a tax burden in breach of the principle of neutrality of VAT.
It follows from the judgment that the CJEU maintains its previous case law on fuel cards, in particular that there is no right to deduct VAT. However, the good news is that the CJEU has confirmed the possibility to correct issued tax documents (invoices). In response to these judgments, the General Financial Directorate is preparing to publish its own information to clarify their application in the Czech Republic.