Duty to declare tax on one-time supplies paid in instalments

In 2012, a German company acted as an intermediary in the sale of land for another entity and, for these services charged a remuneration of EUR 1 million plus VAT to be paid in five instalments of EUR 200,000 plus VAT. The company issued an invoice and paid the related VAT at the moment the particular instalment was due. However, the German tax authorities stated that the services were provided in their entirety in 2012 and the company should have therefore paid VAT on the entire mediation fee in that year.

Although the first-instance court agreed with the company, the CJEU sided with the tax authority’s opinion that the transaction was carried out as a one-time supply in 2012 and was therefore subject to VAT on the entire amount in that year. The judgment derived from the interpretation of Article 64 of the VAT Directive, according to which a supply of a service that gives rise to successive invoices or successive payments shall be deemed to have been completed on the expiry of the periods to which those invoices or payments relate.

The CJEU pointed out that this provision only applies to supplies that are provided repeatedly during a certain period of time and to which specific partial payments can be allocated. It therefore cannot be applied to one-time supplies that are paid for in successive instalments since no supply can be attributed to each instalment, i.e., this only involves the spreading of the payment over several periods. Since the company provided its mediation services on a one-time basis upon the sale of the plots of land in 2012, the taxable supply took place and the duty to declare tax arose at the time the services were provided. It is not possible to postpone the payment of VAT until the moment the instalment is received.