News Flash

August, 2017

Exemption from VAT in respect of

export of goods and services
News Flash I Accace Slovakia I Exemption from VAT in respect of export of goods and services
Exemption from VAT in respect of export of goods and
services
In this issue of our News Flash, we would like to inform you about the latest interesting judgements of the
European Court of Justice (hereinafter ECJ) regarding the VAT exemption of services connected with
international transport of goods and exportation of goods.
Exemption from VAT on services of
loading and unloading of cargo
provided by a subcontractor
In accordance with the Article 148(d) of Council
Directive 2006/112/EC, the supply of services
required for direct needs of the sea-going
vessels and their cargo shall be exempted from
VAT.
In the latest judgment C-33/16 A Oy from 4 May
2017, the ECJ dealt with the question whether
services of loading and unloading of cargo onto
and off an international sea-going vessel are
services to meet the direct needs of the cargo of
the vessels and thus, whether these services
can be exempted from VAT if they are carried
out by a subcontractor who physically supplied
the services.
In this case, the company A carried out loading
and unloading of the cargo onto and off the
vessel used for navigation on the high seas and
for the purposes of a commercial activity. In
practice, the loading and unloading activities
were carried out by a subcontractor which
invoiced those services to the company A, which
re-invoiced them to its customers which,
depending on the circumstances may be
the holder of the goods, the loader, the
forwarding company or the vessel owner. The
ECJ dealt with the question whether loading and
unloading activities performed by the
subcontractor on behalf of its clients are eligible
for exemption from VAT.
The ECJ decided, that these services are
substantial services for operation of vessels
transporting a cargo and, thus meet the direct
needs of vessels. Based on that, these services
are exempted from VAT.
In connection with appliance of exemption from
VAT of these services if these services are
provided by a subcontractor, the ECJ decided
that tax exemption on supply of loading and
unloading services of a vessel at an early
stage of the commercial chain of those
services will apply in the case, when the
purpose of the services is clear at the
moment when the supply of services is
agreed and services cannot be abused for
another than the initial purpose.
Exemption from VAT on transport
services connected with the
exportation of goods
In accordance with the Article 146(1)(e) of
Council Directive 2006/112/EC, supply of
services, including transport and ancillary
transactions, but excluding the supply of
services exempted in accordance with Articles
132 and 135, are exempted from VAT, if these
services are directly connected with the
exportation or importation of goods covered by
Articles 61 and Article 157(1)(a).
In the case C 288/16 L.. IK decided on 29
June 2017, the ECJ dealt with the question
whether in accordance with the above-
mentioned Article, it is possible to exempt from
tax the supply of services of transport of goods
to a third country, if these services are not
directly provided to a consigner or consignee of
the goods.
In this case, the company Atek, as a carrier,
concluded a contract on transport of goods from
Latvian port of Riga to Belarus. The effective
performance of that transport was assigned by
Atek to the company L.., which carried out
News Flash I Accace Slovakia I Exemption from VAT in respect of export of goods and services

transport with Ateks vehicles. The company
L.. ensured driving the vehicle, its refuelling,
customs formalities obligations, surveillance of
the goods and its transferring to the consignee.
As the company L.. regarded the supplied
services as services connected with transit of
goods, it applied a VAT rate of 0% to those
services.
A tax inspection was carried out on the company
L.. by the Latvian tax administration and
following the inspection the tax administration
calculated an additional VAT assessment, a
penalty and late payment interest. The tax
administration decided on the ground that the
company L.. was not entitled to apply a VAT
rate of 0% to the services, which were carried
out in the contexts of its contract concluded with
Atek, since (1) in the absence of a legal
connection with the consignor or the consignee
of the transported goods, these services cannot
be regarded as services of a carrier or a freight
forwarder and (2) since the company L.. did
not hold the license required under Latvian law,
L.. could not be regarded as a carrier, and
was therefore not authorized to carry out the
transport of goods.
The company L.. brought an appeal against
this decision, and the local national court
decided to stay the proceedings and to refer
question to the ECJ for a ruling. The ECJ dealt
with the question whether a supply of services
consisting in the transport of goods to a third
country, where those services are not supplied
directly to the consigner or the consignee of the
goods, can be treated as exempted from tax
under the provision, which requires an existence
of direct connection between the supply of
services and the exportation or importation of
the goods.
The ECJ decided that Article 146(1)(e) of
Council Directive 2006/112/EC should be
interpreted in the sense, that the exemption
laid down in that provision does not apply to
a supply of services consisting in the
transport of goods to a third country, where
these services are not supplied directly to
the consigner or the consignee of the goods.

Disclaimer

Please note that our publications have been prepared for general guidance on the matter and do not represent a
customized professional advice. Furthermore, because the legislation is changing continuously, some of the
information may have been modified after the publication has been released. Accace does not take any responsibility
and is not liable for any potential risks or damages caused by taking actions based on the information provided
herein.
News Flash I Accace Slovakia I Exemption from VAT in respect of export of goods and services

Contakt
Katarna Balogov
Tax Director
Katarina.Balogova@accace.com
Tel: +421 2 325 53 000

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