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European Court of Justice specifies the conditions for application of the EU customs procedure &quot

The ECJ has (a.o.) ruled that a Member State may not refuse an import VAT exemption "procedure 42" on the mere ground that the imported goods have been supplied to a taxable person other than the person whose VAT number was stated in the import declaration.

Enteco Baltic is an importer and trader in fuels based in Lithuania . The company imports fuels from Belarus with application of the so-called ' 42 ' customs procedure. This arrangement makes it possible to import products in the EU with an exemption from import VAT. The import must then be succeeded by an intra-community delivery. When filing an import declaration with application of the "42" procedure, the importer has to provide his customer's VAT registration number to local customs authorities and then provide evidence that the goods have been transported to (and delivered in) another EU Member State.

In this case, Enteco Baltic imported fuel but immediately stored them in (Lithouanian) excise goods warehouses. Thereafter, the goods were sold on EXW terms to companies established in Poland, Slovakia and Hungary . In other words, the purchasers were liable for the further transport to the final destination. After delivery of the goods to the receiving tax warehouses, Enteco Baltic received an electronic confirmation of the supply of the goods (‘e-ROR confirmation’), an e-AD document for excise purposes and a CMR consignment note confirming the receipt of the goods by the receiving tax warehouses. Sometimes, Enteco Baltic sold goods to businesses in other Member States, different from those whose VAT numbers were shown on the import declarations, but always provided information on those businesses to the relevant tax authorities.

Afterwards, the Lithuanian Authorities were informed that the final EXW buyers in Poland, Slovakia and Hungary had not paid local VAT and started a fraud investigation. They finally found that Enteco Baltic had not supplied the fuel to the taxable persons shown on the import declarations, or had not shown that the fuel had been transported and that the right to dispose of it as owner had been transferred to the persons whose names were stated on the invoices mentioning the VAT due. Proceedings were before the Court seeking inter alia the annulment of the decision of the Tax Disputes Commission of the Government of the Republic of Lithuania whereupon the Court asked the ECJ for a preliminary ruling.

A.o. the ECJ ruled in its decision of 20 June 2018 in clear sentences:

Article 143(1)(d) and Article 143(2)(b) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2009/69/EC of 25 June 2009, must be interpreted as precluding the competent authorities of a Member State from refusing exemption from value added tax on importation on the sole ground that, following a change of circumstances after the importation, the goods in question have been supplied to a taxable person other than the person whose value added tax identification number was stated in the import declaration, where the importer has communicated all the information on the identity of the new purchaser to the competent authorities of the Member State of import, provided that it is shown that the substantive conditions for the exemption of the subsequent intra-Community supply are actually satisfied.

Article 143(1)(d) in conjunction with Article 138 and Article 143(2)(c) of Directive 2006/112, as amended by Directive 2009/69, must be interpreted as meaning that:

  • documents which confirm the transport of goods from a tax warehouse in the Member State of import, not to the purchaser but to a tax warehouse in another Member State, may be regarded as sufficient evidence of dispatch or transport of the goods to another Member State;

  • documents such as consignment notes on the basis of the Convention on the Contract for the International Carriage of Goods by Road, signed at Geneva on 19 May 1956, as amended by the Protocol of 5 July 1978, and electronic administrative documents accompanying movements under suspension of excise duty may be taken into account to show that, at the time of importation into a Member State, the goods concerned are intended to be dispatched or transported to another Member State within the meaning of Article 143(2)(c) of Directive 2006/112, as amended, provided that the documents are submitted at that time and include all the necessary information. Those documents, as also the electronic confirmations of the supply of the goods and the report of receipt issued following a movement under suspension of excise duty, are capable of showing that the goods have actually been dispatched or transported to another Member State in accordance with Article 138(1) of Directive 2006/112, as amended.

Source: : curia.europa.eu

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