NSS odmítl vrácení DPH organizátorovi předváděcí akce

The Supreme Administrative Court refused to refund VAT to the organiser of a promotional event

The SAC has published an interesting judgment 7 Afs 392/2021, which deals with an Italian company's application for a refund of Czech VAT from invoices issued by the Czech suppliers. The Italian company organized for its B2B customer an event in the Czech Republic in order to demonstrate and promote a product. The service included the provision of transport, accommodation, catering, assistance services, an entertainment programme and also arranging a lease of a suitable premises  and its equipment. The claim was rejected on the grounds that the company was providing a travel service (so called TOMS) which did not qualify for a VAT refund.

The SAC agreed with this conclusion and held that the complainant had procured travel services from subcontractors and had subsequently provided a complex travel service - the organisation of the event. The fact that he provided the service to a single customer has no impact on that classification. Nor does the fact that the primary objective was to promote the company/product and not the tour. According to the SAC, the travel services were a substantial part of the overall service and could have contributed significantly to the promotion; they cannot be considered ancillary to the organisation of the congress or the provision of the premises.

The court further examined the possibility of applying the exception from the special regime for travel services, which the company argued (§89/19 in the current wording of the VAT Act). According to the SAC, the company had failed to prove that one of the conditions was met, namely that the customer was not itself a provider of a travel service. In the present case, the documents showed that the customer subsequently provided a service to the end customers in the form of professional congresses.

This is another judgment (see, for example, our previous alert) which highlights problematic aspects of organising similar events - whether marketing, educational or even less formal meetings, for example, within a group of related parties. We therefore recommend proceeding cautiously in these situations and considering the related tax implications in advance, not only for events held in the Czech Republic but also abroad.

If you have any questions, please contact the authors of this article or the EY team members with whom you usually work.

Authors:

David Kužela

Jevgenija Bajzíková