New guidelines on VAT rules for fuel card schemes

Following new guidelines by the EU VAT Committee on fuel card schemes, underlying agreements should be reviewed to reflect the VAT treatment.

The EU VAT Committee acknowledges the conclusion of the European Court of Justice (“ECJ”) in the Vega International case (C-235/18), that in principle a fuel card issuer does not receive & make a supply of fuel (being a supply of goods), but rather performs a supply of VAT exempt financial services. In such setup, the fuel card issuer could not deduct any VAT incurred on the fuel purchase, nor could the fuel card issuer invoice an onwards supply of fuel. As this judgement of 2019 was not in line with the applied invoicing & VAT treatments of many fuel- and charging card schemes, it resulted in a storm of debate.

Fortunately, the new guidelines of the EU VAT Committee put forward that the fuel card issuer could still be deemed to have received & supplied the fuel (under article 14(2)(c) of the VAT Directive), to the extent that all of the following conditions are met:

1. A transfer of ownership of the fuel in the sense of the formal legal title is made to the fuel card issuer (which includes several aspects on bearing certain risks, price-setting, purchase conditions etc.);
2. The supplies to and by the fuel card issuer are similar;
3. An agreement exists between the fuel card issuer and the principal (which includes sufficient elements to reflect the economic & commercial reality and fully align with the applied VAT treatment).

Some questions that may arise in this regard:

• In which situations will the fuel card issuer hold the formal legal title of the fuel?

• Which aspects should be covered contractually to sufficiently prove the transfer of legal ownership?

• What is the correct VAT treatment based on my current setup and contracts? Are my sales and/or purchase invoices in line?

• Should my company register locally in Belgium and/or abroad for VAT purposes? What are the VAT consequences depending on the setup at hand? Any risks exposure?

• Is it advisable for my company to carry out regularizations? If so, how and from when?

• As a customer, given that any VAT incorrectly charged would typically be non-deductible, am I receiving VAT compliant invoices in line with the given setup? How could I check this? If not compliant, what is my potential exposure and which steps could I take to resolve this?