VAT exemption for IC supplies of goods: proof of supply to the recipient

On 29 February 2024, the European Court of Justice delivered its judgment in the case B2 Energy (C-676/22).

For the interpretation of this judgment, it is important to note that the facts took place before the introduction of the ‘quick fixes’, which came into force on 1st January 2020.

The case concerned a Czech company transporting rapeseed oil to another Member State without providing undeniable proof concerning the supply to the actual recipient of the goods. In this respect the CMR documents were signed and stamped by a third entity which was not listed on the invoice as being the recipient of the goods. This raised the question on the conditions to apply the VAT exemption for the intra-Community supply of goods.

The Czech tax authorities concluded that the company had failed to detail the transfer of the right to dispose of the goods to the names listed as the recipients. Therefore, it was not in accordance with the conditions to obtain the VAT exemption for intra-Community supplies of goods.

However, the ECJ does not follow that position. In scenarios where the identity of the buyer is not ascertained, the substantive conditions for applying a VAT exemption may still be fulfilled if the tax authorities, based on the available facts, can verify that the actual buyer has the status of a VAT taxable person in addition to the other conditions to apply the VAT exemption of Article 138(1) of Directive 2006/112/EC.

Hence, when the right to dispose of goods has been transferred to the buyer (who has to declare the intra-Community acquisition) and the goods are transported from one Member State to another, the substantive conditions of the exemption have been met.

Please note however, that there could have been a different outcome if the facts would have taken place as from 01/01/2020, when the VAT quick fixes were introduced.

Those quick fixes introduced additional conditions with respect to the buyer of the goods, requiring the supplier to receive a VAT number in another Member State from the buyer and to include this VAT number correctly in the EU sales listing. Under those conditions, it would be more important for the supplier to have supporting documentation to ascertain the (VAT) identity of the buyer.

Sufficient and consistent supporting documentation should be there to prove the shipment to another Member State by or on behalf of the supplier or buyer. If your company is involved in intra-EC trade, it is recommended to schedule periodical checks to ensure that the exemption conditions are met at all times.