Possible European VAT impact for intermediaries in chain transactions!
Recently the VAT working group of the European Commission published a document in which they provide their opinion about the VAT treatment of ABC-transactions as a result of the European Court of Justice (ECJ) judgement 'Fast Bunkering'.
The discussion is about ABC-transactions in which intermediaries (such as agents, LRD's or other buy-sell entities) are involved who receive legal ownership but do not receive the actual power of disposal of the goods as an owner. According to the ECJ, in certain situations the transaction has to be regarded as a supply made directly from the supplier to the final recipient. According to the VAT working group, the intermediary does not take part of the supply chain of the goods as it does not receive the power of disposal of the goods. As a result, the VAT working group is of the opinion that the intermediaries’ transaction should be classified as a supply of service.
In our VAT practice, we are analysing the potential impact of the Fast Bunkering case and the European Commission working paper. In light of these developments, we strongly recommend companies to actively investigate whether they are involved in these kinds of transactions and if so, possibly a more detailed analysis is required to identify the VAT risks. For more information, please contact our advisors.