What is new in the area of VAT? The CJEU ruling in the case of Altic may change the practice of tax audits in the Czech Republic. The CJEU ruled that VAT exemption cannot be applied to the service of ensuring comprehensive operation of ATMs. And last but not least, the Court of Justice of the EU confirmed the currently valid practice in the area of subsidies.
Court of Justice of the EU (CJEU)
In case C-329/18 Altic, the CJEU assessed the circumstances that may indicate the involvement of a taxable person in a fraudulent activity of a different person. The tax administrator refused the right of Altic to deduct VAT as it had not verified the entries about the supplier in a certain publically available register. In our opinion, the considerations of the CJEU regarding the duties of taxable persons are in partial disagreement with the approach taken by the Czech Tax Administration and the rulings of Czech courts. The CJEU takes a more tolerant approach to the good faith of the taxable persons. Thus, the given judgement could modify to a certain extent the approach taken by tax inspections in the Czech Republic or strengthen the position of taxable persons in a situation when they already are in a dispute with the Tax Administrator.
Case C-42/18 Cardpoint summarised the rules for the exemption of services related to transactions concerning transfers or payments. According to the CJEU, services consisting in operating and maintaining ATMs, replenishing them, installing computer hardware and software in them, sending a withdrawal authorisation request to the bank that issued the bank card used, dispensing money and registering withdrawal transactions, do not fall into the category exempt from VAT. The decisive criterion for the CJEU was the fact that Cardpoint did not have the right to authorise the given transactions. The question is whether the scope of contractual obligations of the companies providing services of ATMs in the Czech Republic corresponds to the above-stated criterion. The relevant persons should indisputably verify the regime of the relevant services in light of case C-42/18 Cardpoint, as the existing rules for VAT exemption have not been formulated clearly.
In judgement C-573/18 “C“, the CJEU highlighted the principles for including subsidies from public sources in the tax base for a supply provided to the purchaser/customer by the taxable person. Subsidies that cover price reduction in the ratio 1:1 is to be included in the tax base. The given judgement comes as no surprise and in our opinion, it should not have any significant implications for the common practice in the Czech Republic.
The article is part of dReport – October 2019, Tax news; Grants and investment Incentives.