Case law of the Court of Justice of the EU

• In the CJEU’s decision in Case C-808/23 Högkullen AB, the CJEU dealt with the issue of determining the tax base for services between related parties. The holding company charged subsidiaries not fully entitled to deduct tax for services (administration, IT and others) one total price for all services. The price did not cover the costs of the holding. According to the CJEU, services provided by a parent company to a subsidiary are not considered to be a single supply, while the tax base may be their usual price.
• In Case C-785/23 Bulgarian posts, the CJEU considered the exemption of postal services. The Bulgarian Post considered its postal services to be exempt. The tax administrator considered that the services provided by post office were taxable because they took into account the special needs of customers (prices lower than those approved by the regulator, etc.). A large part of these additional services was provided to public administration bodies. According to the CJEU, it is necessary for services to be exempted that they meet certain qualitative and price conditions, but the exemption can also be applied under more favourable conditions only if these services are offered, provided and serve everyone. According to the CJEU, this could also be met by services for public authorities. That decision may have a significant impact on the current interpretations of the rules on the exemption of postal services.
• The CJEU also issued a decision C-276/24 KONREO, v.o.s., concerning the application of the institute of liability in the event that the customer was denied the right to deduct tax because he knew or should have known and could have known that he was participating in tax evasion. The supplier did not pay the VAT, therefore the customer was asked to pay VAT as a guarantor under Section 109 of the VAT Act. According to the CJEU, the Directive allows for the denial of the right to deduct tax and at the same time to exercise joint and several liability if the taxable person knew that he or she was participating in tax evasion. This decision is in line with the practice of the Czech Financial Administration.
• In the context of Case C-433/24 Galerie Karsten Greve, the CJEU considered the question of how to strictly interpret the condition for the application of the special regime in the trade in works of art, according to which the author himself must deliver the work to the trader. According to the CJEU, the special regime may also be applied if the work is supplied to the dealer by the legal entity through which the author acts, and at the same time if such supply can be attributed to this author. This attribution to the author is applicable if the author has established the legal entity in question for the purposes of the first placing of his works on the EU market, but there may be other reasons for attribution to the author, which the CJEU comments on below. In our opinion, the applicability of this approach in practice is very limited.
• In Case C-602/24 W. sp. z o. o. with the CJEU, focused on the question of whether it is possible to reclassify a transaction from an intra-community supply of goods to an exempt export of goods. W reported the supply of goods to another Member State, the consignee of the goods being a company registered in Latvia. The transport provided by the consignee of the goods was supposed to take place from Poland to Lithuania, but the goods were exported to Belarus without the supplier’s knowledge. According to the CJEU, this transaction must be reclassified as an exempt export if it is demonstrable that the supplier transferred the right to dispose of the goods as the owner, the recipient of the goods actually transported the goods outside the EU (while it is irrelevant that he did so without the supplier’s knowledge) and there was no intentional tax evasion. This is a fundamental interpretation of the rules for the application of VAT exemption.
• The issue of correction of VAT stated on documents in an incorrect amount was dealt with by the CJEU in Case C-794/23 P GmbH. This company applied the basic rate instead of the reduced rate on more than 20,000 receipts (VAT documents), and the tax could not be refunded to customers (they were unknown in principle). According to the CJEU, there is no risk of loss of tax revenue in B2C transactions, the taxpayer is not obliged to pay this higher part of VAT and can correct the taxation. In the case of B2B, this risk exists even if the customer is not entitled to deduct input VAT, so a correction is not technically possible. With regard to the volume of documents originally issued, the tax administrator may use an estimate of the share of B2B transactions for which the payer is still obliged to pay the originally invoiced VAT. This conclusion may have implications for the approach used in practice.
• In its opinion in case C-796/23 Česká síť s.r.o. The Advocate General of the Court of Justice of the EU assessed the designation of a taxable person within a community (association without legal personality) under the Czech VAT Act effective before 1 July 2019. The association provided internet connection services, while each of the members of the association provided the service in its own name to its portfolio of customers, but the tax administrator nevertheless required the payment of tax from a single designated participant in the association. The Advocate General stated that it was decisive which of the associations acted externally towards customers. Even in the case of a contractual prohibition on the shareholders acting independently, it is still possible that each partner acted independently and was then obliged to pay VAT. According to the Advocate General, the approach of the Czech VAT Act to the functioning of associations was not in accordance with the VAT Directive.
• In his Opinion in Joined Cases C-379/24 Agrupació de Neteja Sanitària, AIE and C-380/24 Educat Serveis Auxiliars SCCL, the Advocate General ruled on the various conditions for the exemption of services provided by an independent organisation to its members under Article 132(1)(f) of the VAT Directive. According to the Advocate General, the condition of direct necessity of services relates rather to the assignment of the service provided by the organisation to the exempt activity of members and does not address the nature or (in)necessity of such services. According  to the Advocate General, the condition of non-distortion of competition probably relates to how the application of the exemption affects the decisions of members to purchase services.