Newsflash | 18/03/2019

EU Council adds 10 jurisdictions to its list of non-cooperative jurisdictions

In addition to the 5 jurisdictions that were already listed, the revised EU list of non-cooperative jurisdictions now also includes the following 10 jurisdictions: Aruba, Barbados, Belize, Bermuda, Dominica, Fiji, Marshall Islands, Oman, United Arab Emirates, Vanuatu.  The list already included Samoa, Trinidad and Tobago, and the US territories of American Samoa, Guam, and the US Virgin Islands. Those jurisdictions did not implement the commitments they had made to the EU by the agreed deadline.

Thirty-four other countries remain on the grey list and have up until the end of the year to comply with the EU requirements or face being added to the blacklist. These countries include Albania, Anguilla, Antigua and Barbuda, Armenia, Australia, Bahamas, Bosnia and Herzegovina, Botswana, British Virgin Islands, Cabo Verde, Costa Rica, Curacao, Cayman Islands, Cook Islands, Eswatini, Jordan, Maldives, Mauritius, Morocco, Mongolia, Montenegro, Namibia, North Macedonia, Nauru, Niue, Palau, Saint Kitts and Nevis, Saint Lucia, Serbia, Seychelles, Switzerland, Thailand, Turkey, and Vietnam.

Additionally, twenty-five jurisdictions were cleared as they fully complied with the EU’s demands. These are: Andorra, Bahrain, Faroe Islands, Greenland, Grenada, Guernsey, Hong Kong, Isle of Man, Jamaica, Jersey, Korea, Liechtenstein, Macao SAR, Malaysia, Montserrat, New Caledonia, Panama, Peru, Qatar, San Marino, Saint Vincent and the Grenadines, Taiwan, Tunisia, Turks and Caicos, and Uruguay.

The list, which is part of the EU’s external strategy for taxation as defined by the Council, is intended to contribute to ongoing efforts to prevent tax avoidance and promote tax good governance worldwide. The work on the EU list of non-cooperative jurisdictions is a dynamic process. The Council will continue to regularly review and update the list in the coming years, taking into consideration the evolving deadlines for jurisdictions to deliver on their commitments and the evolution of the listing criteria that the EU uses to establish the list.

The full text of the conclusions can be read here:

Newsflash | 23/11/2018

Stricter requirements for Dutch tax ruling practice

By means of a tax ruling, the Dutch Tax Authorities provide advance certainty to taxpayers about the tax consequences of their planned actions. The Dutch tax ruling practice has become a topic of much debate recently however. In February of this year, the goverment announced his intention to review the current ruling practice with an international character in order to safeguard the quality of the Dutch ruling practice for companies with real economic activities in the Netherlands. In a letter to the Lower House of 22 November 2018, the Dutch State Secretary of Finance, Mr Snel, outlined his plans in more detail. The changes relate to more transparency, centralisation of the practice and stricter requirements for issuing rulings with an international character, particularly to companies with little presence in the Netherlands, so-called letterbox companies.


The following changes are proposed:

  • An anonymous summary of every issued ruling with an international character will be made public;
  • The Tax and Customs Administration will publish an annual report that relates to rulings with an international character;
  • Periodical research with independent experts will be continued.

The information to be published will address important issues that have arisen during the year so that they are made widely known. Extra attention will also be paid to cases where a ruling request has been submitted but for which no ruling has been granted.

Analogous to the Belgium ruling practice, a summary for each ruling issued by the Dutch Tax Authorities with an international character, will also be published in the Netherlands. This way the need for more transparency per ruling will be achieved without the information being traceable to an individual taxpayer, according to Mr Snel.

Central coordination

Within the Tax and Customs Administration the process of issuance of tax rulings will be further centralised and coordinated. Rulings issued with an international character require double signatures and the persons responsible for the sign-off will be centralised in a new to be formed team, the so-called “College Internationale Fiscale Zekerheid”.

Letterbox companies

The Dutch government has declared the battle against international tax avoidance, an important spearhead of the Dutch tax policy. That is why the government has reconsidered issuing rulings to internationally operating companies with a limited presence in the Netherlands. (Letterbox-) companies, that establish in the Netherlands mainly on paper and for tax purposes, will no longer be granted advance tax certainty. ‘We issued rulings on structures that ended in a tax haven. We do not want that anymore ‘, says State Secretary Menno Snel van Financiën in an explanation of his plans.

The following measures will be taken:

  • Taxpayers should meet stricter criteria when requesting a tax ruling with an international character. The current list of substance criteria that needs to be met will be replaced by a new ‘economic nexus’ requirement, that a group must meet in the Netherlands.
  • The tax authorities will look more closely at the purpose of the specific structure for which the ruling is requested. If the decisive motive of the taxpayer is to save either Dutch or foreign tax, no ruling will be granted.
  • Rulings with an international character are issued for a maximum term of 5 years; in exceptional cases this period can be extended to a maximum of 10 years.
  • There will be a fixed format for all rulings with an international character, this is also for exchange of information purposes within the EU.

In the future, the Tax and Customs Administration will only issue a ruling for activities of internationally operating companies involving ‘economic nexus’ with the Netherlands. These must be business, economic or operational activities actually performed at the expense and risk of the company established in the Netherlands. These activities must match the function of the company within the group. For those activities, sufficient qualified personnel must be available in the Netherlands at group level and the number of personnel employed in the Netherlands must be in proportion to the total staff of the group. The level of the operational costs must also match the activities carried out. This concept will be further elaborated and provided with examples published in a policy decision. This notice will be further updated on a regular basis with new examples that occur in practice. Some examples has already been published as an appendix to the letter.

The inclusion of the ‘economic nexus’ concept goes a step further than the raising of the minimum substance requirements as previously announced. It is therefore heavier, more effective and better focused on the specific circumstances of the case. This way a motion adopted by the House which asks for the substance requirement to be made more dependent on the size and content of the company’s activities, will also be honoured. The concept of ‘economic nexus’ means that in all cases the threshold for obtaining certainty will be increased comparing to the current substance criteria.

In parallel with more stricter substance requirements, the tax authorities will also take into consideration the purpose of the specific structure for which the ruling is being requested. The Tax and Customs Administration will not give a ruling if tax saving is the sole or decisive reason for the structure or transaction, irrespective whether it is domestic or international tax that is at stake. Furthermore, rulings will no longer be issued on transactions with entities established in countries on the EU list of non-cooperative jurisdictions for tax purposes or that are qualified as low-tax countries (i.e. effective tax rate of 7%).

Another amendment proposed is an adjustment of the maximum duration of rulings. All new rulings issued with an international character (not limited to APA’s and ATR’s), will have a maximum term of 5 years, unless the facts and circumstances permit an exception, for example if there are long-term contracts, then the maximum is 10 years. An interim revaluation test is also built in, e.g. after 5 years, an amendment of law or a relevant change of facts and circumstances.

The current format of rulings will also be redesigned. At present, a ruling is basically free of form. In the future rulings will only be concluded in the form of a settlement agreement in a fixed prescribed format. As a result, each agreement will contain the agreed necessary elements and not only the Tax Authorities but also taxpayers are explicitly bound by what has been agreed. A fixed format is also desirable in order to simplify the exchange of information with other tax authorities.

Next steps

The substantive changes will be elaborated further in policy rules next year be and supplemented by examples. The policy rules and examples will be published on a regular basis so that they are accessible and clear to everyone. All these changes should lead to a renewed Dutch tax ruling practice.

These changes will be introduced simultaneously, starting 1st of July 2019. The Lower House will be informed on the progress in the Half-year Report of April 2019.

The original letter of the Dutch State Secretary can be found at:  

Newsflash | 23/06/2018

Dutch tax policy on cryptocurrency transactions published

How the Dutch tax authorities deal with cryptos
BTC, Blockchain, ICO’s, EOS, Ether etc., have grown considerably popular over the past few years, with an increasing number of people buying and selling them. With so much buzz going around, the question inevitable arises how bitcoin or other “altcoin” transaction such as mining, spending, trading, exchanging, etc. — are taxed in the Netherlands. The Dutch State Secretary of Finance, published a policy letter on May 28, 2018 explaining how the Dutch tax authorities are likely to deal with cryptocurrency transactions and how various common situations, will be treated for Dutch tax purposes.

Mining and trading by individuals
With respect to crypto mining and trading transactions carried out by individuals, an important question is whether these activities would create a source of income for Dutch tax purposes. Examples of such a taxable source of income are income from business or income from other activities. These sources of income are taxed at progressive tax rates up to 51,5% in 2018. However for these sources of income to be deemed present, certain criteria need to be met. An important test is whether a certain degree of labor has been performed. In addition, the taxpayer should intend a benefit (subjective test) and this benefit can reasonably be expected (objective test). According to Mr Snel the answer to this source question, is not easy to provide in practice. It depends largely on the facts and circumstances of an individual case. Partly because of an increase in mining activities in general and the limited number of cryptos that can be mined on a particular day, a benefit is not likely to be realized. However other criteria such as the size of capital investment in e.g. computers, is also relevant. The phase where an individual enters into the mining process, at the beginning of a new crypto or an already established one, are relevant aspects as well that will be considered in qualifying whether a benefit can be obtained.
According to Dutch case law there is no source of income in case of speculative transactions and if the outcome of the transaction cannot be influenced by the input or work performed by the individual taxpayer. This approach is also followed in case of crypto trading. If however structurally positive results are realized that can be attributed to the work of the taxpayer and which goes beyond the work associated with speculation, this could also result into recognition of a taxable source of income. The surplus yield must therefore be related to the work performed by the taxpayer (in qualitative or quantitative terms). In general however- taking into account the facts and circumstances of the case – both trading and mining of cryptocurrencies performed by an individual taxpayer will presumably not qualify as a source of income for Dutch tax purposes.

Box 3 Assets
In the absence of a taxable source of income described above, cryptocurrencies such as bitcoin will still qualify as other assets taxable under income from savings and (portfolio) investments in the so-called box 3. Taxation on income from savings and investments is in the Netherlands based on the assumption that a taxpayer will realize a fixed annual yield on their investments. Depending on the applicable tax bracket the effective tax rate for 2018 will vary between 1.63% and 5.39 %.

The assets and liabilities taxed in this box have to be reported at their fair market value at the first of January of the tax year concerned (reference date). As crypto prices may vary considerably depending on the particular exchange platform used, the most obvious price to report at reference date would be the price quoted at the particular exchange platform used for trading.

Dutch resident taxpayers are responsible for a correct and complete tax return. Taxpayers are therefore required to report their crypto holdings at the minimum as income from savings and investments in their Dutch personal income tax return, unless there is an active source of income taxable at progressive tax rates. Cryptocurrencies are for that matter no different than any other class of assets held by a taxpayer.
Business operations

The Dutch State Secretary elaborates separately on the Dutch tax implications if cryptos are received in exchange for goods sold or services rendered by a business enterprise. The EUR equivalent of the crypto will still have to reported as revenue both for personal and corporate income tax purposes, as well as for value added tax purposes. Upon exchange of a crypto against EUR, there may be an additional need to recognize a currency exchange profit or loss (F/X result) for profit determination purposes.

At balance sheet date any crypto holding will have to be valued in accordance with Dutch sound business practice. Cryptocurrencies are likely to qualify as current assets, not as cash items or liquid assets. Under certain circumstances crypto can also qualify as inventory or stock assets. In both case valuation at cost price or lower market value will be the main rule.

In case of a privately owned business there may also be an issue of excess cash assets investment in cryptocurrencies. If the cryptocurrencies are purchased with cash assets owned by the business that are not necessary in the day-by-day operation of the business and the investment is done for temporarily purposes in such a way that the assets can easily be converted back in liquid assets, then the holding of cryptos by the individual will then qualify as private instead of business equity in the hands of the taxpayer, subject to tax in box 3.

Crypto transactions by legal entities
Assets held by legal entities subject to the Dutch corporate income tax act are deemed business assets without exception. There is comparable freedom to qualify an asset held either for business or private purposes as with an individual business owner subject to the Dutch personal income tax act. This means that mining and trading activities will always be subject to a profit tax. Income from such activities needs to be determined in accordance with Dutch sound business practice.

Loan wage payments in cryptos 
Wages paid in cryptocurrency are treated as wages in kind. For Dutch wage tax purposes the value of the crypto at the time the wage is received must be converted into an equivalent in euros.

The Dutch tax authorities are conducting various studies to gain more insight into this new phenomenon and possible issues that may arise. At the same time, effective enforcement can only be designed in an international context, according to the Dutch State Secretary. This research also looks at crypto transactions carried out in the shady side of the economy. An important development in this respect is the new 5th EU anti-money laundering Directive which contains identification obligations as well as other rules for trading platforms and other providers of cryptocurrency services. Further information on the Dutch tax treatment of cryptocurrencies will be published on the website of the tax authorities.

Newsflash | 25/07/2017

183-days rule not limited to actual working days in the work state

OECD’s physical presence method is determinative!


The Hague: 14-07-2017. The Dutch Supreme Court declares the appeal in the cassation of the Secretary of State to be justified. As days of presence in the state of activity do not count only the days actually worked in that state. All other days that the taxpayer was present in that state and who had any connection with the work executed there, do also count for this matter.

Taxpayer B is a resident of Belgium. He is a director and sole shareholder of X BVBA, a company established in Belgium, active in architectural project management. In 2009 B worked for X BVBA for a total of 181 days in the Netherlands on behalf of a contract concluded between X BVBA and the Dutch (ultimate) service recipient. B traveled on his working days from his home in Belgium to the workplace in the Netherlands. B received a salary of € 57,600 from X BVBA in 2009. The inspector is of the opinion that the Dutch fictional wage scheme applies and therefore increases the wage of B to a fixed percentage (80%) of the (net) annual result of X BVBA over 2009.

In dispute is whether the Netherlands is entitled to tax the remuneration of X on the basis of the double tax treaty concluded between the Netherlands and Belgium and, if so, whether the attributed Dutch income of X can be taxed under the rules of the Dutch fictional wage scheme of Article 12a of the Dutch Wage Withholding Tax Act 1964.

According to the courts the Netherlands was not entitled to tax B on this deemed income because the 183 days rule was simply not met. B stayed in the Netherlands for only 181 days in connection with his work. According to the court, a reasonable explanation of the treaty implies that days spend in the Netherlands for private purposes should not count under the 183 days rule.

The Dutch State Secretary went into cassation. The Supreme Court ruled that the court has applied an incorrect test in it’s assessment of the number of days B stayed in the Netherlands. As days present in the state of activity do not count only the days actually worked in that state. All other days spent by B in the work state connected to his work, such as Saturdays, Sundays, National Holidays, Vacations and days off, before, during or after termination of the work or short breaks, do also count in this respect.

The Supreme Court referred the case back to the lower court for a further investigation into the number of days that B was present in the Netherlands. If the referral court judges that B stayed in the Netherlands for more than 183 days, the question arises whether the fictional wage scheme may then be applied. According to the Supreme Council, this is the case since B held a substantial interest in X BVBA, in spite of the fact that X BVBA is established in Belgium. The Dutch fictional wage scheme can be applied irrespective of whether the company is a resident of the Netherlands or not.

An important conclusion is therefore that in the absence of a Dutch wage withholding agent (”inhoudingsplichtige”), a remuneration derived from an employment carried out in the Netherlands, depending on the applicable tax treaty, may still be subject to Dutch personal income tax in the hands of a foreign national not residing in the Netherlands.

Substantial shareholders of foreign entities with a working presence in the Netherlands be careful! There are however a few proven ways to circumvent this outcome!

Supreme Court, July 14, 2017, ECLI:NL:HR:2017:1326

Newsflash | 17/07/2017

Value Added Tax

Letterbox address on invoice does not limit a taxpayer’s right to deduct input VAT

ECLI: EU: C: 2017: 515

Opinion Advocate General Wahl CJEU joined cases C-374/16, C-375/16

Common system of value added tax – Directive 2006/112/EC – Article 178(a) – Right of deduction – Conditions of exercise– Article 226(5) – Details required on invoices – Address of the taxable person – Good faith meeting the requirements for deduction of input tax – Evasion of the law or abuse of rights – National procedures – Principle of effectiveness

RGEX GmbH is a limited liability company trading in motor vehicles. The company has been in liquidation since 2015. In the 2008 VAT return RGEX declared tax-exempt Intra-Union supplies of motor vehicles to buyers in other EU Member States, as well as a tax deduction of approximately € 2 million relating to motor vehicles obtained from EXTEL GmbH.

The competent Finanzamt (Tax Office, Germany) however did not agree with the return. The Intra-Union supplies of motor vehicles to Spain which had been declared as tax-exempt were found taxable, on the ground that the motor vehicles in question had not been delivered in Spain, but had been sold in Germany instead. According to the tax authorities, the corresponding input VAT charged on the invoices issued by EXTEL was not deductible, because EXTEL was a ‘ghost company’, which did not have any establishment at the address mentioned on the invoice.

Mr Igor Butin runs a car dealership in Germany. He claimed VAT deduction based on invoices for a number of vehicles he bought from company Z. The vehicles were purchased for the purpose of resale. Since the supplier Z operates exclusively through the internet, the vehicles were delivered to Mr Butin either in the street where Z has its corporate seat, or at public locations, such as railway station forecourts.

The German tax authority is of the opinion that the VAT charged on the invoices from Z is not deductible because the supplier’s address stated on the invoices is incorrect. Nothing at the stated address would indicate the presence of an undertaking: the address in question was only a letterbox where Z only fetched his mail.

the Bundesfinanzhof (Federal Finance Court) as the referring court, decided to uphold the proceedings and to refer the following questions to the CJEU for a preliminary ruling:

  1. Does Article 226(5) of [the VAT Directive] require the taxable person to indicate an address at which he carries [out] his economic activities?
  2. If the answer to question 1 is in the negative,
  • Is a letterbox address sufficient as an indication of address pursuant to Article 226(5) of the VAT Directive?
  • Which address must a taxable person who operates a business undertaking (in the internet trade, for example) with no business premises indicate on an invoice?

A-G Wahl concludes that Article 226(5) of the VAT Directive precludes national legislation that subjects the right to deduction of value added tax to the indication on the invoice of the address where the issuer carries out its economic activity.

Furthermore, the Advocate General considers the German legislation, according to which, where the formal conditions of invoices are not fulfilled, deduction is granted only if the taxable person proves that he took every measure that could reasonably be required of him in order to satisfy himself that the content of the invoice was correct, in violation of the VAT Directive.


Newsflash | 28/06/2017

Deemed Dutch fictional wage for Director of British Ltd.

The Amsterdam tax court ruled previously that X Ltd, a company incorporated under British law, was actually considered to be Dutch resident. A held a substantial interest in the share capital and has also been performing work for X Ltd., the tax inspector was right in imposing an additional wage tax assessment to X Ltd. for a deemed fictional wage (‘gebruikelijk loon’) on behalf of A.

C was engaged into a tax advisory practice until 2003. Due to a conflict with the landlord of his business premises, C got involved in a series of legal procedures. This resulted into a debt of approximately € 450,000. Appellant, X Ltd. was established mid-2003. The shares of X Ltd. were held by Z Trust.

X Ltd. is the managing partner of B cv, an open partnership, located in the Netherlands. B cv provides tax and legal services in the Netherlands. A is the spouse of C, the statutory director and current account holder of X Ltd. The activities of B cv were carried out by C. Following a tax audit, the tax inspector imposes an additional wage withholding tax assessment to X Ltd for a deemed fictional wage on behalf of A. According to the inspector, X Ltd. should be considered a withholding agent (‘inhoudingsplichtige’) for Dutch wage tax purposes.

The Court of Amsterdam first established that in the year concerned X Ltd. was actually located in the Netherlands for tax purposes. According to the court the management of X Ltd was exclusively provided by A. Since A lived in the Netherlands, the actual seat or residence of X Ltd. is allocated to the Netherlands. Since A was considered to have a deemed fictitious employment, X Ltd. was required to withhold Dutch wage tax and remit this to the Dutch tax authorities. The court hereby considered that A was a registered director of X Ltd., and that she was actually engaged in the operation of the business. The court did not find any evidence that X Ltd. was run by someone else than A.

Since A held a substantial interest in X Ltd and she also performed work for this company the tax inspector was right in taking into account a deemed fictional wage of € 40,000 in the year concerned. According to the court it is justified to maintain that A indirectly through Z, held the shares of X Ltd.

Decision Supreme Court

The appeal against the decision by the Amsterdam court was briefly dismissed by the Dutch Supreme Court on the grounds of Article 81 (1) of the Dutch Judicial Organization Act. If the Supreme Court finds that an appeal cannot lead to cassation and does not require a response to legal issues needing to be addressed in the interests of legal unity or the development of the law, he may limit himself to the judgment in the grounds of his decision providing no further justification.

Please refer to the deeplink below for the full text of the decisions.

Hoge Raad, 23 juni 2017, ECLI:NL:HR:2017:1140

Hof Amsterdam, 4 August 2016, ECLI:NL:GHAMS:2016:3277



Newsflash | 03/03/2017

Member States may not refuse VAT zero-rating for intra-Community supplies in bonafide cases

CJEU 09-02-2017 Euro Tyre C-21/16

On 9 February 2017 the Court of Justice of the European Union (CJEU) delivered its judgement in the case Euro Tyre (II)  against the Tax Inspectorate of Portugal. The dispute concerns the question whether EU law precludes Portugal from setting formal conditions for the exemptions of an intra-Community supply of goods.


13      Euro Tyre is a Portuguese branch of a company incorporated under Netherlands law, Euro Tyre BV. It is engaged in the import, export and marketing of tyres of various brands for retailers based in Portugal and Spain. In the Spanish market, it sells, in part, directly and, in part, through a distributor, namely Euro Tyre Distribución de Neumáticos SL.

14      The dispute in the main proceedings concerns several sales made during the period between 2010 and 2012 to Euro Tyre Distribución de Neumáticos. At the time of those sales, the latter was registered as a taxable person for the purposes of VAT in Spain. However, it was not yet subject, in that Member State, to the system of taxation on intra-Community acquisitions or registered in the VAT Information Exchange System (the ‘VIES system’). It was not until 19 March 2013 that the Spanish tax authorities granted it the status of intra-Community operator and registered it in that system with effect from 1 July 2012.

15      Euro Tyre declared those sales to be intra-Community supplies and thus exempt under Article 14(a) of the RITI.

16      Following a tax inspection covering the years 2010 to 2012, however, the Inspeção Tributária (Tax Inspectorate, Portugal) considered that the conditions for the exemption provided for in Article 14(a) of the RITI were not met, since, at the time of the sales in question, Euro Tyre Distribución de Neumáticos, was neither registered for intra-Community transactions in Spain nor registered in the VIES system.

17      Consequently, the Tax and Customs Authority made adjustments to the VAT due from Euro Tyre for the years 2010 to 2012 together with interest for late payment.

Main considerations

22      By its questions, which should be considered together, the referring court asks, in essence, whether Article 131 and Article 138(1) of the VAT Directive must be interpreted as precluding the tax authority of a Member State refusing to exempt intra-Community supplies from VAT on the ground that, at the time of that supply, the purchaser, domiciled in the territory of the Member State of destination and who was in possession of a valid identification number for the purposes of VAT in that Member State, is neither registered in the VIES system nor comes under a system of taxation on intra-Community acquisitions of goods. The referring court also asks whether Article 138(1) of the VAT Directive, interpreted in the light of the principle of proportionality, precludes such refusal where the vendor was aware of the circumstances of the situation of the purchaser with regard to the application of VAT and was convinced that subsequently the purchaser would be registered as an intra-Community operator with retroactive effect.

24      Under Article 138(1) of the VAT Directive, Member States are to exempt supplies of goods dispatched or transported to a destination outside their respective territories but within the European Union, by or on behalf of the vendor or the person acquiring the goods, for another taxable person, or for a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods began.

29      Neither Article 138(1) of the VAT Directive nor the Court’s case-law, however, mentions — as one of the substantive conditions, listed exhaustively, for an intra-Community supply — the obligation for the purchaser to have a VAT identification number (see, to that effect, judgment of 6 September 2012, Mecsek-Gabona, C‑273/11, EU:C:2012:547, paragraph 59) nor, a fortiori, the obligation for the purchaser to be registered for the purpose of carrying out intra-Community transactions and to be registered in the VIES system.

32      Accordingly, neither the acquisition by the purchaser of a VAT identification number valid for the purpose of carrying out intra-Community transactions nor the inclusion of that number in the VIES system constitute substantive conditions for exemption from VAT of an intra-Community supply. Those are merely formal requirements which cannot undermine the vendor’s entitlement to exemption from VAT where the substantive conditions for an intra-Community supply are satisfied (see, by analogy, judgments of 6 September 2012, Mecsek-Gabona, C‑273/11, EU:C:2012:547, paragraph 60; of 27 September 2012, VSTR, C‑587/10, EU:C:2012:592, paragraph 51, and of 20 October 2016, Plöckl, C‑24/15, EU:C:2016:791, paragraph 40).

38      It must be noted that, according to Court’s case-law, however, there are only two situations in which the failure to meet a formal requirement may result in the loss of entitlement to an exemption from VAT (see, to that effect, judgment of 20 October 2016, Plöckl, C‑24/15, EU:C:2016:791, paragraph 43).

39      In the first place, the principle of fiscal neutrality cannot be invoked for the purposes of an exemption from VAT by a taxable person who has intentionally participated in tax evasion which has jeopardised the operation of the common system of VAT (see judgment of 20 October 2016, Plöckl, C‑24/15, EU:C:2016:791, paragraph 44 and the case-law cited).

41      In the present case, the sole fact, referred to by the referring court, that the vendor, on the one hand, was aware of the fact that at the time of the transactions the purchaser was neither registered in the VIES system nor comes under a system of taxation on intra-Community acquisitions and, on the other hand, believed that the purchaser would subsequently be registered as an intra-Community operator with retroactive effect, cannot be grounds for the national tax authority to refuse to grant an exemption from VAT. It is clear from the documents submitted by the referring court and noted in paragraph 20 above that there was neither tax evasion nor tax avoidance on the part of Euro Tyre.

42      In the second place, non-compliance with a formal requirement may lead to the refusal of an exemption from VAT if that non-compliance would effectively prevent the production of conclusive evidence that the substantive requirements have been satisfied (see judgment of 20 October 2016, Plöckl, C‑24/15, EU:C:2016:791, paragraph 46 and cited case-law).

43      In the present case, as is apparent in essence from paragraph 26 above, the questions referred are based on the premiss that the material conditions for an intra-Community supply within the meaning of Article 138(1) of the VAT Directive have been fulfilled. Moreover, nothing in the file submitted to the Court indicates that the infringement of the formal requirement at issue in the main proceedings prevented the conclusion being reached that those conditions were indeed fulfilled. It is, however, for the referring court to carry out the necessary verifications in that regard.


44      In the light of the foregoing considerations, the answer to the questions referred must be that Article 131 and Article 138(1) of the VAT Directive must be interpreted as precluding the tax authority of a Member State from refusing to exempt an intra-Community supply from value added tax on the sole ground that, at the time of that supply, the purchaser domiciled in the territory of the Member State of destination and who was in possession of a valid identification number for the purposes of VAT in that Member State is neither registered in the VIES system nor comes under a system of taxation on intra-Community acquisitions of goods, where there is no sound evidence pointing to the existence of fraud and it is established that the basic conditions of the exemption are fulfilled. In that case, Article 138(1) of the VAT Directive, interpreted in the light of the principle of proportionality, also precludes such refusal where the vendor was aware of the circumstances of the situation of the purchaser with regard to the application of VAT and was convinced that subsequently the purchaser would be registered as an intra-Community operator with retroactive effect.



Member States may not refuse to exempt intra-Community supplies from VAT in bonafide cases. Zero-rating for intra-Community supplies for value added tax is available whenever the following material tests are met:-

  • There is a supply of goods;
  • To a taxpayer (or a non-taxable legal person acting as a taxpayer) in a Member State other than that in which dispatch or transport of the goods began;
  • the goods are transported or dispatched within the EU.

The CJEU repeats these simple condtions under paragraph 24.

In the Netherlands article 12(2)(a)(1) of the Dutch Implementation Decree of the VAT Act 1968 requires a Dutch taxpayer to have the VAT identification number of the person who receives the goods as a condition for zero-rating. This seems to be a dead letter now based on this CJEU jdgement.

There may still be dark clouds ahead with the recent initiatives from the ECOFIN Council of 7 October 2016, (12764/16) to make a VAT-identification number a condition for zero-rating on intra-Community supplies due to the so-called VAT carousel evasion. So, taxpayers as long as you are bonafide you should benefit from zero-rating for intra-community supplies. Be careful however because the invoices and the tax reporting requirements (e.g. listing) should still comply with certain formalities.

 Date judgement: 07-02-2017
Source: Court of Justice of the EU, C-021/16, ECLI:EU:C:2017:106