In Weindel Logistik Service (Weindel) VAT case C-621/19, the European Court of Justice (CJEU) ruled that there is no right to deduct import VAT if the importer of record is not the owner of the goods.
Weindel supplies a reconditioning service and it imported goods from Switzerland, Hong Kong and China into Slovakia in order to recondition them. Once repackaged on Slovak territory, the goods were delivered to other Member States or exported to third countries.
- The repackaging service was billed to the customer, namely a Swiss company which remained the owner of the goods concerned throughout the period in question.
- The invoices issued by Weindel therefore only related to repackaging services and not to imported goods.
- Weindel paid import VAT that, in turn, was claimed as an input VAT deduction.
The Slovakian tax authorities challenged the input VAT deduction on the basis that Weindel:
- Was not the owner of the imported goods.
- Did not incur any costs that could be reflected in the price of output taxable supplies.
- Did not use imported goods for its economic activity as a taxable person.
Weindel appealed and the Slovakian tax authorities referred the question on the recoverability of the import VAT to the Court of Justice.
The CJEU agreed with the Slovakian tax authorities that the right for an input VAT deduction was not available if:
- The importer did not dispose of the goods as the owner of the goods.
- The importation costs were not incurred on the input side or were not included in the price of the outputs or in the price of the goods and services supplied by the taxable person within the economic activity.
Comment
In the light of the above, it is recommendable to ascertain if the conditions required for the VAT deduction are met if the imports are not carried out by the owner of the goods, and in particular when the importer acts just as a service provider.
Useful guides on this topic
Importing goods into GB from 1 January 2021
The post Brexit transition period ends on 31 December 2020. HMRC has issued guidance for importing goods. Is your business ready?
Exporting goods from GB from January 2021
The post Brexit transition period ends on 31 December 2020. HMRC has issued guidance for exporting goods. Have all of the relevant applications been made in order to continue trading smoothly?
R & C Brief 15 (2020): Input VAT and non-owners
Revenue & Customs Brief 15 (2020): 'VAT; Conclusion of review of Import VAT deducted as input tax by non-owners', explains the outcome of HMRC's review of its policy on the deduction of import VAT paid by taxable persons that are not the owners of the relevant goods
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