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Weekly VAT News - 10/04/2017


Questions to the CJEU in HP partial exemption case
The Supreme Court has decided to refer questions to the CJEU in the HP partial exemption case of VW Financial Services Limited (“VWFS”).  Although the questions being referred have not been published yet, the Press Summary released by the Court suggests that they will focus on whether the fact that the cost of overheads was met from the VAT exempt finance charges (since the vehicles were sold on at cost price) meant that input tax on them was not recoverable, and if EU law permits the taxable sale of the vehicles to be ignored in the partial exemption calculation.  HMRC’s secondary argument – that the Court of Appeal and Tribunals should have considered an alternative to the approaches advanced by the parties – was rejected by the Supreme Court.  For further information about the case, and to discuss the implications of it, please contact Oliver Jarratt on 0121 695 5722.


A-G suggests “cost sharing exemption” should be available widely
A-G Wathelet has delivered his
opinion in the "cost-sharing exemption" infringement case brought by the European Commission against Germany.  The case concerns Germany's approach to the "cost sharing exemption", which restricts the benefit of exemption to the supply of services by independent groups of persons whose members carry on activities or professions in the health sector.  A-G Wathelet agreed with the Commission that the restriction imposed in German law had no basis in EU law and suggested that the exemption was available to a wide range of businesses.  His opinion differs in a number of respects from the views expressed recently by A-G Kokott in the “cost sharing exemption” cases of DNB Banka and Aviva, in which she proposed a narrower interpretation of the relevant EU law.  The decisions of the CJEU in these cases, and in the case of Commission v Luxembourg, should clarify the scope of the EU law exemption for supplies by “cost sharing groups”.  For further information about the cases, or to discuss the implications of them, please contact Richard Insole on 0207 303 0062.

No VAT recovery on infrastructure works paid for by developer – A-G Opinion
A-G Kokott has delivered
her opinion in the Bulgarian case of ‘Iberdrola Inmobiliaria Real Estate Investments’ EOOD (Iberdrola), about the recovery of input tax on infrastructure works paid for by Iberdrola.  Iberdrola was developing holiday accommodation on land that it owned, and in order to connect the new buildings to the municipal waste water system, the pumping station needed extensive works.  The municipality and Iberdrola agreed that Iberdrola would arrange for the work to be carried out and would pay for it.  Iberdrola’s input tax claim was rejected by the Bulgarian tax authority on the basis that the works were effectively supplied free of charge to the municipality involved, for it to use for the benefit of the municipality, and that precluded any input tax entitlement for Iberdrola.  A-G Kokott has agreed that EU law does not permit the deduction of input tax for services which are supplied free of charge directly to a third party for its own purposes, even if they are motivated by business reasons.  For further information about the case, or to discuss the implications of it, please contact Ben Tennant on 0121 695 5828.

Australia: vendor GST registration for imports of low value goods from 1 July
With the growth in online shopping, many countries have experienced significant increases in the volume of low value goods being imported by consumers, and border collection arrangements are not always an effective method of ensuring that GST is accounted for.  From 1 July 2017, Australia is adopting a vendor GST registration and collection model in order to ensure that GST is accounted for on such sales.  Under this model, foreign retailers, online marketplace operators and redelivery services providers who are involved in facilitating the sale or delivery of low value goods to consumers will be required to collect GST.  The rules relating to how this will operate are complex, and systems and process changes will need to be implemented by those affected.  For further information about the new model, please see
Tax Insights produced by Deloitte Australia.


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