Tax & Legal

The European Court of Justice (ECJ) decided that the service provided by a taxable person, which consists in purchasing accommodation from other taxable persons and reselling them, in its own name, to other business operators, is covered by the special value added tax scheme applicable to travel agents, even though those services are not accompanied by ancillary services.

In a Belgian case the ECJ commented on the conditions for application of the so-called margin scheme in respect of certain sales of second-hand goods. In the case at hand the ECJ held that definitively end-of-life motor vehicles acquired by an undertaking and intended to be sold ‘for parts’ without the parts having been removed might qualify as second-hand goods within the meaning of Article 311(1)(1) of the VAT Directive.

Supreme Tax Court judges have expressed doubt both upon the previously uncontested obligation of entrepreneurs subject to the so-called imputed taxation (“Sollbesteuerung) to pre-finance VAT and upon the exclusion of the reduced VAT rate on the provision of holiday apartment rentals according to the so-called margin-scheme taxation. The Supreme Tax Court has therefore referred two cases to the European Court of Justice (ECJ) (i) referral of 21 June 2017: V R 51/16; and (ii) referral of 3 August 2017: V R 60/16.