Gelderland District Court rules that the Tax and Customs Administration was right to refuse to apply the 0% rate to takeaway transactions.
0% rate
VAT is levied, amongst other things, at the 0% rate when:
- goods are supplied to a VAT-registered business established in another EU Member State, AND;
- the goods relating to the supply are actually transported to another EU Member State.
Both conditions must be proven by the trader applying the 0% rate. Proof that the goods are being supplied to a VAT-registered trader in another EU Member State constitutes valid verification (in VIES) of the VAT identification number provided by the purchaser of the goods, relating to the Member State in which the purchaser is established. Proof that the goods have actually been transported to another EU Member State may be provided in various (administrative) ways.
Collection transaction
In a collection transaction, the (foreign) customer collects the goods themselves. This makes it difficult for the trader supplying the goods to prove that the goods have actually been transported to another EU Member State. The Ministry of Finance has approved the use of collection declarations as proof, but only insofar as the goods are supplied to regular customers.
The case on which the Gelderland District Court ruled concerns a Dutch trader in second-hand cars. Among other things, he supplies these cars to a sole trader based in Bulgaria. On the first delivery, the dealer charged 21% Dutch VAT, but subsequently, on the basis of collection certificates issued by the Bulgarian party, the 0% rate was applied. The Bulgarian customer does not declare any intra-Community acquisitions in Bulgaria. This is why the Tax and Customs Administration launched an investigation into the car dealer. As a result, 21% VAT was levied retrospectively on all supplies to the Bulgarian customer, on which tax interest was calculated. An administrative fine of 25% of the additional VAT assessed is also imposed.
The court upholds the additional tax assessment and the fine. There is no question of a regular customer, as only one previous delivery had taken place at the time the collection certificates were first used. Nor does the customer become a regular customer in the course of the year because, by starting immediately with collection certificates, the car dealer was no longer able to verify whether the cars were actually being transported abroad. According to the court, the fact that the customer does not qualify as a regular customer cannot be remedied by making deliveries using collection certificates over a prolonged period.
Furthermore, the collection declarations contain errors: the undertaking that the customer will provide information to the Dutch tax authorities upon request is missing, and the signature on the declarations does not match the signature on the Bulgarian entrepreneur’s driving licence (and the signatures on the collection declarations are not always the same either). Furthermore, the address of the goods’ destination, the date of signing, the date on which the cars were collected and the registration number of the vehicle used to collect the cars are all missing.
The court notes that no other administrative documents have been produced to substantiate the transport (no emails, order requests, order confirmations, CMRs or similar). The court also notes that the payments were made almost entirely in cash. The car dealer further argues that the export insurance policies show that the cars were transported abroad. Apart from the fact that these insurance policies have not been produced, the court states that they cannot prove that the cars were actually transported abroad.