Tax alert 33 – VAT exemption related imports of goods followed by intra-Community supplies of goods

CJEU’s Decision in the case C-528/17 Milan Božičevič Ježovnik

On 25 October 2018, the Court of Justice of the European Union („CJEU”) issued a judgment related to Milan Božičevič Ježovnik (C-528/17) case. The case is relevant, in particular for the intra-Community trade and imports sector, and deals with the conditions for granting the VAT exemption in the case of an import of goods followed by a subsequent intra-community supply of goods in the European Union territory.

According to the CJEU, where the taxable person which imports and supplies has been exempted from VAT on the basis of an authorization issued by the competent customs authorities on the basis of the evidence provided by that taxable person, it is not required to pay VAT retrospectively when, on the occasion of subsequent verification, it turns out that the material conditions of the exemption were not met.

However, as an exemption, if is objectively established that the importer / supplier knew or ought to have known that subsequent supplies of the imports in question were involved in fraud, which was committed by the purchaser and did not take all reasonable steps in his power to avoid that fraud, a matter which is the competence of the referring court to verify.

Particularities of the case and the Court’s decision

Following a subsequent customs check, the customs office found that several buyers of the goods had been registered and de-registered for VAT purposes the same day shortly before the first delivery. Moreover, CMR consignment letters were illegible and incomplete and contained insufficient information on the date and place of discharge of the goods.

The Slovenian customs office collected information from the Romanian authorities and found that some buyers were „phantom companies” and some transporters denied the authenticity of the signatures on the transport documents and the existence of any link with the buyers.

Therefore, the CJEU concluded that since the importer / supplier benefited from an exemption from VAT on importation under an authorization issued following a prior check by the customs authorities, he was not obliged to pay VAT retrospectively when, during the subsequent verification proves that the conditions for exemption were not met unless it is proven that the importer / supplier knew or ought to have known that the supplies subsequent to the import were involved in a fraud committed by the person who purchased the goods.

What is the new decision of the CJEU in the Božičevič Ježovnik case?

Božičevič Ježovnik is the most recent decision of the CJEU in a number of other cases (such as Case C-108/17 – Enteco Baltic), which dealt with the VAT exemption on imports for goods to be intra-community supplied.

The judgment reaffirms that the VAT exemption can not be refused if the supplier proves that he has taken all the precautions and did not know or should not have known that his beneficiaries are involved in tax fraud.


Author: Ramona Stefan – Manager, Indirect Tax


For additional information, please contact:

Alex Milcev, Partner – Head of Tax & Legal


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