Background of Judgment of the European Union Court of Justice, Case C-602/24 :
During a tax audit, the VAT exemption of a Polish company on an invoice issued for an intra-Community supply of goods to Lithuania was called into question. However, unbeknownst to the company, the buyer transported the goods to Belarus. The transaction therefore constituted an export.
The Polish tax authorities refused the VAT exemption and demanded that VAT be applied to the transaction.
The case was brought before the Administrative Court in Warsaw, which referred a question for a preliminary ruling on 12 July 2024. This was registered on 17 September 2024.
The court asked the CJEU for clarification on the interpretation of Article 146(1)(b) of the VAT Directive, specifically regarding the reclassification of an intra-Community supply of goods as an export.
CJEU ruling :
The Court ruled that Article 146(1)(b) allows exemption for supplies initially declared as intra-Community transactions, even if the export took place without the supplier’s knowledge and was confirmed by the tax authorities based on customs documents.
Reasons for the decision :
The Court emphasised the importance of the principles of neutrality and proportionality in relation to VAT, stating that formal requirements must not prevent the fulfilment of the conditions necessary for exemptions to apply. As the tax authorities confirmed the export, the exemption must apply even if the supplier was unaware of it.
