The wording of the German provision regarding the refund of import VAT is laid down in Sec. 15 (1) no. 2 VAT Code. Here it is stated that the import VAT will only be refunded …
Decision of the Federal Fiscal Court 11, November 2015 – V R 68/14, published on 9th December 2015.
The operator of a customs warehouse might not be entitled to receive the import VAT refund
The wording of the German provision regarding the refund of import VAT is laid down in Sec. 15 (1) no. 2 VAT Code. Here it is stated that the import VAT will only be refunded when the goods imported are used for the purposes of the taxed transactions of the taxable person.
The operator of a warehouse, in the case recently decided by the Federal Fiscal Court, had to pay the import VAT because the customs authorities found shortages and raised import VAT on the missing goods.
When the operator applied for the refund of the paid import VAT within the turnover tax assessment procedure, the tax authorities denied the refund. They argued that Sec. 15 (1) no. 2 VAT Code has to be interpreted such that only the taxpayer who has the power of disposition over the goods at the moment they are imported can apply for the refund.
This is how the German authorities have been arguing since the provision was amended in 2004. Taxpayers have appealed decisions based on this argumentation several times, arguing that the interpretation is inconsistent with EU jurisdiction. The Federal Fiscal Court therefore suspended its decision until the European Court of Justice’s decision in the case DSV Road A/S (C-187/14). The ECJ ruled that the national legislator is not prevented to deny the import VAT refund to an entrepreneur who only transports the goods and provides customs services without being owner of the goods or at least having the power of disposal. It is consistent with EU Case law, that the refund is made only under the condition that the goods imported are used for the purposes of the taxed transactions of the taxable person and that condition is satisfied only where the cost of the input services is incorporated either in the cost of particular output transactions or in the cost of goods or services supplied by the taxable person as part of his economic activities.
Since the payment of import VAT on shortages will not have any influence on the prices for the services of the warehouse operator, the import VAT refund was rejected.
As the decision refers to the ECJ decision dealing with the refund of import VAT to a transport company, the Federal Fiscal Court decision is relevant not only for warehouse operators but as well for all taxpayers who are offering services related to imports of goods without being owner of the goods.
Silke Bacht and Andreas Pommerin