© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
S1. International goods
ZERO-RATING OF EXPORT​
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- Purpose: to ensure that goods are taxed at place of destination
"[19] The exemption of supplies of goods dispatched or transported outside the European Union is intended to ensure that the supplies of goods concerned are taxed at the place of destination of those goods, namely the place where the exported products will be consumed (see, to that effect, judgment of 17 October 2019, Unitel, C‑653/18, EU:C:2019:876, paragraph 20 and the case-law cited)." (W C-602/24)
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- Zero-rating applies where right to dispose of goods transferred + goods have physically left territory
"[20] As the Court has already observed on several occasions, it follows from the provisions referred to in paragraph 18 above, and particularly from the word ‘dispatched’ in Article 146(1)(a) and (b) of the VAT Directive, that the export of goods is effected and the exemption of the supply of goods for export becomes applicable when the right to dispose of the goods as owner has been transferred to the person acquiring the goods, the supplier establishes that those goods have been dispatched or transported outside the European Union, and, as a result of that dispatch or that transport, the goods have physically left the territory of the European Union (see, to that effect, judgments of 17 October 2019, Unitel, C‑653/18, EU:C:2019:876, paragraph 21, and of 17 December 2020, BAKATI PLUS, C‑656/19, EU:C:2020:1045, paragraph 56)." (W C-602/24)
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- Where goods leave territory, there is no consumption in that territory
"[32] It should be noted that, since it is also common ground that there was no consumption of those apples in the territory of the European Union, it cannot be held that the supplier made a supply in the national territory." (W C-602/24)
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Proof of export​
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- No requirement to identify the person acquiring the goods
"[24] The fact that exported goods are acquired outside the European Union by an entity which is not that mentioned on the invoice and which is not identified does not preclude those objective criteria from being met.
[25] Consequently, the characterisation of a transaction as a supply of goods within the meaning of Articles 146(1)(a) and (b) of the VAT Directive cannot be held subject to the condition that the person acquiring the goods must be identified.
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[30] First, a breach of a formal requirement may lead to the refusal of an exemption from VAT if the effect of the breach is to prevent the production of conclusive evidence that the substantive requirements have been satisfied (judgments of 8 November 2018, Cartrans Spedition, C‑495/17, EU:C:2018:887, paragraph 42, and of 28 March 2019, Vinš, C‑275/18, EU:C:2019:265, paragraph 35).
[31] Therefore, if the failure to identify the person actually acquiring the goods prevents, in a given case, it from being proved that the transaction at issue constitutes a supply of goods within the meaning of Article 146(1)(a) and (b) of the VAT Directive, that fact may lead to refusal of the exemption on exportation provided for in that article. On the other hand, requiring in all cases that the person who acquires the goods in the non-Member State must be identified, without seeking to ascertain whether the substantive conditions for that exemption, in particular the exit of the goods concerned from the customs territory of the European Union, have been met, is not in accordance with either the principle of proportionality or the principle of fiscal neutrality." (Unitel C-653/18)
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- Supplier entitled to zero-rating where customer transports goods to different destination outside the territory
"[25] The Polish tax authorities deduce therefrom that the intra-Community supply subject to a VAT rate of 0%, initially envisaged, had not in fact been made. Accordingly, those authorities took the view that the supplier had not duly checked where the goods, which it had sold, would be delivered and that it had merely formally confirmed their delivery in Lithuania on the basis of the signature of the driver who carried out the transport of the goods, together with the transport company’s stamp.
[26] However, it must be held that such circumstances are not relevant for the purposes of classifying the transaction at issue in the main proceedings as an export transaction within the meaning of Article 146(1)(a) and (b) of the VAT Directive." (W C-602/24)
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- Zero-rating to apply if substantive conditions met even if some formal conditions not met
"[34] Accordingly, when the substantive requirements have been satisfied, the principle of fiscal neutrality requires the VAT exemption to be granted even if certain formal requirements have been omitted by the taxable persons (judgment of 17 December 2020, BAKATI PLUS, C‑656/19, EU:C:2020:1045, paragraph 72 and the case-law cited).
[35] It follows from the foregoing that the classification of a transaction as a ‘supply of goods’ within the meaning of Article 146(1)(a) and (b) of the VAT Directive cannot be refused on the ground that the dispatch or transport outside the European Union was carried out without the supplier’s knowledge and was established by the tax authorities and not by the supplier itself." (W C-602/24)
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"[28] When those substantive requirements have been satisfied, the principle of fiscal neutrality requires the VAT exemption to be granted even if certain formal requirements have been omitted by the taxable persons (judgment of 8 November 2018, Cartrans Spedition, C‑495/17, EU:C:2018:887, paragraph 39)."(Unitel C-653/18)
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- Fact that proof of export obtained by tax authority irrelevant
"[29] In the present case, it is common ground that the supply of the apples at issue in the main proceedings outside the territory of the European Union was established. The fact that the proof of that supply was obtained by the Polish tax authorities and not by the supplier is not relevant for the purposes of classifying the transaction at issue in the main proceedings as an export transaction, for the purposes of Article 146(1)(a) and (b) of the VAT Directive.
[30] In such circumstances, the second criterion referred to in paragraph 20 of the present judgment must be regarded as having been satisfied." (W C-602/24)
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- Zero-rating cannot depend on export declaration to the exclusion of other evidence
"[49] However, it does not follow that the granting of such an exemption can be subject to the mandatory condition that the relevant transporter or intermediary must produce an export declaration for the purposes of establishing that the exports in fact took place, thereby excluding any other evidence capable of shoring up the conviction thus required by the competent tax authorities to make their conclusion.
[50] Imposing such a probative procedure, to the exclusion of any other, would amount to making the right to an exemption subject to compliance with formal obligations, within the meaning of the case-law referred to in paragraphs 38 and 39 of the present judgment, without examining whether the substantive requirements laid down by EU law have in fact been satisfied or not. The mere fact that a transporter or an intermediary taking part in a transport transaction is unable to produce an export declaration does not mean that such exportation has not in fact taken place." (Cartrans Spedition C-495/17)
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- TIR carnet is evidence of export
"[63] It follows from the foregoing that a TIR carnet duly certified, in particular by the customs authorities of the third country of destination, constitutes an official document which, in principle, shows that the goods in question, by crossing the European Union’s external borders, have physically moved from the European Union to that third country and reached the latter.
[64] Such a crossing of borders and arrival of the goods in the third country of destination demonstrated by the TIR carnet constitute one of the elements of an export transaction which distinguishes it from a transaction which occurs within the European Union (see, by analogy, judgment of 27 September 2007, Teleos and Others, C‑409/04, EU:C:2007:548, paragraph 37).
[65] It follows that, when such a supply of transport services is made under cover of a TIR carnet, the latter, in the absence of precise grounds capable of casting doubt on the authenticity or reliability of that carnet and its contents, is particularly relevant in the specific context of the recognition of the right to the exemption in respect of that supply of transport services.
[66] The tax authorities must therefore take proper account of such a document, just as, moreover, and has been noted in paragraph 52 of the present judgment, they must take account of all of the information available to them." (Cartrans Spedition C-495/17)
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- Innocent party entitled to rely on falsified proof of export to claim zero-rating
"[27] It follows that a supplier must be able to rely on the lawfulness of the transaction that he carries out without risking the loss of his right to exemption from VAT, if, as in the case in the main proceedings, he is in no position to recognise – even by exercising due commercial care – that the conditions for the exemption were in fact not met, because the export proofs provided by the purchaser had been forged." (Netto Supermarket C-271/06)
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