Czech Republic: Application of VAT to fuel cards
A working paper on the application of VAT to fuel cards was issued by the EC VAT committee
A working paper on the application of VAT to fuel cards was issued by the EC
The European Commission's value added tax (VAT) committee issued a working paper on the application of VAT to fuel cards that does not entirely conform to the usual administrative practice.
According to existing practice, fuel card issuers in the most usual business models (“buy/sell” or “commissionaire” model) carry out two transactions from a VAT viewpoint:
- Purchase of goods (fuel) from the fuel station owner
- Delivery of goods (fuel) to the vehicle operator
This was also the view expressed by the EC’s VAT expert group, and according to the information available, this approach has so far also been respected by the Czech ﬁnancial administration.
The VAT committee has now responded to the expert group's views, adopting a relatively surprising position: for the standard buy/sell model it can be argued that the fuel card issuer does not at any moment acquire the right to dispose of the fuel as the owner. In line with CJEU Judgment C-235/18 Vega, the committee concluded that the fuel card issuer merely ﬁnances the purchase of fuel on behalf of the vehicle operator, i.e., provides a ﬁnancial service exempt from VAT.
On the other hand, for the commissionaire model the VAT committee agrees with the existing interpretation, i.e., it recommends that the transactions carried out by fuel card issuers in a chain of transactions need to continue to be viewed as the acquisition and subsequent supply of goods (fuel).
Tax professionals do not yet know the response of the Czech ﬁnancial administration to the VAT committee's stance. Since a broad interpretation of the committee's conclusions may have an adverse implication on the fuel card market, it is recommended to prepare for this situation well in advance.
Read a December 2022 report prepared by the KPMG member firm in the Czech Republic
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