A June 2017 judgment by the Court of Justice of the European Union (CJEU) tightens the conditions for an exemption from value added tax (VAT) for transport services rendered in connection with the export of goods outside the EU.
The CJEU’s approach appears to tighten the rules in the Czech Republic for applying for an exemption from VAT for the transport of goods on export because up to now, the interpretation of the Czech VAT law allowed sub-suppliers to claim this VAT exemption.
The CJEU’s judgment only addresses the transport of goods exported to a destination outside of the EU. The question remains as to what the CJEU’s position would be on the exemption from VAT for transport services rendered in connection with the import of goods into the EU. Both the VAT directive and the Czech VAT law allow for a VAT exemption relating to transport services connected with the import of goods—if the value of transport is included in the tax base upon the import of goods, these transport services are deemed to be services that are exempt from VAT. In other words, if the carrier is certain that the value of transport will be included in the tax base upon the import of the goods, these transport services may be exempt from VAT, thus allowing a VAT deduction, despite the fact that no direct contractual relationship exists between the carrier and the importer.
In connection with the CJEU judgment, the Czech tax authority is reported to be preparing guidance for a uniform approach to the application of a VAT exemption for transport services directly connected with the import or export of goods.
Read a December 2017 report prepared by the KPMG member firm in the Czech Republic
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