Right to deduct VAT when purchasing fuel using fuel cards

12. 12. 2022
Right to deduct VAT when purchasing fuel using fuel cards

It is apparent from judgments of the Court of Justice of the European Union in Case C-235/18 of 15 May 2019 and in Case C-48/20 of 4 May 2021 that the position of the Court relating to the right to deduct VAT of a provider/issuer of fuel cards used to finance fuel purchases in other countries of the European Union remains unchanged.

In the first case (C-235/18), an Austrian carrier provided its subsidiaries based in other EU Member States with fuel via fuel cards, to which the carrier added its margin and local VAT. The Court of Justice of the European Union ruled that an instrument was provided to finance fuel, which is a service similar to loan intermediation and such service may be exempt from VAT in EU Member States.

In the second case (C-48/20), the Court of Justice of the European Union refused the right to deduct VAT on fuel by a Lithuanian company that provided fuel cards to other Lithuanian companies purchasing fuel in Poland, for the same reasons as those specified in the judgment of 15 May 2019.

The European VAT Committee published its working paper in this connection confirming that in case of a buy/sell business, a fuel card issuer is not entitled to dispose of such fuel and only finances fuel purchases; consequently, such transactions are exempt from VAT. However, in case of a commission business, the Committee recommends that transactions carried out by a card issuer be treated as chain transactions or subsequent delivery of fuel, as appropriate, i.e. as goods.

The assessment of the working paper by the Financial Administration of the Czech Republic is still pending.

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