Chapter 01 Local News
Malta Tax and Customs Administration News
Small and Medium Enterprises Guidelines
On 7 April 2025, the Commissioner for Tax and Customs (“CfTC”) published updated guidelines on Article 11 of the VAT Act, following the amendments introduced by Act XXXVIII of 2024. These changes, effective as of 1 January 2025, aim to clarify the VAT exemption framework available to small enterprises established in Malta.
Article 11 applies to Malta-established taxable persons making supplies locally, with exemptions under Articles 11A and 11B covering cross-border EU activities. A key element of the guidance is the reaffirmation of the €35,000 domestic turnover threshold. The threshold calculation includes certain exempt transactions, such as financial and insurance services or immovable property, unless these are deemed ancillary to the main business activity. Importantly, only supplies taxable in Malta are relevant when determining whether this threshold is exceeded.
To address potential abuse of the exemption, the CfTC introduced the concept of “related persons” and clarified the turnover aggregation rules. The guidelines specify that turnover must be aggregated across entities where a person (or group of related persons) holds at least 10% of the capital or voting rights in one or more taxable persons. Several practical scenarios are included to illustrate how these rules apply, including cases involving partnerships, companies with common shareholders, and other connected entities.
The full guidelines may be accessed through the following link:
Introduction of the Large Taxpayer Office (LTO)
As part of its wider transformation strategy, the Malta Tax and Customs Administration (“MTCA”) has launched the Large Taxpayer Office (“LTO”), a dedicated unit established to deliver a specialised and holistic service to qualifying entities and individuals.
The LTO is structured to operate as a single point of contact, streamlining communication and support through a team of experienced relationship managers. These officers are equipped to handle complex tax matters spanning legal, regulatory, and crossborder dimensions, ensuring personalised, efficient, and expert assistance to Malta’s largest and most strategically significant taxpayers.
For further details, please refer to the following link:
Legal Notices
On 13 May 2025, Legal Notice 88 of 2025 was published, introducing amendments to Item 11 of Part One of the Fifth Schedule to the Malta VAT Act, thereby extending the scope of the VAT exemption for passenger transport services.
The amendment clarifies that the exemption applies to a wider range of scheduled passenger transport services, including services operated by entities authorised under Regulation 69 of the Passenger Transport Services Regulations (S.L. 499.56). This effectively extends the exemption to sightseeing buses
The Legal Notice may be found through the following link:
Acts
The Budget Measures Implementation Act 2025, which was published on the 17 of April 2025, brought about amendments to the Value Added Tax Act, amongst other legislation. Whilst there were various cosmetic amendments carried out to the VAT Act through such Budget Implementation Act, key amendments include: th
A change in the wording with regards to the effective date of registration for Article 11 taxable persons. The amended text clearly stipulates that the VAT registration shall take effect as from the first day of the month in which the Commissioner receives the application, from a taxable person who is not registered under article 10.
Widening of the scope of when official secrecy is to be disregarded according to Article 56, to now cater for judicial or quasi-judicial proceedings when ordered by a court or tribunal to disclose information.
A full substitution of Article 57 which now broadly refers to all the special cases referred to in the Fourteenth Schedule, whilst enabling the Fourteenth Schedule to be the pre-dominant Schedule and have effect notwithstanding any other contrary provisions which may be found in the Act with regards to special cases.
D.
E.
A modification to Article 62 that broadens the scope of the Commissioner’s power to register a privilege over assets. The law no longer limits this privilege to assets forming part of a business activity, thereby allowing the Commissioner to invoke such privilege over all assets of a person with tax arrears.
The removal of the reference found in Item 2 of the Eighth Schedule, which previously referred to Article 102 of Council Directive 2006/112/EC which no longer existed.
The Budget Measures Act may be accessed here:
Chapter 02 Local Court Decisions
Administrative Review Tribunal
XXX vs il-Kummissarju tat-Taxxa u d-Dwana – 01/2024VG – 26/05/2025
The case concerned an appeal lodged by the plaintiffs against the Commissioner for Tax and Customs (“CfTC”) following the receipt of judicial letters addressed to each plaintiff.
The judicial letters, dated 10 July 2024, demanded payment of €731,332.79 allegedly due to the CfTC. The plaintiffs argued that it was unjust for the CfTC to initiate such enforcement proceedings, given that they were actively engaged in discussions with the CfTC regarding the underlying tax matters and were, at the time, awaiting documentation from the Malta Tax and Customs Administration which they had previously requested.
With this being said, the Tribunal raised the dilatory pleas of lack of jurisdiction of the Administrative Review Tribunal to hear and decide the case at hand, ex officio. The Tribunal stated that the Malta VAT Act designated the Administrative Review Tribunal to hear and determine appeals raised in accordance with Articles 43 and 44. The Tribunal noted that Article 43 of the VAT Act allows individuals who feel aggrieved by an assessment to raise an appeal and in turn Article 44 of the VAT Act provides that for any other queries which may arise which have nothing to do with assessments, such issues may also be heard by the Administrative Review Tribunal. However, the Tribunal notes that the proceedings at hand do not fall within the remit of either of these Articles as the stage at which such appeal was lodged exceeded the assessment stage and is not at the stage where a judicial letter has been issued by the CfTC in order to constitute an executive title in terms of Article 253 of the Code of Organization and Civil Procedure.
In this regard, the Tribunal noted that even though the request for payment of such dues was issued by the Malta Tax and Customs Administration before the judicial letters were sent out, the plaintiff still did not effect the payment.
However, following such analysis by the Administrative Review Tribunal, the Tribunal concluded that it is not competent to deliver judgment in such case and decided to stay proceedings in this regard in accordance with Article 741(b) of the Code of Organisation and Civil Procedure.
The full case may be accessed through the following link:
The appeal brought in front of the Administrative Review Tribunal by the plaintiff related to an appeal against an assessment raised by the Commissioners for Tax and Customs (“CfTC”) for the VAT periods covering 1st October 2015 till 30 June 2016 and 1st October 2016 and 31st December 2016.
The total amount of VAT due by the plaintiff according to the assessment raised by CfTC was that of €133,990.20 in VAT and an additional €26,798.04 in administrative penalties which totalled to an amount of €160,788.24 due by the plaintiff to the CfTC.
The plaintiff lodged this appeal in front of the Administrative Review Tribunal following the receipt of the notification that an assessment was being raised by the CfTC on the 12th of August 2019, basing his argument that such assessment was unjust. In this regard, the CfTC raised a peremptory plea to extinguish the action brought against them, stating that the time limit in which the plaintiff should have filed his appeal had elapsed in accordance with Item 2(1) of the Ninth Schedule of the Malta VAT Act.
The CfTC provided evidence that the plaintiff was duly notified with regards to such assessment on the 12 of August 2019, when two representatives from the Malta Tax and Customs Administration, namely Denise Said and Nadia Gauci, went personally to the address linked to the plaintiff’s VAT number and proceeded to forward the envelope containing such notification of assessment to the wife of the plaintiff as she was present at the residence at that time. The wife signed the receipt confirming receipt of documents to which she then passed on to her husband who is the plaintiff in question. Pursuant to Article 73(2) of the Malta VAT Act, the plaintiff was notified of such case correctly in terms of law, as notification at the taxpayer’s registered address and acceptance by a family member is considered valid service. This point was specifically discussed and confirmed as valid in the Tribunal’s decision.
The plaintiff stated that he proceeded to give such documents to his accountant around two or three days following receipt, however according to the testimony of the plaintiff’s accountant, the accountant was admitted to hospital due to serious illness and he could not work on such case. The accountant testified that when he was regaining his strength he worked on the case and notified the lawyer to submit the reply to the Courts of Malta. However, such reply was filed on the 19 of September 2019, which meant that the reply to raise such appeal was filed eight days late in accordance with Item 2(1) of the Ninth Schedule of the Malta VAT Act, where it is stipulated that appeals shall be filed within the time limit of thirty days. th
The Administrative Review Tribunal noted that, whilst the Tribunal sympathises with the situation the accountant found himself in, the time limit laid down in the legislation is a peremptory time limit which cannot be extended for any reason whatsoever. The Tribunal’s decision is in line with established case law, which reinforces the strictness of statutory deadlines in tax matters. By application of this, the Tribunal decided that the plaintiff had until the 11 of September 2019 to file such appeal and given that the time limit was exceeded the appeal is invalid.
The full case may be accessed through the following link:
READ MORE
Further Judgments
The court delivered further judgments throughout this quarter, which may be accessed through the e-courts webportal, with the following details:
1. XXX vs Direttur Generali (Taxxa fuq il-Valur Mizjud) – 110/2013VG – 29/04/2025
2. XXX vs Direttur Generali (Taxxa fuq il-Valur Mizjud) – 159/12VG – 06/05/2025
3. XXX vs Kummissarju tat-Taxxa u Dwana – 154/2012VG – 29/04/2025
4. XXX vs Kummissarju tat-Taxxi – 3/2020 – 09/05/2025
Civil Court, First Hall
The Commissioner for Tax and Customs vs Miroslav Mieczyslaw Waszut –773/2024MH – 04/04/2025
This case was filed before the Civil Court, First Hall by the Commissioner for Tax and Customs following a request made by the Polish Tax Authorities for the recovery of debts owed to them by the defendant.
In line with Council Directive 2010/24/EU, namely the Mutual Assistance for the Recovery of Claims relating to Taxes, Duties and Other Measures, the Polish Tax Authority sought to recover unpaid VAT due by the defendant to it which amounted to the value of €1,131,356.72. The referred to Council Directive has been transposed to national legislation through Legal Notice 153 of 2012.
The scope of Council Directive 2010/24/EU is to provide means for European Tax Authorities to reclaim debts owed to them by taxable persons who are no longer established within their territory. Provided that the taxable person would have departed from the Member State in which tax is due, the local tax authority would not have the competence to undertake recovery actions in another Member State, instead a request would be made to the tax authority in which the taxable person would be established in accordance with the rules provided.
In terms of Article 9(6) and (7) of Subsidiary Legislation 460.08, the Commissioner for Tax and Customs asked the honourable Court to register the document which established such debt due and to declare that all requirements have been satisfied, in order for the document to constitute an executive title by way of debt due. The Court took into consideration that whilst the defendant had been duly notified, the defendant failed to file their reply to such proceedings and in turn proceeded to give its judgement.
The Court decided to order the registration and proclaim the executive title. The full case may be accessed through the following link:
Kummissarju tat-Taxxa u d-Dwana vs LB Group Limited –1276/2024 AD – 06/06/2025
This case was quite similar to the above explained judgment as it also related to the request for recovery of tax debts from a European Tax Authority, however, this time it was the Italian Tax Authority making a request for such assistance in the recovery of the tax debts to the Commissioner for Tax and Customs in Malta.
The request was made by the Italian Tax Authorities for the amount of €45,056.04 owed to it by the defendant. The Court proceeded with verifying that the conditions as provided under Article 9 of Subsidiary Legislation 460.08 have been satisfied.
Following the analysis carried out by the Court and provided that the defendant did not file a reply to such proceedings after being duly notified, the Court proceeded to declare the documents indicating the tax due as an executive titles.
The full case may be accessed through the following link:
Court of Appeal (Civil & Superior Jurisdiction
There were no judgments delivered by the Court of Appeal in its Superior Jurisdiction nor its Inferior Jurisdiction during this quarter.
Court of Magistrates (Criminal Judicature)
During the second quarter of 2025, the Court of Magistrates in its capacity as a Court of Criminal Judicature pronounced four VAT related judgments presided over by Magistrate Dr. Yana Micallef Stafrace. For the purposes of this newsletter, two random judgements have been selected for detailed analysis.
Il-Pulizija vs Roque Borg – 18/2025 - 07/05/2025
The case concerned charges brought against the defendant as a representative of the entity Alky Catering Company Limited, for failing to submit seven VAT returns together with the due VAT, within the time limit as stipulated by law.
The unsubmitted VAT returns related to the periods which ended between 31 May 2014 till 30 November 2015, where the defendant was accused of being in violation of Articles 30, 66, 76(c) and 76 (d) of the Malta VAT Act. st
The Court examined the evidence put forward by the Malta Tax and Customs Administration and upon confirmation by the defendant that he in fact did not submit such VAT returns, the Court proceeded to proclaim its judgement and fined the defendant €3,000 for being in violation of Articles 30, 66, 76(c) and 76(d) of Chapter 406 of the Laws of Malta.
Read the full judgment by accessing the following link:
READ MORE
Il-Pulizija vs Paolo Mangiafico – 8246/2023 - 28/05/2025
This case was related to a random VAT inspection, where revenue inspectors from the Malta Tax and Customs Administration witnessed a sale of €4.50 in the Bella Sicilia establishment for which no fiscal receipt was issued.
The inspection took place on the 13 of December 2022, where the revenue inspectors approached the sales assistant present at the time to issue the fiscal receipt for such sale following the issuing of the EPOS receipt but not the fiscal receipt to the customer. The sales assistant present at the time issued such receipt upon request by the revenue inspectors. Whilst the sales assistant has been prosecuted in another case in front of the same Court, such case was brought against Mr. Paolo Mangiafico in his capacity as company secretary of Bella Sicilia Ltd. th
Following deliberations, the Court concluded that the defendant did not submit sufficient evidence to prove that he did whatever he could do in his power to prevent such situation from happening, and in turn the Court decided to find the defendant guilty of violating Articles 51, 77(a) and 77(e), 81 and 82 of the Malta VAT Act and fined the defendant an mount of €1,000.
Read the full judgment by accessing the following link.
MORE
Further Judgments
1. Il-Pulizija vs Moustafa Ata Moussa Darwish – 6839/2023 - 28.05.2025
2. Il-Pulizija vs Mohamed Omar Nasser Abubaker – 6850/2023 - 28.05.2025
Chapter 03 EU News
New Approach to VAT for E-commerce Imports to Simplify Trade & Compliance
On the 14 of May 2025, EU finance ministers reached a significant agreement on a new approach to the Value Added Tax (VAT) focusing on e-commerce imports and the taxation of distance sales of imported goods.
This agreement will further enhance the effectiveness of the Import One-Stop Shop (IOSS) by simplifying VAT declaration and payment, reducing administrative burdens for EU importers, and further improving the fight against VAT fraud.
The full announcement may be accessed through the following link:
VAT Committee Meetings
WP 1109 – Minutes 126 VAT COM Meeting th
The 126 Meeting of the VAT Committee meeting minutes which took place on the 21 of March 2025, were published on the 5 of May 2025. The agenda which was presented was adopted as proposed and the following two main matters (amongst other business) were decided to be discussed through individual workings papers:
1. 2.
Discussion on the proposal brought forward by the Commission for new Articles 218 and 232 with regards to changes in electronic invoicing rules applicable upon the entry into force of the VAT in the Digital Age Directive.
Discussion on the proposal brought forward by the Commission with regards to Article 17(1)(e) of the Administrative Cooperation Regulation in order to effect changes applicable upon the entry into force of the VAT in the Digital Age Package making for the provision of IOSS monthly reports to be made per Member State of consumption.
The minutes may be accessed through the following link:
Agenda 127 VAT COM Meeting th
The agenda for the 127 VAT Committee Meeting was published on the 21 of April 2025. The set agenda were the following topics, on which Working Papers and an Information Paper were published accordingly: th st
Consultation provided to Slovakia with regards to Article 11 of Council Directive 2006/112/EC (VAT Grouping) – Working Paper 1104.
Questions raised by France concerning the application of Article 9 of Council Directive 2006/112/DC with regards to the VAT treatment of reinjections of electricity from private individuals’ car batteries into the electricity grid. – Working Paper 1106.
Question raised by Italy concerning Articles 73 and 80 of Council Directive 2006/112/EC with regards to the taxable amount in the case of barter transactions. – Working Paper 1107.
Discussions with regards to the implementation of recently adopted EU VAT provisions proposed by the Commission with regards to Article 284a, 284b, 284c and 288 of Council Directive 2006/112/EC. With specific reference to the calculation of the annual turnover serving as reference for the SME Scheme. –Working Paper 1108 REV.
Discussions with regards to recent judgments of the Court of Justice of the European Union, as brought forward by the Commission. –Information Paper.
Information session by the Commission to the VAT Committee of options exercised under Articles 80, 101a, 167a, 199 and 199a of Council Directive 2006/112/EC. Information Paper.
The full meeting agenda may be accessed through the following link:
VAT Expert Group Meetings
VEG no 125 – 12/03/2025 – Platform Economy Follow up
The European Commission’s VAT Expert Group has published a follow-up paper on the platform economy element of the “VAT in the Digital Age” (ViDA) package, adopted by ECOFIN on 11 March 2025.
The paper outlines key implementation issues, including the application of the deemed supplier regime (Article 28a), platform responsibilities, the SME exemption, and the treatment of facilitation fees. Concerns raised include timing of national rules, interactions with travel agent schemes, and the scope of Article 46a.
The Commission aims to clarify these points in future guidance and invites stakeholders to contribute to ongoing discussions at the upcoming Fiscalis workshop.
The full document may be accessed through the following link:
VEG no 126 – Rev 1 – 07/04/2025 – Single VAT Registration Follow up
The VEG No. 126 REV document outlines the EU’s implementation plan for the Single VAT Registration (SVR) component of the VAT in the Digital Age (ViDA) package. Key topics included the phased rollout of SVR measures from January 2027 and July 2028, covering updates to the OSS/IOSS systems, the new Transfer of Own Goods (TOOG) scheme, and the end of the Call-Off Stock (COS) model.
Enhancements discussed included strengthened IOSS verification, improved correction mechanisms, and expanded data-sharing between tax and customs authorities. The OSS will also be extended to cover more domestic B2C transactions, zero-rated supplies, and e-charging.
Recordkeeping obligations for platforms will increase, and SME scheme interactions are clarified. A new OSS transfer module will replace the COS model, with guidance to aid the transition.
Member States were invited to provide feedback on these changes, which aim to streamline VAT compliance, improve fraud prevention, and modernise administrative cooperation across the EU.
The full document may be accessed through the following link:
MORE
VEG no 127 – 19/03/2025 – IOSS Project Group EPG053 – Update
The European Commission has updated the VAT Expert Group on progress to strengthen the IOSS (Import One-Stop Shop) verification process, following the adoption of the ViDA package in March 2025.
A new Fiscalis Project Group (FPG053), led by Finland, is piloting two technical solutions aimed at reducing VAT fraud. These involve pre-import data transmission and the use of verifiable credentials and digital wallets.
The pilot, involving Member States and external stakeholders including traders and postal operators, will run from Q3 2025 to Q3 2026. This work supports potential future extensions of IOSS to imports exceeding €150.
The full document may be accessed through the following link:
VEG
no 128 – 15/04/2025
– Summary minutes for 39 Meeting th
The 39th VAT Expert Group meeting on 26 March 2025 covered key developments post-ViDA adoption.
Highlights included a study on future VAT challenges beyond ViDA, with a focus on simplification, digitalisation, and environmental aspects. Updates were provided on the implementation of Digital Reporting Requirements, Single VAT Registration, and the platform economy rules.
The IOSS Project Group (FPG053) is piloting verification enhancements to combat VAT fraud. The new SME scheme’s implementation progress was reviewed, noting some Member State delays. Stakeholders were encouraged to contribute to upcoming consultations and workshops.
The full minutes may be accessed through the following link:
Group on the Future of VAT Meetings
GFV No 144 – 12/03/2025 – ViDA Platform Economy Implementation
Summary of Feedback
The Group on the Future of VAT document captured key feedback from Member States and business stakeholders on implementing the platform economy measures under the VAT in the Digital Age (ViDA) package.
Topics raised will shape future explanatory notes and Fiscalis workshops. Concerns were expressed about the timing of rule adoption, with calls for at least one year’s notice before entry into force.
Clarifications are sought on the scope and application of the Deemed Supplier Regime (DSR), especially for ancillary services and cross-border transactions. Stakeholders also requested clearer definitions of platform roles, VAT responsibilities, and handling of administrative issues like double taxation and retroactive adjustments. There is confusion over overlaps between Articles 28, 28a, and the travel agents’ scheme. The SME exception raised questions about eligibility validation across borders.
Further guidance is needed on VAT treatment of facilitation fees, B2C services under Article 46a, and detailed aspects of the VAT Implementing Regulation, including refunds, definitions, and data use.
The full document may be accessed through the following link:
GFV No 145 REV 1 – 07/05/2025 – Single VAT Registration Follow up
This paper, issued by the Group on the Future of VAT, presents the implementation roadmap for the Single VAT Registration (SVR) elements under the VAT in the Digital Age (ViDA) package.
Key topics include securing the Import One-Stop Shop (IOSS) through transaction IDs and verifiable credentials, with a pilot project running from 2025–2026 ahead of implementation in 2028.
Amendments to Commission Regulation (EU) 2020/194 will support enhancements to OSS/IOSS processes, the new Transfer of Own Goods (TOOG) scheme, and the end of the call-off stock model, with phased rollouts in 2027 and 2028.
The paper also details legislative clarifications, improved correction mechanisms, expanded registration data, and updated rules for facilitation services. Control and reporting measures will be strengthened through enhanced customs access, audit trails, and new recordkeeping duties.
Additional reforms include a mandatory reverse charge mechanism, OSS expansion to domestic B2C supplies, and various technical upgrades. Member States are invited to provide feedback and input on priorities.
The full document may be accessed through the following link: READ MORE
GFV No 146 – 19/03/2025 – IOSS Project Group FPG053 – Update
The 48th meeting of the Group on the Future of VAT (GFV), held on 28 March 2025, focused on four main topics.
First, the VAT Expert Group (VEG) presented a report on modernising VAT postViDA, highlighting themes such as simplification, digital transformation, sustainability, and reform of exemptions.
Second, a study on challenges beyond ViDA was introduced, aiming to identify gaps in the current VAT system, with emphasis on digitalisation and environmental alignment.
Third, updates on ViDA implementation were provided, covering digital reporting, platform economy rules, Single VAT Registration (SVR), and efforts to strengthen the IOSS verification process through pilot projects running from Q3 2025 to Q3 2026.
Finally, the meeting reviewed progress on the new SME scheme, including its rollout across Member States, the launch of a dedicated SME portal, and plans to incorporate relevant data into the EU’s Taxes in Europe database. Delegates were invited to submit feedback by 30 April 2025.
The full document may be accessed through the following link:
Chapter 04 CJEU Decision -
Latest Selection Update
C-615/23 Dyrektor Krajowej Informacji Skarbowej v P. S.A.
This case was decided by the European Court of Justice (“ECJ”) on the 8 of May 2025 and revolved around the concept of consideration in terms of the taxable amount. th
P was an entity which was active in the field of passenger transport and was engaged by a local authority to provide collective public transport in terms of EU legislation regulations. P entered into a contract with the local authority for such provision of transport where it was agreed that P will be remunerated by the sale of tickets and additionally via additional compensation from the local authority. This agreement was put in place given that the mere sale of the tickets would not have been a sufficient financial model for P. P sought an advanced tax ruling from the tax authority on whether the compensation for losses resulting from the supply of collective public transport services constraints turnover subject to VAT. However, the tax authorities expressed the opposite opinion. P brought an action to its national court which in turn referred the case to the ECJ raising the following question to the ECJ:
A.
Must Article 73 of Council Directive 2006/112/EC (“VAT Directive”) be interpreted as meaning that compensation, paid to an operator by a local authority for the provision of public transport services, is included in the taxable amount referred to in that provision?’
The Court started its analysis for the posed question by revisiting the text found in Article 73 of the VAT Directive, which states that the taxable amount for the supply of goods or services “shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply”. At the outset the Court determined that the local authority is to be regarded as a third party which is referenced in Article 73 of the VAT Directive.
Furthermore, with regards to the question as to whether the compensation constitutes a subsidy directly linked to the price of the supply, the Court stated that Article 73 of the VAT Directive is intended to subject the full value of goods or services to VAT and hence to prevent payment of a subsidy entailing a lower return from the tax. Such provision applies where the subsidy is directly linked to the price of the supply in question. For this to be considered as consideration for the supply of goods or services and therefore be taxable, the court provided that:
1.Firstly the subsidy must be paid specifically to the subsidised operator to enable it to supply particular goods or services.
2.Second, the need to verify that the purchasers of the goods or services benefit from the subsidy granted to the recipient must be ascertained.
3.The consideration represented by the subsidy, must at the very lease be identifiable.
The Court evaluated the agreements put in place between P and the local authority and concluded that the compensation paid by the local authority had no direct effect on the price of the transport services provided. The purpose of that compensation was to only cover the losses linked to that activity. In addition the Court made reference to the Advocate General’s opinion which held that any subsidy is capable of having an effect on the calculation of prices, whether that is carried out by the recipient of the subsidy or, as in the present case, by the organiser paying that subsidy. The mere fact that financing may affect the price of the goods or services supplied by the body in receipt of that financing is not enough to make it taxable as a subsidy directly linked to the price, for the purposes of Article 73 of the VAT Directive.
Hence, the Court ruled that Article 73 of Council Directive 2006/112/EC must be interpreted as meaning that the flat-rate compensation paid by a local authority to an undertaking providing collective public transport services and intended to cover losses incurred in connection with the supply of those services is not included in the taxable amount of that undertaking.
The full case may be accessed through the following link:
C-405/24 - L (Petits envois non commerciaux)
th
This case was decided by the European Court of Justice (“ECJ”) on the 8 of May 2025 and revolved around the exemption with regards to importation for private persons.
L was a company that provided forwarding and customs clearance services. L applied to the Polish tax authorities for a tax ruling in order to determine whether an importation into Poland of goods in a consignment between private person may be exempt from VAT when the consignee of that consignment is established in another Member State, rather than Poland.
The Polish tax authority took the stand that the exemption could not be applied for such importation, to which L lodged an action in front of the national Courts. The national Courts dismissed the action and held that the VAT exemption only applies where the consignment is sent to a private person residing in the Member State into which the goods are imported. L appealed this decision nationally, and the highest Court of the state referred the case to the ECJ for a preliminary ruling.
The national Court asked the following question to the ECJ:
Whether Article 143(1)(b) of Directive 2006/112 (“VAT Directive”) and Article 1 of Directive 2006/79/EC must be interpreted as precluding legislation of a Member State which excludes from the exemption from VAT provided for in those provisions small consignments of a non-commercial character sent from a third country by private persons to private persons residing in another Member State.
The Court started off its deliberations by stating that according to Article 143(1)(b) of the VAT Directive. Member States are to exempt the final importation of goods governed by Directive 2006/79/EC. The scope behind Directive 2006/79/EC is to exempt, goods in small consignment of a non-commercial character sent from a third country by private persons to other private persons in a Member State, from turnover tax and excise duty.
The ECJ deemed it prudent to determine whether the exemption from VAT provided in such provisions applies only to consignments sent to private persons residing in the Member State of importation or whether this applies to consignments sent to private persons in any Member State, including a Member State other than that of importation. Using a theological and literal interpretation, the Court held that Article 143(1)(b) of the VAT Directive expressly refers to the exemptions from VAT as provided for in Directive 2006/79/EC. In turn, an analysis of the exemption provided for in Article 1 of Directive 2006/79/EC was performed – with such article providing that the exemption applies to small consignments of a non-commercial character sent to private persons in a Member State. It is to be pointed out that Article 1 of Directive 2006/79/EC does not include an indefinite article in front of the words “Member States”, which suggests that the exemption is applicable for goods being imported by private persons into any Member State, rather than the Member State.
According to the ECJ, it is clear that the EU legislator did not intend to make the VAT exemption for small, non-commercial consignments dependent on the specific destination of the consignment within the European Union. The explanatory memorandum of Directive 2006/79/EC indicates that its objective was to allow lowvalue consignments sent by private individuals in third countries to other private individuals in the EU to benefit from an import tax exemption, as long as certain conditions regarding the goods are met.
Following the ECJ’s analysis, the Court ruled that Article 143(1)(b) of Council Directive 2006/112/EC and Article 1 of Council Directive 2006/79/EC must be interpreted as precluding legislation of a Member State which excludes from the exemption from VAT provided for in those provisions small consignments of a non-commercial character sent from a third country by private persons to private persons residing in another Member State.
The full case may be accessed through the following link:
Further Judgements:
1. C-405/24 - L (Petits envois non commerciaux)
2. C-278/24 – Genzyński
3. C-213/24 – Grzera
4. C-164/24 - Cityland
5. C-125/24 - Palmstråle
6. C-615/23 - Dyrektor Krajowej Informacji Skarbowej (Services de transport public)
DISCLAIMER
While every effort was made to ensure that the content of this newsletter is accurate and reflects the current position at law and in practice, we do not accept any responsibility for any damage which may result from a change in the law or from a different interpretation or application of the local law by the authorities or the local courts. The information contained in the newsletter is intended to serve solely as guidance and any content of a legal nature therein does not constitute or should be interpreted as constituting legal advice.
Consulting your tax practitioner is recommended in case you wish to take any decision connected to content of this newsletter.
Should you require further information on the above please contact Brandon Gatt on brandon@zampapartners.com