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Supreme Court of Denmark

No basis for VAT exemption 

Case no. 245/2014

The Danish Ministry of Taxation

The conditions for VAT exemption and reimbursement of registration duty paid in connection with the sale of used cars to other EU member states had not been met

In September 2010, SKAT (the Danish tax authorities) decided to increase the amount of VAT payable and to recover registration duty from A, who had allegedly sold used cars without charging VAT to a number of buyers registered for VAT in other EU member states through his sole proprietorship.  SKAT was not satisfied that he fulfilled the conditions for not charging VAT on the sales, as SKAT was not satisfied that cars had actually been sold to the foreign buyers in question. In addition, the lack of documentation showing that the cars had been exported caused SKAT to recover the registration duty on the cars that had previously been reimbursed to the appellant.

According to section 34(1) of the Danish VAT Act, it is a condition for VAT exemption that the goods are transported to another EU member state and that the buyer is registered for VAT in another EU member state. It also follows from SKAT's VAT guidelines that the seller must be able to document that the goods have actually been shipped or transported to another EU member state, and that such documentation may take the form of a transport invoice, a consignment note or a declaration from the carrier or forwarding agent.

With regard to registration duty, section 7b of the Danish Registration Duty Act provides that the duty may be reimbursed if the vehicle is deregistered from the Register of Motor Vehicles and exported from Denmark. It follows from the legislative history behind the Registration Duty Act that appropriate documentation, in the form of an invoice, registration certificate or other documents deemed by the tax authorities to be suitable as documentation, must be produced when exporting to other EU member states.

The High Court held that the contract notes produced by A did not sufficiently document that the cars had actually been exported from Denmark, which meant that the appellant was not entitled to reimbursement. In addition, the High Court held that the conditions for VAT exemption had not been fulfilled.

The Supreme Court affirmed the High Court's judgment based on the High Court's justifications.

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