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Fuel card VAT treatment in the EU

January 6, 2023

Have you heard the most recent updates about the EU's handling of VAT on fuel cards?

Following a meeting between the EU Commission Services and the VAT Expert Group on October 21, 2022, new findings will clarify whether the supply of gasoline cards qualifies as a taxable or exempt supply for VAT purposes.

Here is what you must know to maintain compliance:

The EU Commission Services adopted fresh findings on the VAT treatment of gasoline cards on October 21, 2022. 

This topic was spurred by the 2019 judgment by the Court of Justice of the European Union (CJEU) in case C-235/18 Vega International, which raised questions.

Here is what companies need to know about the recent talks around the application of VAT on fuel cards and how it affects their operations.

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The Case of Vega International and Its Significance

This case has been repeatedly brought to the attention of the EU Commission Services, since the judgment has had a direct influence on whether or not the distribution of gasoline cards constitutes a "financial activity," which is the determining criterion for whether or not it is exempt from VAT.

Consequently, the judgment had a direct influence on the VAT treatment of enterprises in the EU that supply fuel cards to their workers and, consequently, on the deductibility of gasoline bought using fuel cards by employees.

As a result, various parties have been attempting to determine whether the supply of a fuel card scheme should be treated as a VAT-taxable supply of fuel or a VAT-exempt supply of pre-financing services. 

Impacting the fuel card industry, the VEGA judgment caused a significant level of confusion over the correct VAT treatment of fuel cards across the EU. 

This has also led to an increase in concerns about VAT neutrality and compliance expenses for the associated trade parties.

The Parties Concerned

To understand how the current conversations will turn out and how they will affect your organization, you need to know what the roles of the important stakeholders are:

  • The fuel card is a secure identity and gasoline purchasing authorization card.

  • Fuel Card Issuer: The organization responsible for gasoline card issuance These might range from individual entrepreneurs to subsidiaries of mineral oil companies. Issuers engage in two distinct contracts: one with the user and the other with the Mineral Oil Company.

  • Mineral Oil Company: The owner of the fuel prior to filling the tank

  • Fuel Card User: The person or organization that purchases the gasoline

  • This party is often a taxable entity for purposes of VAT.

  • Commissioner: A person or business that sells or buys goods or services in exchange for a cut of the sale or purchase. 

The VAT Expert Group and Services of the EU Commission

Between 2019 and the most recent meeting, a series of conversations about the VAT treatment of gasoline cards were held in order to clarify any conflicting decisions, ambiguity, or uncertainty.

At the most recent conference, Working Paper 1046 was discussed. 

The VAT Expert Group developed these suggestions and forwarded them to the EU Commission Services.

In the presentation, they talked about what they had learned, what worried them, and what they thought the European Union Court of Justice should do about fuel cards.

Recent Findings Pertaining to the VAT Handling of Fuel Cards

The primary results and conclusions addressed two competing models: the buy-sell model and the commissionaire model.

The conference ended with the following major insights and concluding remarks:

The initial judgment from the CJEU noted that in order to determine the nature of the supply during a fuel card transaction (and whether it is a product or a service), one must analyze who owns the gasoline at the time of the transaction.

If the right to retain and dispose of the gasoline is passed to the issuer or provider of the fuel card, they might be regarded as the supplier of the fuel.

Currently, this transfer of ownership does not occur under the buy/sell paradigm for gasoline cards. 

This is due to the fact that fuel cards are only a method for purchasing gasoline from the manufacturer. 

Therefore, under the buy-sell model, the issuer does not qualify as the fuel provider.

However, under the commissionaire model, in which the commissionaire operates in its own name but on behalf of a principal, the fuel received and provided by the commissionaire should be classed as a supply of commodities. 

Consequently, the issuer qualifies as the provider.

To summarize the contribution of the EU Commission's services on the question, determining where the right of ownership has been passed to the fuel card issuer is essential for determining whether or not they qualify as the products' supplier.

This does not occur in a buy/sell arrangement, but it occurs in a commissionaire model, including gasoline card transactions.

Confirm Your Fuel Cards' VAT

Do you provide gasoline cards to your workers in the EU? 

Do you want to know if the VAT on gasoline purchased using fuel cards may be reclaimed?

Get enough clarification about the VAT status of your EU-based company's activities.

Contact us, and we will help you through the procedure.

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