ECJ referral – Advocate General’s opinion is issued on the VAT treatment of the storage of goods

An ever recurring question of EU VAT is referred to the ECJ namely, whether the storage of goods is a service connected with immovable property, which should be subject to VAT where the warehouse is located (Art 47) or rather it is a regular service which should be taxed in accordance with the general rules (Art 44 of the VAT Directive). 

In the case at hand a Polish company provides a range of services for the storage of goods, including the admission of goods to the warehouse, placing goods on the shelves, packaging, loading, unloading and in some instances repackaging of goods. The Polish authorities are of the view that these services are connected with the warehouse located in Poland and thus Polish VAT should be applicable, while the taxpayer argues that the services provided should be seen as regular services.

In its recently published Opinion the AG takes the view that the above services constitute a single supply, where the storage service is the principal supply, with all other services offered are ancillary to it. (For completeness, the AG also notes that repackaging may be seen as an independent supply, if its purpose is not only better storage.)

The AG goes on that in order to deem the storage services to be connected with immovable property there should be “sufficiently direct connection” between the services provided and the property, which requires a “specific immovable property identified by the parties” that must also be the “the subject matter” of the service.  However, in this case the subject matter is the storage service and the property is only means of performing the supply.

Interestingly, the AG also refers to VAT Committee’s guideline (of July 2011), which includes a similar conclusion stating that in relation to the storage of goods Art 47 of the VAT Directive cannot be applied where “no specific part of the immovable property is assigned for the exclusive use of the customer”.

It should be noted that neither the VAT Committee’s guidelines, nor the AG’s opinion is binding on the ECJ when deciding on a case, so it will be interesting to see the Court’s final decision on this matter.

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