CJEU: Fuel cards can be a financial service, not a sale of a good (fuel)

Vega International dealt with the organization and management of supplying related companies with fuel cards issued by various fuel suppliers. The company received invoices from fuel suppliers that showed the purchase of fuel with VAT. Subsequently, at the end of each month, Vega International re-invoiced for subsidiaries the fuel made available for the purpose of providing a vehicle transport service and charged a fee of 2%.

Such a practice has raised doubts whether we are in fact dealing with a financial service – loans to related companies (which are exempt from VAT) or whether it is the actual delivery of fuel (that is, delivery of goods) taxed at a basic rate of 23%.

The CJEU in its judgment stated that we are dealing with a financial service in this case. The judgment does not, however, determine whether all fuel cards have this character. An in-depth analysis of the transaction should be done in the case of fuel cards in order to determine whether it is a credit service or fuel sale. Not necessarily this judgment is beneficial for taxpayers; using fuel cards according to the financial service model is associated with the lack of the right to deduct VAT.

As a result of the CJEU judgment, some fuel card models should be considered a credit service and as a result they are exempt from VAT.