Is there the right to a VAT refund or not?
If refueling is paid for with a fuel card and/or through the intermediary of a leasing company, for VAT purposes, the gas station delivers the fuel directly to the driver. Based on European case law, therefore, it is only the driver who is entitled to recover VAT on fuel costs. The card company only fulfills the role of financier and is not entitled to a VAT refund. This also applies to a leasing company. Because practice simply cannot deal with this case law, the Netherlands has approved that card and leasing companies are also entitled to a VAT refund, admittedly subject to conditions. This approval does not apply abroad. Foreign VAT must therefore often be considered an expense.
New guidelines provide clarification
Recent European guidelines shed new light on the VAT treatment of fuel costs. Contrary to European case law, card and leasing companies are still entitled to a VAT refund if fuel is purchased under a "commissiones agreement. This is an agreement under which a card or lease company purchases fuel in its own name, but for the account and risk of another (the cardholder or driver). Based on the guidelines, the following conditions apply to the commissioner model:
- the "legal ownership" of the fuel must be transferred across all links;
- the VAT treatment of the fuel supply must be the same across all links;
- it must be clear from the agreement that one party is acting in its own name, but for the account and risk of another; and
- there must be a clear delineation of the contractual and commercial arrangements for each link in the supply chain.
Since there is an approving policy in the Netherlands, for the time being the guidelines will be especially welcomed in other countries and in cross-border situations. Unfortunately, the guidelines are not legally enforceable and member states can disregard them. It is also not always clear how the conditions should be implemented in practice.
What to do?
The new European guidelines give card and leasing companies reason to review (mobility) card contracts and make them future-proof where necessary. VAT issues could be avoided by working with a 'commissioners agreement', instead of a regular purchase agreement ('buy/sell' model). Any disadvantages of a commission agent model will also have to be taken into account.