VAT on transport services when exporting goods
February 2022 – The sale of goods is in principle subject to VAT. The export of goods is one of the main exceptions to this principle. Export in this context means export outside the European Union. Transport services in the context of such export may also be exempt. But there will be some changes from 1 April 2022.
Direct link to export
One of the basic principles of VAT is that all Member States exempt supplies of services, including transport and ancillary transactions, which are directly linked to exports or imports of goods. The Court of Justice of the European Union has been asked about everything that falls under this exemption.
In this case, a Latvian carrier (Atek) was transporting customers' goods from the port of Riga to Belarus. For the actual performance of this transport of goods, Atek used another company "L.Č.". The transport was carried out with Atek's vehicles, which had been rented from L.Č. Atek was acting as a carrier in respect of the shippers of the goods. L.Č. was responsible for driving, repairing and fuelling these vehicles, as well as for customs formalities at border crossing points, guarding the goods, transferring them to the consignee, as well as the operations necessary for loading and unloading the goods.
L.Č. considered that it was entitled to the exemption for services directly related to export. The Latvian tax authorities did not agree. The case was finally brought before the Court of Justice.
In its judgment, the Court concluded that the transport of goods to a third country - where the services are not provided directly to the sender or recipient of the goods - is not directly linked to the export of the goods.
And in Belgium?
Following the 2017 ruling, the tax authorities published a circular in October 2021 in which they adapted their view to the ruling, effective from 1 January 2022.
A transport service is only directly linked to the export of goods if the service is provided directly to the exporter or consignee of the goods. This implies that the exemption can only be applied in the relationship between the service provider on the one hand and the consignor or consignee of the goods on the other.
Consignor and consignee are understood to mean:
the seller or buyer of the goods to be exported ;
the owner, lessee or borrower of the goods to be exported;
the contract worker who exports goods outside the Community for the purpose of having them repaired, processed, adapted, made up or worked on;
a person who re-exports goods outside the Community which he has received on sight, on trial or on consignment; or
the person who re-exports goods outside the Community after having subjected them to repair, processing, adaptation, customisation or working.
But the administration is clear that if the service provider uses a subcontractor to carry out the goods transport service, the service provided by the subcontractor cannot be exempt from export VAT.
Example
A sells goods to a taxable person B established in China. To transport the goods from Belgium to China, A uses a transport company X established in Belgium. X in turn subcontracts the transport of the goods to transport company Y established in Belgium.
The transport service that X provides to A is located in Belgium (Article 21, § 2 of the VAT Code) and is subject to Belgian VAT, but is exempt from VAT under Article 41, § 1, subparagraph 1, 3° of the VAT Code concerning the export exemption.
The transport service that Y provides to X is also located in Belgium (Article 21, § 2 of the VAT Code) and is also subject to Belgian VAT (pursuant to Article 2, paragraph 1 of the VAT Code), but the exemption under Article 41, § 1, paragraph 1, 3° of the VAT Code does not apply to it.
Entry into force
In order to enable the taxable persons concerned to comply with the above-mentioned limitation of the scope of the exemption in respect of goods transport services, the new administrative viewpoint applies from 1 April 2022.
