24 February 2010
Printing prospectus abroad? – ECJ Case law of interest to investment funds
The European Court of Justice (“ECJ”) has recently released an important case law regarding the VAT treatment of reprographics activities. This case law is of interest for investment funds which often have prospectuses printed abroad. Until now, depending on European Member States, such activities were qualified as supplies of goods or as supplies of services. Such differences led to practical difficulties notably regarding the place of the supply of these activities as well as for the determination of the chargeable event.
In the case brought before the ECJ, Graphic Procédé is a company which carries out reprographics activities, involving the production, using its own materials, of copies of documents, files and maps at the request of customers. Graphic Procédé’s customers retain title to the original documents they have asked to be reproduced. Print runs range from one copy to several hundred copies.
Graphic Procédé considered the transactions carried out as supplies of services. The French tax authority qualified the transactions carried out as supplies of goods and claimed for the payment of late interest on VAT due.
Main findings of the case:
• Reprographics activities have the characteristics of a supply of goods to the extent that they are limited to the mere reproduction of documents on materials.
• Reprographics activities must however be classified as a supply of services where they involve additional services, taking into consideration the importance of those services for the recipient, the time necessary to perform them, the processing required by the original documents and the proportion of the total cost that those services represent, to be predominant in relation to the supply of goods and to constitute an aim in themselves for the recipient.
Points of attention:
The reasoning and findings of the Court can easily be extended to printing services often delivered to investment funds for the printing of prospectuses. Depending on the qualification as a supply of goods or services, the VAT treatment of the transaction is different. This distinction can notably be summarized as follows:
• Supplies of services: the place of taxation, in B2B situations, is in the Member State where the recipient is established.
• Supplies of goods: the place of taxation depends on where the goods are physically dispatched as it is the key factor to determine how VAT applies (e.g. prospectuses of a Luxembourg fund reproduced in France and remaining in France to be distributed will be taxable in France whereas they will be subject to Luxembourg VAT if the prospectuses are effectively delivered to Luxembourg).
We suggest checking the nature of the supplies received in the light of the guidelines provided by this case law and ensuring that the VAT treatment applied is correct, also with respect to reporting obligations (VAT returns and EC sales lists).
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