On 20 January 2021, the Court of Justice held its judgment in Case C-288/19, QM v Finanzamt Saarbrücken, on the interpretation of Article 56(2) of Directive 2006/112/EC. The request has been made in proceedings between QM, an investment fund management company based in Luxembourg, and the Finanzamt Saarbrücken (Tax Office, Saarbrücken), concerning the latter’s decision whereby the former’s act of making cars available to two of its employees working in Luxembourg and resident in Germany was made subject to value added tax (VAT).

In 2013 and 2014, QM made two vehicles available to two members of its staff, who operated in Luxembourg and were resident in Germany, for professional and private purposes. While the provision of the vehicle was free of charge for the first member of staff, QM deducted an annual sum of about EUR 5 600 from the salary of the other one in exchange for the use of the other vehicle. In November 2014, QM registered as a taxable person in Germany for VAT purposes, declaring in 2015, and with regard to the act of making those vehicles available, other taxable services amounting to about EUR 7 900 for 2013 and EUR 20 700 for 2014.

Despite QM’s tax returns were accepted by the Saarbrücken Tax Office, the company lodged a complaint in respect of the related tax assessments. Since that complaint was rejected, on 2 June 2016 QM brought an action before the Finanzgericht des Saarlandes (Finance Court, Saarland; the “referring court”) which, in light of the need to interpret the relevant European legislation, decided to stay the proceedings and to ask the Court of Justice whether, on a proper construction of Article 56(2) of Directive 2006/112, the act of making a vehicle forming part of the assets of the business of a taxable person available to one of that taxable person’s employees falls within the scope of that provision if that employee does not provide payment for that vehicle being made available to him or her and does not give up a part of his or her remuneration as consideration for it and if the entitlement to use that vehicle is not contingent on the forgoing of other benefits by that employee.

According to the Court, the provision of vehicles in the present case is not a supply of goods but a supply of services, inasmuch as there was no transfer of the right to dispose of tangible property as owner. More particularly, since for the provision of the vehicle to the first member of staff he did not make any payment, nor choose between various benefits offered by QM under an agreement between the parties, the transaction cannot be classified as a supply of services for consideration. Furthermore, even if the act of making a vehicle forming part the business’ assets of a taxable person available to one of its employees could be treated as a supply of services for consideration, it could not be covered by Article 56(2) of Directive 2006/112 since it cannot constitute a “hiring of a means of transport”.

By contrast, the provision of the vehicle to the second member of staff may fall under Article 56(2) of Directive 2006/112 whereas it constitutes a supply of services for consideration and he has a permanent right, under an agreement between the parties, to use that vehicle for private purposes and to exclude other persons from using it, in exchange for rent and for a period of more than 30 days.

Marco Stillo