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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 to investment funds which often have prospectuses printed abroad. Atoz, our Luxembourg member, review the main findings and identify what investment funds should be looking out for.
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 Proc?d? 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 Proc?d?'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 Proc?d? 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.
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 summarised 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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