VAT Newsletter 4/2014

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The European Court of Justice (“ECJ”) has ruled on case C-438/13 (BCR Leasing)

The dispute in this case refers to the Romanian tax authorities’ decision to impose BCR Leasing IFN SA (“BCR Leasing” or the “Company”) with additional VAT liabilities as regards the vehicles that were not returned to the Company further to the termination of the lease agreements due to the lessee’s failure to fulfil their payment obligations.

The ECJ concluded that the impossibility, for a leasing company, of recovering from the lessee the goods let under a financial leasing contract following its termination as a result of the lessee’s breach, despite the actions undertaken by that company to recover those goods and despite the lack of any consideration following such termination, may not be treated as a supply of goods for consideration.

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