Weekly VAT News

VAT reverse charge for building and construction services – new HMRC manual

HMRC have published their VAT Reverse Charge for Building and Construction Services Manual. The Manual covers the scope of the construction reverse charge (including the services covered, supplies of materials, and supplies of labour vs staff), how it works (including who needs to apply it, and practical issues such as invoicing and adjustments to consideration), and compliance issues. (Contact: Gagan Sra)

SC Arcomet Towercranes SRL: VAT and transfer pricing adjustments – CJEU AGO

SC Arcomet Towercranes SRL (Arcomet Romania) acquired cranes for sale or lease to customers in Romania. Arcomet Romania’s parent company was Arcomet Service NV Belgium (Arcomet Belgium), which undertook most of the commercial responsibilities for its subsidiaries, including Arcomet Romania. A 2010 transfer pricing study set an operating margin for Arcomet Romania of between -0.71% and 2.74%, in accordance with the Transactional Net Margin Method. From 2011 to 2013, Arcomet Romania’s profits exceeded this amount, and Arcomet Belgium accordingly issued invoices to Arcomet Romania. Arcomet Romania applied the reverse charge to the first two invoices, but then, for the third invoice, considered that the transaction was outside the scope of VAT. Following a reference to the CJEU, the Advocate General has concluded (opinion not yet available in English) that any assessment as to whether a transfer price adjustment is subject to VAT must be carried out on a case-by-case basis. It is necessary to consider whether, for VAT purposes, services have been supplied for consideration. In this case, Arcomet Belgium was supplying management services for remuneration payable by Arcomet Romania. Although the amount of remuneration was not determined under the contract between the two parties, it was clearly determinable. The remuneration payable was accordingly consideration for a supply of services, and subject to VAT. The Advocate General also concluded that the tax authorities may ask the taxpayer for information in addition to invoices to establish input tax deductibility, provided the request is proportionate and the information requested can establish the right to deduction. (Contact: Mark Simm)

EU carbon border adjustment mechanism – authorisation of CBAM declarants

On 28 March 2025, the European Commission announced that the implementing regulation had been adopted to allow importers to apply for the status of authorised CBAM declarant. Importers will be required to be authorised CBAM declarants to import into the EU goods subject to CBAM from 1 January 2026. Importers and their indirect customs representatives can now apply for authorised status in the authorisation management module of the CBAM Registry. The Commission encouraged EU member states to advise importers expecting to exceed the de minimis threshold (of 50 tonnes mass, following recent announcements on simplification of CBAM) for the import of CBAM goods “to apply for an authorisation as soon as possible”. Importers not expecting to exceed that threshold should wait until the autumn to submit an authorisation application. The OECD has recently published papers on the CBAM, including Carbon Border Adjustments: The potential effects of the EU CBAM along the supply chain and What to expect from the EU Carbon Border Adjustment Mechanism? (Contact: Ethan Godden)

VAT case calendar

On 7 and 8 April, the Supreme Court will hear HMRC’s appeal against the Court of Appeal judgment in Northumbria Healthcare NHS Foundation Trust, on the VAT liability of car parking at sites operated by NHS foundation trusts.

At the CJEU, on 10 April, there will be an Advocate General opinion released in Xyrality on the VAT treatment of (pre-2015) in-app purchases.