The Senate’s Department of Administrative Cases has suspended proceedings in a case in which a company is in dispute with the State Revenue Service (SRS) over the right to apply a 0% value added tax (VAT) rate to supplies of excise goods to companies in other European Union Member States.

The company's main activity is the wholesale of fuel and other combustibles. During a VAT audit, the SRS concluded that the 0% VAT rate had been applied to the deliveries without justification.

The SRS pointed out that ownership of the goods had been transferred before they were exported from Latvia, so the deliveries were considered to have taken place domestically and were subject to the standard VAT rate. The SRS also considered that the company had been involved in a VAT fraud scheme and therefore, in its decision, calculated additional VAT payment, penalties and late payment interest, reduced the amount of VAT to be refunded and refused to refund the declared overpayment.

The company filed an appeal against this decision, but the Regional Administrative Court rejected the application. The company appealed against the Regional Administrative Court's judgment to the Senate.

Having reviewed the case, the Senate concluded that the resolution of the case required interpretation of the provisions of Council Directive 2006/112/EC in order to apply them to the Latvian Value Added Tax Law. Therefore, the Senate suspended the proceedings and referred two questions to the Court of Justice of the European Union (CJEU) for a preliminary ruling.

First of all, it has been asked whether a seller may exempt its supply from VAT if it is known in advance that the goods will first be sold to a second buyer in another Member State and only then physically transported from the first Member State to the third Member State?

Secondly, is it possible to apply the special rules for triangular transactions if a company in a third Member State resells the goods to other buyers in the European Union immediately after purchasing them, and all this takes place within the same transport operation?

Proceedings in the case will be suspended until the CJEU ruling comes into force.

Case No SKA-168/2025 (A420226619)

 

Division of Communication of the Supreme Court

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