VAT exemption in relation to fuel transported in locomotive fuel tanks for railway undertakings operating routes with non-EU countries

VAT exemption in relation to fuel transported in locomotive fuel tanks for railway undertakings operating routes with non-EU countries

On 11 November 2020, Polish Member of the European Parliament Beata Mazurek of the European Conservatives and Reformists Group, posed a written parliamentary question to the European Commission:

“In the context of the European Green Deal, EU policy aims to promote economically and energy-efficient modes of transport. Rail transport should be a key area, given its efficiency in comparison with, for example, road transport, its low carbon footprint and improved road safety. The regulations in force impose an obligation on railway undertakings operating routes with third countries to pay taxes on fuel transported in locomotive fuel tanks, which is necessary for the operation of the trains. The charges have a negative impact on the profitability of rail transport outside the EU’s external border and lead to the closure of many connections, including between Chełm and Ukraine.

1. Does the Commission intend to carry out studies on the possibility of amending EU legislation in order to obtain a VAT exemption for imports of fuel contained in standard fuel tanks so that locomotives and wagons with a generator (see Article 84(1)(a) of Directive 2009/132/EC of 19 October 2009 determining the scope of Article 143(b) and (c) of Directive 2006/112/EC as regards exemption from value added tax on the final importation of certain goods – OJ L 292, 10.11.2009, p. 5, as amended) can also be exempt from VAT, and does the Commission consider this solution to be appropriate?”

On 21 December, Economy Commissioner Paolo Gentiloni, responded on behalf of the European Commission reporting:

“According to the current rules of the value added tax (VAT) Directive, the importation of fuels transported in locomotive fuel tanks, which are necessary for the operation of the trains, cannot be exempted from VAT. Since the railway companies are in principle taxable persons, the VAT due upon importation will be deductible by the railway companies when used for the commercial transport of goods or persons. The Commission published on 15 July 2020 its Action plan for fair and simple taxation supporting the recovery strategy, which lists a number of planned actions in the field of VAT for the coming years. The possibility to introduce a VAT exemption for the importation of fuels as requested is not included. It is for Member States to ensure that the taxation of fuel imported in the tank of locomotives does not lead to unnecessary administrative burden and traffic disruption.”

Source: https://www.europarl.europa.eu/doceo/document/P-9-2020-006124_EN.html

Photo Credit : https://pixabay.com/photos/railway-tanks-cars-fuel-4915123/

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