The B2 Energy judgment: know who your customer is

The Court of Justice stresses that it is for the supplier to check its customer's VAT status. Relying on what the customer says is not enough for the zero rate.

The B2 Energy judgment of 29 February 2024 (case C-676/22) concerns a Czech business making intra-Community supplies of goods to a party in Poland. At its heart is whether the supplier must charge VAT, given the customer's VAT status.

The facts

B2 Energy supplied rapeseed oil to Poland, but the goods were not delivered to the recipients named in the tax documents, but to other recipients established in that member state. The Czech tax authorities argued that B2 Energy had wrongly failed to charge VAT, because it had not shown that the goods had been transferred to the recipients named in the documents, nor even that they had been supplied to a person registered for VAT in another member state.

The supplier relied on the customer's statement and took the view that it was for the customer to pay the VAT due.

The ruling

The Court held otherwise. It is the supplier's responsibility to check the customer's VAT status, whatever the customer says. A supplier cannot simply rely on the customer's assertions about its taxable status, but must itself take reasonable steps to verify them.

The judgment thereby emphasises the supplier's due diligence in establishing its customers' status. That a customer claims to be a taxable person does not automatically mean the zero rate may be applied. The supplier must collect the VAT, unless it can show that it took reasonable steps to check the accuracy of those claims.

Why this matters in practice

The judgment underlines the importance of careful VAT compliance, particularly in the light of the 2020 quick fixes. Those reforms aim to reduce fraud and ease the administrative burden, and introduce stricter requirements for applying the zero rate to intra-Community supplies.

In short: check your customers' VAT status and take reasonable steps to verify their statements. That protects the integrity of the VAT system and stops you being left with the VAT bill.