The EU Court of Justice has no doubt that the tax point arises at the time of signing the acceptance report, if it is agreed by the parties in the contract for the execution of construction works (Judgment of the ECJ of May 2, 2019, C-224/18).
The verdict may be the legal basis for the resumption of all court and tax proceedings, which in analogous cases ended with a legally valid – but inconsistent with the ECJ’s – decision.
This is a landmark ruling of the ECJ, questioning the current practice of the tax authorities. This could lead to a favourable change in the construction industry, which will allow entrepreneurs to feel more stable in matters of VAT settlements.
The position of the tax authorities has been directed so far by the general interpretation of the Minister of Finance of April 1, 2016, No. PT3.8101.41.2015.AEW.2016.AMT.141, where it was indicated that the key moment from the VAT perspective is when the contractor reports the readiness for acceptance and not the date when the buyer accepts the work. Consequently, the date of signing of the final acceptance report is (under the current tax authorities’ position) irrelevant for VAT.
However, the ECJ states that if the parties agreed in the contracts that the moment of completion of construction works arises upon their approval, by signing the acceptance report, then this moment shall determine the tax point under VAT provisions.
The judgment of the ECJ may constitute invalidating of the general interpretation of the Minister of Finance. This means that it is an important legal basis for the resumption of all court and tax proceedings, which in analogous cases ended with a final – but inconsistent with ECJ – decision.