CJEU Clarifies Export Exemption Despite Incorrect Waybills (C-602/24)

Case C-602/24 deals with the export exemption in Article 146(1)(b) of the VAT Directive and, more specifically, with the tension between substantive export conditions and formal proof requirements. The dispute arose after a supplier declared certain supplies as intra-Community supplies at 0%, while the tax authorities later established that the goods had in fact been exported to a third country by the purchaser, and without the supplier’s knowledge. The Court was asked whether such transactions must be reclassified as exempt exports, even where the supplier’s own transport documents pointed to delivery within the EU. In answering, the Court clarifies the objective nature of the export exemption, the limited role of subjective intent, and the boundaries within which Member States may enforce formal documentation rules under Article 131, in line with the principles of fiscal neutrality and proportionality.

Facts and circumstances

Company W, established in Poland, supplied apples in 2017 and 2018 to A.E. LP, a company established in the United Kingdom and registered for VAT in Latvia. In its VAT returns, company W treated these supplies as intra-Community supplies subject to a 0% rate. The waybills held by company W indicated that the apples were to be transported from Poland to destinations in Lithuania by carriers established in Belarus, Russia, and Poland, with A.E. responsible for organizing the transport. 

During a tax audit, the Polish authorities found that A.E., as purchaser, had in fact exported the apples directly from Poland to Belarus. The Latvian authorities confirmed that A.E. had declared intra-Community acquisitions from company W and subsequent exports to third countries. The Polish authorities described A.E. as unreliable, but they did not allege fraud or abuse by company W in the supply chain. 

Because the goods were not transported to another Member State as the waybills suggested, the Polish authorities rejected the intra-Community classification. They also criticized company W for not properly verifying the delivery destination and for relying only on the driver’s signature and transport stamp on the waybills. They reclassified the supplies as domestic supplies subject to 5% VAT and imposed a 30% penalty. 

Company W challenged that view, arguing that since the authorities had established an export to Belarus carried out by the purchaser, the transactions should be treated as indirect exports and therefore zero-rated. The Regional Administrative Court initially agreed, but that ruling was later set aside on appeal, and on remittal it asked the CJEU for guidance on whether export exemption could apply in these circumstances.

Legal framework

Article 146(1)(b) requires Member States to exempt supplies of goods dispatched or transported to a destination outside the EU by or on behalf of a customer not established in the supplier’s territory. That provision must be read together with Article 14(1), which defines a “supply of goods” as the transfer of the right to dispose of tangible property as owner. 

The Court recalls that the export exemption aims to ensure goods are taxed at their place of destination and consumption outside the EU. For an exemption to apply, three objective conditions must be met: (i) the right to dispose of the goods is transferred to the purchaser; (ii) the supplier establishes that the goods have been dispatched or transported outside the EU; and (iii) as a result, the goods have physically left EU territory. 

Article 131 allows Member States to lay down conditions to ensure correct application of exemptions and prevent evasion, but such conditions must respect EU general principles, especially proportionality. The Court emphasizes its settled case law that taxation must follow the objective characteristics of transactions, and that exemptions cannot be made dependent solely on formalities where substantive conditions are satisfied, unless (a) the formal breach prevents conclusive proof, or (b) the supplier participated in fraud or knew/should have known of it.

Positions of the parties and the legal issue

Company W argued that once the authorities had established that the apples left the EU and were exported to Belarus by the purchaser, the substantive requirements for export were fulfilled. It claimed that fiscal neutrality required applying the export exemption, even if the supplier’s own documentation originally pointed to intra-Community delivery. 

The Polish tax authorities took the opposite view. They maintained that the supplies could not be treated as exports because company W had not obtained the correct export documents before filing its VAT returns and had relied on waybills suggesting delivery in Lithuania. They also argued that the purchaser’s unilateral export decision, taken independently and without the supplier’s knowledge, could not retroactively turn an intra-Community supply into an export supply. 

The referring court asked three questions, essentially whether Article 146(1)(b) applies where: (1) the supplier declared an intra-Community supply but the purchaser actually exported the goods; (2) that export happened without the supplier’s knowledge or agreement; and (3) the export was established by customs documents held by the authorities, while the supplier’s waybills were inconsistent with those findings.

The Court’s analysis

The Court examines the three questions together and frames the issue as whether Article 146(1)(b) covers a supply initially declared as intra-Community but ultimately exported to a third country by the purchaser without the supplier’s knowledge, where the export is proven via customs documents. 

First, the Court reiterates the three objective criteria for an exempt export. It notes that the first criterion is satisfied because company W transferred the right to dispose of the apples to A.E. as owner. The third criterion is also satisfied since it is undisputed that the goods physically left the EU and were transported to Belarus. 

The dispute concerns the second criterion – proof of dispatch or transport outside the EU. Company W held waybills showing transport to Lithuania, but the tax authorities established, based on customs documents, that the apples were exported to Belarus. The Court holds that this mismatch does not prevent classification as an export. The decisive point is that the goods were objectively exported, and the concept of a supply of goods is objective and applies without regard to the subjective intentions or knowledge of the supplier or other operators in the chain. Therefore, the fact that the parties originally intended and documented an intra-Community supply, and that the purchaser later exported independently, is in principle irrelevant to whether the objective export criteria are met. 

The Court adds that it is likewise irrelevant that the export was established by the tax authorities rather than by the supplier: once the authorities are certain, from customs documents, that the goods left EU territory, the second criterion must be treated as fulfilled. The supplier cannot be denied exemption merely because its own paperwork was aimed at intra-Community delivery or because it had no knowledge of the purchaser’s export decision. 

Next, the Court addresses the Member State’s power to impose formal requirements. While Article 131 allows such rules, refusing exemption solely because the supplier lacks the “correct” export documents is disproportionate when the authorities are certain that substantive conditions are met. That would make exemption depend excessively on form and would go beyond what is necessary to ensure correct collection of VAT. 

The Court reiterates that failing a formal requirement can lead to loss of exemption only in two situations. The first is where the breach prevents conclusive evidence of export. That is not the case here, because export to Belarus is established. The second is where the supplier participated in, or knew/should have known of, fraud. The referring court stated that the authorities did not allege fraud by company W and the file contains no evidence of such conduct. Hence neither exception allows refusal. 

On that basis, the Court concludes that Article 146(1)(b) requires the export exemption to be granted in these circumstances.

Conclusion

The Court concludes that Article 146(1)(b) must apply where the objective conditions for export are satisfied, even if the supplier originally treated the transaction as an intra-Community supply. In this case, company W transferred the right to dispose of the goods to the purchaser, and it was undisputed that the apples physically left the EU and were exported to Belarus. The fact that the purchaser organized that export independently, without the supplier’s knowledge, and that the supplier’s waybills indicated an EU destination, does not change the VAT classification once the export is conclusively established through customs evidence. VAT treatment follows the objective nature of the transaction, not the parties’ initial label or the supplier’s subjective awareness.

The judgment also limits how far Member States may go with formal proof requirements under Article 131. While they may set documentation rules to ensure correct application and prevent evasion, it is disproportionate to deny the export exemption solely because the supplier lacks the “right” export documents when the authorities themselves are certain that the goods left EU territory. Exemption may be refused for formal defects only if those defects prevent definitive proof of export, or if the supplier participated in fraud or knew/should have known of it. Neither exception applied here: export was proven, and no fraud by the supplier was alleged or evidenced.

In practical terms, C-602/24 confirms that substance prevails over form for export exemptions. If goods are objectively exported and this is established reliably, the zero-rating must be granted, regardless of earlier intra-Community reporting or imperfect supplier documentation, provided the supplier is not involved in fraud.

Source: Case C‑602/24 - W. sp. z o.o. v Director of the Tax Administration Chamber in W., Poland, EU VAT Directive