CJEU Confirms VAT Exemption for Small Non-Commercial Consignments - C-405/24

On 8 May 2025, the Court of Justice of the European Union (CJEU) delivered its judgment in Case C-405/24, L. s.c. v Dyrektor Krajowej Informacji Skarbowej, a decision that clarifies how the VAT exemption for small consignments of a non-commercial nature from third countries should operate within the EU. At the heart of the case was a question of territorial scope: does the exemption apply only when the consignee resides in the same Member State where the goods are imported, or can it also apply when the consignee lives in another Member State?

The Court’s ruling provides significant guidance on the application of Article 143(1)(b) of the VAT Directive (2006/112/EC) and Article 1 of Directive 2006/79/EC, with potentially wide-reaching implications for customs authorities, traders, and consumers across the European Union.

Factual background

The dispute arose in Poland, where L. s.c., a company offering freight forwarding and customs clearance services, sought a binding tax ruling. The question posed was whether imports into Poland of small consignments of a non-commercial nature – sent by a private person in a third country to another private person – could benefit from the VAT exemption when the consignee resides in a Member State other than Poland.

Under Article 52 of the Polish VAT Law, an exemption is available for such imports, but the Polish provision requires that the consignee reside within Poland. The tax authority rejected L.’s position, issuing a ruling on 22 February 2019 confirming that the exemption would not apply where the consignee lived in another Member State.

L. challenged this decision before the Regional Administrative Court in Warsaw, which upheld the tax authority’s interpretation, reasoning that both EU and Polish law require the consignee to reside in the same Member State as the point of importation.

Undeterred, L. appealed to the Polish Supreme Administrative Court (Naczelny Sąd Administracyjny), which noted that in light of prior CJEU case law – specifically Har Vaessen Douane Service (C-7/08) – there was an argument to be made that the Member State of residence of the consignee should not be decisive for the exemption. However, Polish case law had consistently interpreted the exemption more narrowly.

Faced with this conflict between domestic interpretation and a potentially broader EU interpretation, the Supreme Administrative Court referred the matter to the CJEU for a preliminary ruling.

Legal framework

1. EU Primary VAT Law

At the heart of the dispute lies Article 143(1)(b) of the VAT Directive (2006/112/EC), which requires Member States to exempt “the final importation of goods governed by [Directive 2006/79/EC]” from VAT. Directive 2006/79/EC specifically concerns imports of small consignments of a non-commercial character sent from third countries by private persons to private persons in a Member State.

The relevant provision, Article 1(1) of Directive 2006/79, defines this exemption without specifying that the consignee must reside in the Member State of importation. It sets clear criteria for what constitutes a small non-commercial consignment:

· Occasional in nature;

· Intended for personal or family use, not indicating commercial intent;

· Total value not exceeding EUR 45;

· Sent without payment by the recipient.

2. Relationship to Customs Duty Relief

Recital 3 of Directive 2006/79 explicitly aligns the VAT exemption limits with those applicable under customs duty relief rules in Council Regulation (EEC) No 918/83 (now replaced by Council Regulation (EC) No 1186/2009). Under Article 25 of Regulation 1186/2009, consignments sent to private persons “in the customs territory of the EU” are exempt from customs duties, again without reference to the consignee’s Member State of residence.

3. Polish VAT Law

The Polish Law on VAT (Article 52(1)) transposes the exemption but imposes an additional condition: the consignee must reside in Poland. This was the crux of the dispute – the national law introduced a territorial limitation absent from the EU directives.

Parties’ positions and the legal question

L. s.c. argued that EU law provides for an exemption without reference to the consignee’s Member State of residence, and thus Polish law is overly restrictive and incompatible with the directives. From their perspective, the physical entry of the goods into the EU customs territory – whether in Poland or another Member State – should not affect the right to exemption as long as the consignment meets the substantive conditions.

The Polish tax authority maintained that both EU and national provisions imply a territorial link: the exemption applies only if the consignee resides in the Member State of importation. According to this view, the wording “in a Member State” in Directive 2006/79 should be read in conjunction with the point of importation, creating a nexus between residence and entry.

The referring court’s legal question to the CJEU was therefore whether Article 143(1)(b) of Directive 2006/112 and Article 1 of Directive 2006/79 preclude a national provision that denies the VAT exemption where the consignee resides in a different Member State from the one of importation.

The Court’s analysis

The CJEU approached the issue through its well-established method: examining the wording of the relevant provisions, their legislative context, and their underlying objectives.

Wording of the provisions

The Court noted that Article 1(1) of Directive 2006/79 refers to consignments sent to private persons “in a Member State” without specifying which Member State. In most language versions, the term is accompanied by an indefinite article, signalling the absence of a specific territorial link. By contrast, other provisions of the VAT Directive – for example, Articles 32, 86, and 163 – explicitly refer to the “Member State of importation,” proving that the legislature uses such wording deliberately when it intends to impose such a limitation.

From this textual perspective, the exemption’s scope does not appear restricted to the Member State of importation.

Legislative context

The CJEU looked back to the origins of the rule in Directive 78/1035/EEC and its preparatory works. The intention was to grant relief for low-value, non-commercial consignments between private persons, without differentiating between destinations inside the EU. The reference to “a Member State” was not meant to tie the exemption to the consignee’s residence.

Recital 3 of Directive 2006/79 reinforces this understanding by aligning VAT exemptions with customs duty relief rules, which do not impose any such residency condition. Article 25 of Regulation 1186/2009 exempts consignments to private persons anywhere in the EU’s customs territory, regardless of where they enter the Union.

Objective of the exemption

The purpose of the exemption is to simplify and harmonise the treatment of small, non-commercial consignments, which are often of personal or sentimental value and generally low in monetary worth. They may already have been taxed in the country of origin, and subjecting them to VAT formalities in the EU would create disproportionate burdens.

From this teleological perspective, imposing a condition based on the consignee’s residence undermines the simplification goal and risks fragmenting the internal market.

The Court concluded that EU law precludes national legislation that restricts the VAT exemption to consignments where the consignee resides in the Member State of importation. The Polish requirement that the consignee be a resident of Poland is therefore incompatible with EU law.

This interpretation means that the exemption applies to any qualifying small non-commercial consignment sent from a third country to a private person in the EU, irrespective of where within the Union the recipient lives.

Implications in practice

For freight forwarders, customs agents, and postal operators, this decision removes an administrative layer: they no longer need to verify the consignee’s Member State of residence for exemption purposes. This simplifies processing, especially for shipments that may pass through one Member State en route to another.

For businesses, the ruling ensures uniform application of the exemption and reduces the risk of inconsistent treatment across the EU. It also opens the door to increased cross-border gifting and low-value shipments from third countries, as senders can be confident that the exemption applies regardless of the recipient’s location within the Union.

Member States with similar restrictive provisions will need to amend their laws to comply with the ruling. Failure to do so could expose them to infringement proceedings or challenges before national courts. At the same time, customs authorities must remain alert to possible abuses, such as attempts to disguise commercial shipments as private gifts to exploit the exemption.

Conclusion

The judgment in C-405/24 reinforces the principle that the VAT exemption for small, non-commercial consignments from third countries is destination-neutral within the EU. The Court’s interpretation not only aligns with the text and context of the relevant directives but also supports the overarching objective of facilitating cross-border exchanges of low-value, non-commercial goods without imposing unnecessary tax burdens.

In practical terms, this ruling harmonises the application of the exemption across the Union, strengthens legal certainty for businesses and individuals, and affirms that administrative simplicity is a core value of the EU’s VAT and customs regimes.