Oasis East sp. Z o.o. (“Oasis”) Vs the Minister of Finance of Poland:
Oasis Company produces and sells water cooling systems. As part of its’ activities, which include customer service after the sale, it uses the services provided by a company resident in one of the territories that are considered in Poland as a “fiscal haven”.
The VAT legislation in Poland, before Poland’s accession to the EU, contained a provision which forbidenned the right to deduct input tax on purchase of services provided, when payment for such services is made to a company situated in a country considerated as fiscal haven. The accuracy of the above provisions was challenged by Oasis, and the Court of Poland has decided under the circumstances, to submit to the European Court of Justice (‘ECJ’) the question, whether Community law allows Member States to apply national legislation which contains provisions as above, and which was in force before the latter becomes an EU Member State.
The Court held that they may not maintain the national legislation that was in force at the time that the Sixth Directive 77/388 was applied in the Member State; and which excludes the general deductibility of VAT paid on services for which, the payment has been provided to a person established in a State or a territory characterized by this legislation as a tax haven.
MacDonald Resorts Ltd (“MRL”) Vs The Commissioners for Her Majesty’s Revenue & Customs:
In this case of the ECJ, there was a disagreement between the MRL and the VAT authorities in Britain regarding the proper classification for tax purposes of certain services provided by MRL regarding the sale of timeshare use and the appropriate analysis of the time of delivery and the payable VAT for these benefits.
MRL is a company registered in the VAT records of England and Spain. MRL’S activity, which is practiced in the United Kingdom and Spain, consists in trading timeshare use («timesharing») accommodation situated in holiday complexes in these two Member States.
From October 3rd, 2003, MRL sells a new product consisting of a program of “voluntary choice”. To implement the program of voluntary choices, MRL recommended a club whose main purpose is “to provide for its members the right to reserve vacation accommodation and other incidental benefits for certain periods each year, for a total period of 30 years.”
The English court held that the sale of rights must be considered as a taxable supply of benefits to members of the club and that the place is England. MRL contends that the services provided to its’ customers under this project, concerns renting real estate property or services relating to real estate property.
The European Court ruled that the services made by an entrepreneur under the “volontary choice” must be declared at the time that the customer who participates in such a system redeems the initially acquired rights in respect of services offered by this operator. When these rights are redeemed against a stay in a hotel or to the right of temporary lodging use, these benefits are services related to real estate property, and are provided where this hotel or this accommodation is situated.
In the program of “voluntary choice” when the customer redeems the initially acquired rights against the right of temporary lodging use, the relevant provision suggests a leasing of the property.