The European Court of Justice (ECJ) has ruled in the case of European Commission v Sweden in respect of the VAT exemption for postal services.
The European Commission referred Sweden to the ECJ on 10 March 2014 under Article 258 of the Treaty on the Functioning of the European Union (TFEU). Under Article 258 the Commission gives the member state a chance to submit its observations and then if necessary the Commission delivers a reasoned opinion on the matter. If the member state does not comply with the reasoned opinion the European Commission may bring the matter before the ECJ.
The Commission considered that the services supplied by Posten AB, a company instructed by Sweden to carry out a universal postal service in the country’s territory, were a public postal service as referred to in Art. 132 of the EU VAT Directive. The European Commission considered that Sweden had not exempted the postal services by Posten AB and the supply of postage stamps valid for use for the postal services in Sweden.
EU VAT Directive
Art.132 of the EU VAT Directive of 2006 is in Chapter 2 of the Directive dealing with the exemptions for certain services in the public interest. The Article provides for member states to exempt the supply by the public postal services of services other than passenger transport and telecommunications services, and the supply of goods incidental to those services.
Art. 135 (1) (h) of the VAT Directive provides an exemption for the supply at face value of postage stamps valid for use for postal services within their respective territory.
ECJ decision
On 21 April 2015 the ECJ ruled that by failing to exempt from VAT the supply by the public postal services of services other than passenger transportation or telecommunications services and the supply of goods incidental to that supply; and for the supply at face value of postage stamps valid for use for postal services within the national territory, Sweden has not fulfilled its obligations under the VAT Directive. The Court also ordered Sweden to pay the costs.
