Almost six years after the ECJ ruling in the Vega International case (C-235/18) which left the fuel card industry in a state of great uncertainty, the German Federal Ministry of Finance (BMF) has now issued its highly anticipated letter on the “VAT treatment of fuel supplies under a fuel card system”.

 

Meanwhile, the BMF had issued a first draft letter in autumn 2021 (which was never published) that was intended to replace the Ministry's letter dated 15 June 2004, which was issued in response to the ECJ ruling in the Auto Lease Holland case (C-185/01). However, this first draft left the fuel card industry at a loss as to how to implement the strict conditions it set out, in particular regarding the transfer of power of disposal, in order to continue to be able to structure fuel card transactions as chain transactions. 

 

At the same time, however, the EU Commission's VAT Committee was already concerning itself with fuel card transactions (KMLZ VAT Newsletter 42 | 2023). On 6 September 2023, the VAT Committee issued guidelines, with a high level of approval from the EU Member States, on the VAT treatment of fuel cards, according to which chain transactions primarily involved fuel card models that were designed as a commissionaire scheme within the meaning of Art. 14 (2) (c) of the EU VAT Directive. 

 

The subsequent second draft letter on fuel card transactions dated 19 August 2024 had nothing in common with the first draft. It was published on the BMF’s website on 21 January 2025, without any changes having been made. In essence, the new BMF’s letter on fuel card transactions only confirms that the criteria set out in its letter dated 15 June 2004 for the differentiation of chain transactions and financial services in the vehicle leasing sector are also applicable to the VAT treatment of transactions in the fuel card business. 

 

The new BMF’s letter now confirms that the practice followed in the industry in Germany is, from the point of view of the tax administration, still legal. The list of criteria from the former BMF’s letter of 15 June 2004, which was issued on car leasing-related matters, is now explicitly applicable to all fuel supply arrangements using a fuel card system. This means that, at least in Germany, there is now a significant degree of legal certainty regarding fuel supplies using a fuel card system. The criteria set out in the 2004 letter must be taken into account in the contractual agreements and in the actual execution if fuel deliveries are to be carried out as chain transactions. The card issuer's input VAT deduction, as an intermediary, can thus be claimed with legal certainty in Germany. 

 

In contrast to the positions taken by the VAT Committee in its guidelines, the BMF does not include a reference to the commissionaire scheme, within the meaning of Art. 14 (2) (c) EU VAT Directive, as a prerequisite for a chain transaction. It does not contain any statement on constellations in which more than three parties are involved in a specific fuel card transaction. However, with the general reference to “fuel card transactions”, it should be easy to argue that business models with more than three parties involved are also covered. The similarly structured business model of charging electric vehicles is not addressed in this BMF’s letter.

 

However, the fact is that a fuel card user's authorization does not usually end at the German border. Naturally, the effect of the BMF’s letter is limited to fuel supplies using fuel cards within Germany. It therefore does not eliminate the need for fuel card issuers to consider the position of the tax authorities in all countries in which their customers are permitted to refuel with their fuel cards. Some countries have already made their own pronouncements on this, while others have yet to do so. Many Member States refer to the guidelines of the VAT Committee of 6 September 2023. These consider the safest business model, for arriving at a chain transaction in the case of fuel card transactions, is to set up a commissionaire scheme within the meaning of Art. 14 (2) (c) EU VAT Directive. 

 

At 17 October 2024, the ECJ ruled in case C-60/23, Digital Charging Solutions GmbH (KMLZ VAT Newsletter 41 | 2024). This judgement also deals with the cases Auto Lease Holland and Vega International, albeit in a case concerning the charging of electric vehicles. In this case, the ECJ also concludes that the commissionaire scheme, within the meaning of Art. 14 para. 2 letter. c)  EU VAT Directive, best reflects the typical charging processes with a charging card or similar means of authentication – with the legal consequence of the fiction of a chain transaction.

 

The BMF’s letter of 21 January 2025, is to be appreciated as it at least creates legal certainty for the industry within Germany. It is recommended that contracts and general terms and conditions now be reviewed again on the basis of the 2004 criteria and that any necessary adjustments be made. Those who, as a precaution, have already made changes in line with the guidelines of the VAT Committee in the period since 2023, moving towards a commissionaire scheme, should already enjoy more extensive legal certainty within the EU. However, it should also be ensured for Germany that the contracts nevertheless take into account the details of the criteria set out in the new BMF’s letter.