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Poland challenges fuel card companies’ VAT model

  • VAT
  • 28 July 2014 | Richard Asquith

Poland challenges fuel card companies’ VAT model

A recent Polish VAT ruling on the treatment of input VAT deductions on fuel cards threatens to undermine the industry’s long-term EU-wide business model.

VAT on fuel card supplies

Many hauliers/truckers and other commercial vehicle operators make use of fuel cards to help manage and lower the cost of high frequency petrol or diesel refills. The current model puts the fuel card company in-between the filling station and the trucker, with the fuel card company taking momentary ownership of the fuel prior to resale to the haulier. This arrangement enables fuel card companies to achieve better purchasing power for the thousands of transport companies they serve.

In VAT terms, it is treated as a chain supply, with the petrol station charging output VAT to the card company, who in turn deducts this input VAT against their own output VAT when they resale the fuel to the truckers.

Polish Supreme Court rules fuel card company only a financial services provider

In a case this month (FSK 1177/11), the Polish Supreme Court reviewed the deductibility for a transporter of the output VAT charged by the card company on fuel sales. It ruled that the fuel card company was only providing a financial service for the haulier and not a fuel supply, and therefore should not have been charging VAT on the fuel and was not part of the chain supply.

The initial implication for this decision is that fuel card companies will have to rethink their Polish billing model and may struggle to trade under their current terms. But the ruling may also be picked up by other member states too, threatening a black hole for millions of VAT charged to the card companies' customers.

This makes it likely that the fuel companies will want to appeal the decision immediately.  This could include an eventual appeal to the European Court of Justice, the highest court of appeal for EU legal and VAT issues.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.