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Quoted prices in contracts include VAT

  • VAT
  • 29 November 2013 | Richard Asquith

Quoted prices in contracts include VAT

In a recent case before the European Court of Justice, it was concluded that prices quoted in contracts include the VAT amount, unless otherwise stated.  This is an important decision as it may make suppliers liable for tax amounts that it cannot recover.

Who is responsible for VAT in contract

The case concerned two Romanian companies dealing in commercial property.  The supplier had assumed that it was VAT exempt as the supply related to real estate.  The Romanian tax office subsequently deemed that it was a taxable supply for VAT, and that the supplier should have charged Romanian VAT.

The supplier attempted to content that it was assumed that VAT was part of the prices, and not a supplement to it.  Also that the supplier could not subsequently attempt to recover the VAT as it was not part of the contract, and that the liability should be on the consumer since the tax is a consumption tax.

The Romanian authorities referred the cast to the European Court of Justice (ECJ), the highest court of appeal on European Union legal affairs and legislation.

The ECJ ruled that where the contract did not specify, the price quoted in a contract is the taxable base plus VAT.  The only exception is where national law permits recover of the VAT where not indicated.


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.