Can be a penalty for parking in breach of the regulations subject to VAT?

Background of the case

Danish company Apcoa Parking Danmark A/S (hereinafter „Apcoa“) operated car parks where besides parking fee also so called control fees for various breaches of parking conditions were charged, such as e.g. for payment of insufficient fee, missing or incorrectly placed parking ticket, parking outside designated or on reserved spaces without permission, parking in restricted area.

According to Apcoa, control fees were not subject to VAT; however, Danish Tax Authorities took a different view.

Judgement

According to the CJEU:

- control fees may have a direct link with the parking service and, as a result, they may be regarded as forming an integral part of the total amount – the total amount of the sums which the motorists have undertaken to pay for parking, including, where appropriate, the control fees, represents the terms and conditions under which they actually benefited from a parking space, even if they chose to make excessive use of it, contrary to the general terms and conditions for use of the car parks concerned,

- the amount of control fees corresponds to the remuneration for part of the costs associated with the supply of the parking service – that amount necessarily takes into account the higher cost of operating car parks which is caused by parking that does not satisfy the normal terms and conditions for use and also seeks to ensure that Apcoa receives contractual remuneration for the service carried out in circumstances attributable to the user, which are not such as to change the economic and commercial realities of their relationship,

- payment of parking fees and, where appropriate, of the amount corresponding to the control fees for parking in breach of the regulations constitutes consideration for the provision of a parking space, whereas the following arguments do not have any effect on this conclusion:

• the provision of a parking space does not depend on the payment of those control fees by the motorist,
• the amount of control fees charged for parking in breach of the regulations is predetermined and has no real economic link with the value of the parking service supplied,
• under national law, the amount of control fees charged for parking in breach of the regulations is classified as a penalty.

The control fees charged in the event of failure to comply with the general terms and conditions for use of the car parks can be regarded as consideration for a supply of services; and thus, may be subject to VAT.

More information can be found on the following link: https://curia.europa.eu/juris/document/document.jsf?text=&docid=252446&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=24427