Judgment of the Court (Third Chamber) of 20 June 2019.
Grup Servicii Petroliere SA v Agenţia Naţională de Administrare Fiscală – Direcţia Generală de Soluţionare a Contestaţiilor and Agenţia Naţională de Administrare Fiscală - Direcţia Generală de Administrare a Marilor Contribuabili.
Request for a preliminary ruling from the Curtea de Apel Bucureşti.
Reference for a preliminary ruling — Common system of value added tax (VAT) — Directive 2006/112/EC — Article 148(a) and (c) — Exemptions related to international transport — Supply of offshore jackup drilling rigs — Concept of ‘vessels used for navigation on the high seas’ — Scope.
Case C-291/18. (2019)
Language: English

In May 2008 Grup Servicii Petroliere sold three offshore jackup drilling rigs, operated in the Black Sea, to Maltese companies for a total amount of 96 million US dollars (USD) (around EUR 82 million). That company issued invoices for the supply of those rigs, applying the VAT exemption rules provided for in Article 148(c) of the VAT Directive and in Article 143(1)(h) of the Tax Code. The company continued to operate those rigs in the Black Sea during 2008 as a charterer.
In 2016 the Romanian tax authorities issued an adjustment notice for the unpaid VAT in connection with that supply, charging Grup Servicii Petroliere a sum of over 113 million Romanian lei (RON) (approximately EUR 25 million), including default interest and penalties for late payment. The grounds of that notice state, inter alia, the following:
–although the rigs in question are vessels within the meaning of Government Ordinance No 42/1997 and may be put to unlimited use for navigation at sea, they do not navigate during the drilling activity but are rather in a parked position; their columns are in a low position, rest on the seabed and lift the pontoon (the floating part) above the sea, to a height of 60 to 70 metres;
–in the light of the provisions of Decision No 3/2015 of the Central Tax Commission, for the supply of the rigs to fall within the exemption provided for in Article 143(1)(h) of the Tax Code, it is necessary to establish by all forms of evidence that the vessel in question navigates effectively and predominantly on the high seas;
–however, the evidence available showed that the actual and preponderant use of the rigs occurs when they are in a parked position for the purpose of drilling activity and not for navigation, which is only subsidiary to the drilling activity.

Legal relationship diagram (Graphviz):
digraph {
    node [shape=box];
    
    "Grup Servicii Petroliere" [shape=doubleoctagon];
    "Maltese companies" [shape=doubleoctagon];
    "Romanian tax authorities" [shape=doubleoctagon];
    "An adjustment notice for the unpaid VAT" [shape=trapezium];
    "Applying the VAT exemption rules provided for in Article 148(c) of the VAT Directive and in Article 143(1)(h) of the Tax Code" [shape=trapezium];
    
    "Grup Servicii Petroliere"->"Maltese companies" [label="Sold three offshore jackup drilling rigs for 96 million USD 2008/5"];
    "Grup Servicii Petroliere"->"Issued invoices for the supply of those rigs";
    "Issued invoices for the supply of those rigs"->"Maltese companies";
    "Issued invoices for the supply of those rigs"->"Applying the VAT exemption rules provided for in Article 148(c) of the VAT Directive and in Article 143(1)(h) of the Tax Code"[dir=none];

    "Romanian tax authorities"->"An adjustment notice for the unpaid VAT"[label="Issue in 2016"];
    "An adjustment notice for the unpaid VAT"->"Grup Servicii Petroliere"[label="Charging a sum of over 113 million Romanian lei (RON)"];
    
}