Theft of goods is not primarily taxable because it is the supply of goods which is the transfer of the right to dispose of the goods as owner, and such a right is not usually given by the owner to the thief. However, occasionally the offender is traced, then the theft may become a supply of goods and it is the duty of the person robbed to pay tax on the stolen goods.
According to the Court of Justice's decision in British American Tobacco, which will celebrate 20 years of existence this summer, two reasons prevent theft from being considered a supply of goods. The first is the lack of consideration. The thief takes the goods without payment. The second reason is that the thief does not have the same status as a regular buyer. He is merely in possession of the stolen goods and cannot treat them as the true owner.
However, the 621/09.10.24 Coordinating Committee, which closed on the last day of April, worked with the idea of how to deal fiscally with the situation where the robbed knows the thief and arranges with him to pay for the stolen goods. Here, it will depend on the specific contractual arrangement as to whether the thief, by virtue of such an agreement, acquires the right to decide the future fate of the goods. If he does not obtain such a right, the relationship between the robber and the thief remains at a level outside the scope of VAT, as the Coordination Committee confirms. However, the burden of proof will be on the robbed party in the case of consideration received to establish that the thief has not acquired a right over the goods, and the consideration received will remain outside the VAT regime.
If the thief pays the robbed goods in one lump sum or very quickly, the robbed person will not be bothered by the VAT, because he will be reimbursed by the thief. But the reality is more likely to be that the one who steals is the one who doesn't want to or doesn't have the money to pay. If some sort of payroll deduction or long-term repayment is arranged with the thief so that the thief gets "at least something", the thief will have to prove to the tax authorities that he did not transfer legal title to the thief by such a repayment.
The opinion of the Directorate General of Finance within the Coordination Committee mentions in several places the content of the specific contractual arrangement (agreement) and therefore it is recommended that where ownership is not transferred by consideration, this should be clearly stated in the contractual arrangement. Because if the title is not transferred to the thief, he cannot transfer it to his buyer and the goods in question will be returned to the original owner when found. In the event that the robber transfers the title to the thief for a consideration (whether in one lump sum or in instalments), the robber loses the right to recover the stolen goods.
Very often, theft is already dealt with as part of the storage contract. One party to the contract undertakes to reimburse the other party for goods that have been stolen by its employee (or other person). The basic prerequisite for classifying theft of goods as a supply of goods for consideration in these cases is that a person other than the original owner acquires by this agreement the right to decide the future legal fate of the goods. Again, therefore, it depends on whether, in the context of a contract under which the warehouseman pays the owner the value of the stolen goods, the right to dispose of the stolen goods as owner is transferred to the warehouseman. Again, it must be resolved to whom the stolen goods are to be handed over if they are later found - whether to the warehouseman, who, having paid for them, can dispose of them as owner, i.e. use them for his own consumption or resell them, or whether they are to be returned to the robber, who thereby recovers the goods while retaining or returning the compensation received from the warehouseman.
In the case where the robbed person receives compensation from the insurance company, this received payment will not be subject to value added tax for the robbed person, because by accepting such payment the robbed person does not transfer to anyone the right to dispose of the stolen goods as the owner.
It remains the case that if the consideration received is not related to the transfer of the right to dispose of the goods as the owner, this does not mean that the defrauded person must repay the VAT he claimed on the acquisition of the stolen goods. In the present case, the robber neither deducts VAT on the stolen goods nor repays the deduction originally claimed. In the case where the robber transfers the right to dispose of the goods as owner together with the consideration received, the consideration received will be inclusive of VAT and again, logically here, without the obligation to repay the deduction originally claimed.
The obligation to repay the claimed deduction would be on the robbed person if he either fails to properly report the theft or has the goods stolen on purpose. According to the 8-year-old information of the General Directorate of Finance on the settlement and adjustment of deduction, one of the indications of purposeful conduct, on the basis of which the tax authorities will judge that the robbed person is unable to properly document the theft of the property, is the fact that the robbed taxpayer does not recover damages from the person who caused or caused the theft of the commercial property. An indication of purposeful conduct is also when the robbed person reports the damage to his business property to the insurance company, whereupon the insurance company fails to pay for the damage caused. An important clue is the reasoning behind the insurer's decision to refuse to pay the claim.
Autor: Petr Vondraš
According to the Court of Justice's decision in British American Tobacco, which will celebrate 20 years of existence this summer, two reasons prevent theft from being considered a supply of goods. The first is the lack of consideration. The thief takes the goods without payment. The second reason is that the thief does not have the same status as a regular buyer. He is merely in possession of the stolen goods and cannot treat them as the true owner.
However, the 621/09.10.24 Coordinating Committee, which closed on the last day of April, worked with the idea of how to deal fiscally with the situation where the robbed knows the thief and arranges with him to pay for the stolen goods. Here, it will depend on the specific contractual arrangement as to whether the thief, by virtue of such an agreement, acquires the right to decide the future fate of the goods. If he does not obtain such a right, the relationship between the robber and the thief remains at a level outside the scope of VAT, as the Coordination Committee confirms. However, the burden of proof will be on the robbed party in the case of consideration received to establish that the thief has not acquired a right over the goods, and the consideration received will remain outside the VAT regime.
If the thief pays the robbed goods in one lump sum or very quickly, the robbed person will not be bothered by the VAT, because he will be reimbursed by the thief. But the reality is more likely to be that the one who steals is the one who doesn't want to or doesn't have the money to pay. If some sort of payroll deduction or long-term repayment is arranged with the thief so that the thief gets "at least something", the thief will have to prove to the tax authorities that he did not transfer legal title to the thief by such a repayment.
The opinion of the Directorate General of Finance within the Coordination Committee mentions in several places the content of the specific contractual arrangement (agreement) and therefore it is recommended that where ownership is not transferred by consideration, this should be clearly stated in the contractual arrangement. Because if the title is not transferred to the thief, he cannot transfer it to his buyer and the goods in question will be returned to the original owner when found. In the event that the robber transfers the title to the thief for a consideration (whether in one lump sum or in instalments), the robber loses the right to recover the stolen goods.
Very often, theft is already dealt with as part of the storage contract. One party to the contract undertakes to reimburse the other party for goods that have been stolen by its employee (or other person). The basic prerequisite for classifying theft of goods as a supply of goods for consideration in these cases is that a person other than the original owner acquires by this agreement the right to decide the future legal fate of the goods. Again, therefore, it depends on whether, in the context of a contract under which the warehouseman pays the owner the value of the stolen goods, the right to dispose of the stolen goods as owner is transferred to the warehouseman. Again, it must be resolved to whom the stolen goods are to be handed over if they are later found - whether to the warehouseman, who, having paid for them, can dispose of them as owner, i.e. use them for his own consumption or resell them, or whether they are to be returned to the robber, who thereby recovers the goods while retaining or returning the compensation received from the warehouseman.
In the case where the robbed person receives compensation from the insurance company, this received payment will not be subject to value added tax for the robbed person, because by accepting such payment the robbed person does not transfer to anyone the right to dispose of the stolen goods as the owner.
It remains the case that if the consideration received is not related to the transfer of the right to dispose of the goods as the owner, this does not mean that the defrauded person must repay the VAT he claimed on the acquisition of the stolen goods. In the present case, the robber neither deducts VAT on the stolen goods nor repays the deduction originally claimed. In the case where the robber transfers the right to dispose of the goods as owner together with the consideration received, the consideration received will be inclusive of VAT and again, logically here, without the obligation to repay the deduction originally claimed.
The obligation to repay the claimed deduction would be on the robbed person if he either fails to properly report the theft or has the goods stolen on purpose. According to the 8-year-old information of the General Directorate of Finance on the settlement and adjustment of deduction, one of the indications of purposeful conduct, on the basis of which the tax authorities will judge that the robbed person is unable to properly document the theft of the property, is the fact that the robbed taxpayer does not recover damages from the person who caused or caused the theft of the commercial property. An indication of purposeful conduct is also when the robbed person reports the damage to his business property to the insurance company, whereupon the insurance company fails to pay for the damage caused. An important clue is the reasoning behind the insurer's decision to refuse to pay the claim.
Autor: Petr Vondraš