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Germany: Services related to ATM operations not exempt from VAT

Germany: Services related to ATM operations not exempt

The Court of Justice of the European Union (CJEU) held that a value added tax (VAT) exemption for transactions involving payments and transfers related to the operation of automated teller machines (ATMs) do not qualify for the VAT exemption available for certain transactions concerning payments and transfers.


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The case is: Cardpoint GmbH case (C-42/18, 3 October 2019)


The taxable person provides serviced related to the operation of ATMs owned by its client, a bank.

  • The taxpayer was responsible for the operation of the ATMs and for their maintenance.
  • The taxpayer equipped the ATMs with computer hardware and software required for their proper operation.
  • The taxpayer was also responsible for the transportation of the bank notes made available by the bank and for replenishing the ATMs.
  • The taxpayer advised on the day-to-day operation of the ATMs. The bank had effectively outsourced the daily operational activities to the taxpayer. 
  • Account holders from various banks could withdraw cash from the ATMs.

A German court initiated the reference for a preliminary judgment of the CJEU, specifically asking whether the services that the taxpayer provided for the operation of the ATMs qualify as “transactions concerning payments” that would be exempt from VAT under the VAT exemption for transactions concerning payments and transfers. However, according to a previous judgment, the CJEU has concluded that technical and administrative services provided by a service provider in connection with card payments for the sale of cinema tickets were not in scope of the VAT exemption). 

CJEU judgment

The CJEU referred to its previous case law in which it concluded that services are regarded as “transactions concerning payments” if these services form a distinct whole, fulfilling in effect the specific and essential functions of a payment. The CJEU reiterated that a payment is characterized by the fact that such a transaction entails the transfer of money and a change in the legal and financial relationship between parties. In that respect, the CJEU noted that more than a mere physical or technical service must be provided.

Although the CJEU considered that the withdrawal of cash from an ATM must be regarded as a VAT-exempt “payment” and the services of the taxpayer were indispensable for the execution of these transfers, the CJEU concluded that these services could not be regarded as VAT-exempt “transactions concerning payments.” According to the CJEU, the services provided did not result in a cash transfer nor did they change the legal and financial relationship between parties—because the taxpayer does not debit and credit the relevant bank accounts (in fact, the taxpayer did not itself approve any transactions). After all, it has no authorization to do so, but transmitted, via a chain of intermediaries, data to the bank that issued the bank card used for the cash withdrawal. The taxpayer subsequently followed the instructions from that bank by providing the cash. 

The CJEU also addressed the fact that supplying cash to the user of an ATM is not a transfer of ownership, but a transfer by the bank that issued the bank card and approved the cash withdrawal. It was the bank that operates the ATM that entered the data files in the banking system. According to the CJEU, this meant that it was the bank that made changes to the financial and legal relationship between parties. The taxpayer only sent the daily non-editable list with transactions for the purposes of notifying the central bank about the approved transactions performed. According to the CJEU, the registration of the withdrawal transactions did not display the essential functions which are characteristic of a payment. 

Read an October 2019 report prepared by the KPMG member firm in the Netherlands

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