In GM v Finanzamt Saarbrücken (Case C-288/19) (20 January 2021) the CJEU held that the provision of a car for an employee’s use free of charge does not amount to a supply of long-term car hire.
The claimant was a Luxembourg company which was registered for VAT in both Luxembourg and Germany. Two of its employees were resident in Germany. It provided each employee with a car which could be used for both business and private purposes. One employee was provided with a car free of charge (the ‘free car’); the other was required to make a contribution by means of a salary deduction in respect of the car (the ‘salary sacrifice car’). Under the relevant legislation in Luxembourg the claimant was unable to recover input tax on the cost of the cars.
The German authorities took the view that in each case the...
