1. Facts of the question referred for a preliminary ruling
The plaintiff is an operator of car parks which are open to the public. The terms of use for the use of the parking spaces are laid down in general terms and conditions and regulate, inter alia, the permissible parking period and the fee to be paid. If the conditions of use are violated (e.g. lack of visibility of the parking ticket, exceeding the time limit, etc.), the plaintiff levies a so-called "control fee" of (the equivalent of) €70, if necessary in addition to the regular parking fee. All users are informed about this "sanctioning" by a separate sign which explains the exact catalogue of the use in breach of contract and the amount of the control fee.
2. Opinion and decision of the ECJ
According to the ECJ, the control fees are part of the consideration paid for the provision of a parking space. If parking is illegal, the parker has agreed to the parking conditions and to the payment of the control fee. Consequently, according to the ECJ, there is a direct connection between the use of the parking space and the control fee as remuneration. The increase in operating costs due to illegal parking also justified the amount of the control fee. Moreover, it was harmless that the control fee was fixed in advance and not determined for the specific individual case.
Furthermore, it was harmless that the control fee constituted a fine under national law. In this respect, the ECJ emphasises that it is a matter of considering the matter from a Union law perspective.
3. Current view of the tax authorities and significance of the decision for practice
So far, the German tax authorities have treated contractual penalties as non-vatable damages. Of course, it is also true under German VAT law that the mere designation as a contractual penalty is not sufficient. As a rule, it must be considered that the contractual penalty in question is aimed at sanctioning behaviour and, in addition, is intended to provide lump-sum compensation for damages. In this respect, the view of the German tax authorities is in line with the case law of the German Highest Federal Fiscal Court.
However, this traditional treatment could change in the future as a result of the ECJ ruling. The specific ruling here only concerned the case of a contractual penalty for parking in the wrong place. However, the ruling could also be applicable to other cases of contractual penalties. The view of the tax authorities based on German Highest Federal Fiscal Court case law, according to which increased transport fees for fare evasion are not subject to VAT, is difficult to reconcile with this ruling of the ECJ. In particular, this ruling has also put the long-discussed question of compensation for reduced value in leasing contracts back on the table. Companies should react to this decision and, if necessary, adapt their contracts and GTCs with regard to possible VATability. It could be particularly problematic if the contractual penalty agreement does not contain any reference to possible VAT liability. In this case, a review should definitely be carried out. It remains to be seen how the ruling will affect practice in the future and how the German tax authorities will react.