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In a decision dated 16 October 1997 (Fillibeck KG - IStR 1997, 658) the European Court of Justice has held that transportation between home and place of work provided by an employer to his employees does not constitute a service rendered by the employer for consideration where the transportation is provided on an optional basis and the same wages are paid whether an employee takes advantage of the free transportation or not.

Under this condition, the transportation would not be taxable under sec. 1 (1) no. 1 UStG.

The ECJ further held that transportation between home and place of work provided by an employer to his employees is as a rule provided in satisfaction of the personal needs of the employees, hence is provided for purposes outside of the scope of the employer's enterprise. However, the court went on to state that the transportation of employees is motivated by a business purpose where exceptional circumstances compel (gebieten) the employer to provide transportation. The court appeared to say that this was the case when "other suitable means of transportation" were not reasonably available. A lack of accessibility of public transportation may be a case in point. The fact that employees change work sites frequently can also compel the employer to provide transportation.

The specific case involved a construction company. The court implied that the circumstances of the construction business would frequently compel construction companies to provide transportation for their employees.

If the transportation service is provided for the private needs of the employees, it is taxable under sec. 1 (1) no. 2 (b) UStG. If the service is compelled by special business circumstances within the meaning of the ECJ's judgement, then it would escape VAT taxation.
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