TA 21657-11-19 Hagshama Cosmi Project Management Ltd. v. Director of Value Added Tax – Tel Aviv Center
TA 21657-11-19 Hagshama Cosmi Project Management Ltd. v. Director of Value Added Tax – Tel Aviv Center (Nevo 10.07.2022):
The court accepted the appellant's appeal against the VAT Director's decision to charge the appellant full-rate VAT on hostess services provided to foreign cosmetics companies at Duty Free shops in Israel.
The appellant provides sales promotion and hostess services to cosmetics companies that are foreign residents, for the sale of their products at Duty Free – James Richardson. The appellant reported these services as subject to zero-rate VAT pursuant to Section 30(a)(5) of the VAT Law. According to the appellant, the latter part (sifa) of Section 30(a)(5) of the VAT Law applies to these services, granting zero-rate VAT on services provided to a foreign resident, even where an Israeli resident also receives a service in Israel in addition to the foreign resident, provided that the consideration for the service constitutes part of the value of the imported goods under the Customs Ordinance. The court held that the application of the aforementioned sifa does not require actual payment of tax upon the import or sale of the goods, and that according to the language of the section, it is sufficient that the services are included in the value of the imported goods.
