Anyone who books a hire car via an internet portal often enters into the actual hire agreement directly with the car hire company. However, from a VAT perspective, a crucial question arises: does the portal itself provide a car hire service, or does it merely act as an intermediary between the customer and the hire company? The Federal Fiscal Court has ruled on this question in a recent judgement in favour of the portal operator.
What was the dispute about?
The operator of an online car hire booking portal booked vehicles from various car hire companies for 2009 and issued a voucher to its customers once payment had been made. Customers could use this voucher to collect the reserved vehicle directly from the relevant car hire company. The rental agreement was concluded on site between the customer and the car hire company, on the car hire company’s terms and conditions.
The tax office took a different view. It assumed that the portal had purchased the vehicles itself and sublet them to end customers as part of a rental chain. It would follow from this that the portal itself was liable for VAT on the entire rental service. The Cologne Tax Court initially supported this view.
The Federal Fiscal Court rules in favour of the portal operator
The Federal Fiscal Court set aside the judgement of the Cologne Fiscal Court. The court clarified that a so-called ‘disguised transaction on one’s own account’ – that is, a situation in which someone appears to act as an intermediary but, in economic terms, acts as a contracting party themselves – does not exist in any event if the intermediary did not hire the vehicle themselves. As the portal had not hired the vehicles itself, the essential prerequisite for a transaction on one’s own account was not met.
The Federal Fiscal Court (BFH) classified the reservation made via the website and the issuing of the voucher as a classic intermediary service. The portal was therefore acting on behalf of and for the account of the car hire companies, not on its own account.
What does this mean in terms of VAT?
The classification as a brokerage service had significant implications for tax liability in the disputed year of 2009. In the case of a brokerage service provided to a business, the tax liability may pass to the recipient of the service, i.e. the car hire company. The portal would then not have had to pay VAT on the full rental service, but only, if at all, on its own agency commission.
In this context, the Federal Fiscal Court (BFH) expressly left open the question of whether it intends to uphold its previous case law on the trade in second-hand cars. According to this case law, a disguised transaction on one’s own account may exist if the substance, value and proceeds of the item are transferred to the intermediary before it is passed on to the end customer. This question remains unresolved for the time being.
Practical implications for business owners
The ruling is particularly relevant for operators of online platforms and intermediary portals, for example in the travel, car hire or property sectors. The precise wording of the contract and the actual commercial arrangements determine whether a platform is classified as an intermediary or as an independent service provider. This classification has a direct impact on VAT liability.
Anyone operating or planning to operate such a business model should have the contractual arrangements carefully reviewed. Where in doubt, it is advisable to seek tax advice in order to avoid unexpected tax demands.
Federal Fiscal Court (BFH), judgement of 21 May 2026, Case No. V R 17/24, published on 24 September 2026
Source: Haufe: Tax
This post and the accompanying image were created with the help of AI and have been editorially reviewed.
