In the case under consideration, the German plaintiff ran supermarkets near the Polish border. From 1993 to 1998, a time before Poland became an EU member, several Polish citizens simulated purchases and exports by collecting sales receipts left in the plaintiff’s shopping carts and waste paper baskets near the supermarkets. By using falsified forms and toll stamps, they tampered with export verifications, provided the documents with the names and address of Polish citizens and applied for and were granted VAT refunds by the plaintiff.

After recognising the suspicious fact that one toll stamp number occurred frequently, the plaintiff asked the main customs office (Hauptzollamt) to look into the possibility that the verifications were falsified. After the main customs office informed the plaintiff about the falsification, the tax authorities amended the plaintiff?s VAT assessment. The plaintiff applied for abatement of the VAT but the tax authorities rejected the application.

In a challenge brought by the plaintiff, the tax court upheld the decision of the tax authorities. The plaintiff then appealed to the Federal Fiscal Court which, on 30 July 2008, held that a tax exemption for equity reasons may be granted in regard to exports, even if the presumptions for such an exemption are not met, to the extent that the taxpayer would not have been aware of the lack of presumptions even if he had exercised the due care and diligence of a prudent businessman.

While German VAT law granted such protection of trust for exports within the EU (Section 6a (4) UStG), no such regulation existed for exports to countries outside of the EU. The Federal Fiscal Court therefore had to decide whether the tax exemption could be granted for reasons of fairness. The Court suspended its proceeding in order to bring before the European Court of Justice (ECJ) the following question in regard to the interpretation of community law:

?Do the provisions of Community law on the exemption from tax for exports to a third country preclude the granting of exemption from tax by a Member State on the grounds of fairness where the conditions for exemption are not satisfied but the taxable person was unable, even by exercising due commercial care, to recognise that they were not met??

On 21 February 2008, the ECJ decided that granting such an exemption does not conflict with community law. Given this position, the Federal Court of Justice then had to decide whether a tax exemption for equity reasons could be granted in the case under consideration.

In several earlier decisions, the Federal Fiscal Court had decided that the protection of trust provision of Section 6a (4) UStG was not applicable by means of analogy if the export was made to a non-EU member state. In the current decision, the Court still did not apply the protection of confidence rule by means of analogy but noted that, since the plaintiff?s factual situation was equivalent to the situation regulated in Section 6a (4) UStG, a tax exemption may be granted for reasons of fairness if the same presumptions are met as in Section 6a (4) UStG cases.