(February 26, 2015) 

On February 26, 2015 the European Court of Justice (CJEU) ruled in joined Cases C-144/13 (VDP Dental Laboratory NV versus Staatssecretaris van Financiën), C-154/13 (Staatssecretaris van Financiën versus X BV) and C-160/13 (Staatssecretaris van Financiën versus Nobel Biocare Nederland BV)  (ECLI:EU:C:2015:116).

 

·       Should Article 17(1) and (2) of the Sixth Directive be interpreted to mean that if a national statutory provision, contrary to the Directive, provides for an exemption (in respect of which the right to deduct is excluded), the taxable person is entitled to the right to deduct in reliance on Article 17(1) and (2) of the Sixth Directive?

 

·       Should Article 143(a) and Article 140(a) and (b) of the [VAT Directive] be interpreted to mean that the exemptions from VAT contained in those provisions do not apply to the importation and the intra-Community acquisition of dental prostheses? If the answer to that question is in the negative, is the application of the exemptions then subject to the condition that the dental prostheses must have been supplied from another country by a dentist or dental technician and/or supplied to a dentist or dental technician?

 

·       Must Article 140(a) and (b) of the [VAT Directive] be interpreted as meaning that the exemption from VAT for which that provision provides does not apply to the intra-Community acquisition of dental prostheses? If the answer is no, is the application of the exemption subject to the condition that the dental prostheses are supplied from abroad by a dentist and/or dental technician to a dentist or dental technician?

 

·       If the exemption from VAT (whether or not under the conditions described in Question 1) for which Article 140(a) and (b) of the [VAT Directive] provides applies to the intra-Community acquisition of dental prostheses, does the exemption therefore apply in Member States, such as the Netherlands, which have complied with the exemption provided for in Article 132 of the [VAT Directive], to the intra-Community acquisition of dental prostheses originating from a Member State which has taken advantage of the derogating and transitional arrangements for which Article 370 of the [VAT Directive] provides?

 

·       Must Article 140(a) and (b) of the [VAT Directive] be interpreted as meaning that the exemption from VAT for which that provision provides does not apply to the intra-Community acquisition of dental prostheses? If the answer is no, is the application of the exemption subject to the condition that the dental prostheses are supplied from abroad by a dentist and/or dental technician to a dentist or dental technician?

 

The disputes in the main proceedings and the questions referred for a preliminary ruling

 

Case C‑144/13 

 

·       The dispute in the main proceedings in Case C‑144/13 concerns VDP, which is established in the Netherlands and is an intermediary in the sale of dental prostheses. On receipt of prior orders from dentists established in the Netherlands or outside that Member State, it arranges for prostheses to be manufactured by dental laboratories which have the status of dental technicians and are established outside the Netherlands and both within and outside the European Union. The laboratories concerned supply the dental prostheses to VDP, which in turn sends them to the dentists who ordered them. The dental prostheses which VDP receives from countries which do not belong to the customs territory of the European Union are declared on their arrival in the Netherlands for the purpose of their release for free circulation.

 

·       In its VAT return for the first quarter of 2006, VDP declared, as regards the supplies of dental prostheses effected during that period to dentists established in the Netherlands, that the supplies in question were exempt from VAT, in accordance with the first subparagraph of Article 11(1)(g) of the VAT Code, in the version in force until 1 January 2008. VDP also deducted the VAT which it had been charged during that quarter in respect of the supplies of the prostheses concerned, relying on the interpretation of Article 17(2) of the Sixth Directive given by the Court in its judgment in VDP Dental Laboratory (C‑401/05, EU:C:2006:792). The Tax Inspectorate refused that deduction on the basis of Article 15(2) of the VAT Code and dismissed the objection lodged by VDP.

 

·       In respect of the supplies of dental prostheses made to dentists established in the Netherlands in the third quarter of 2008, VDP paid no VAT pursuant to its tax returns, relying on the fact that it had, since 1 January 2008, the status of ‘dental technician’ within the meaning of Article 132(1)(e) of the VAT Directive, and taking the view, therefore, that it was entitled to an exemption in accordance with the first subparagraph of Article 11(1)(g) of the VAT Code. In accordance with Article 15(2) of that code, VDP did not deduct the tax which had been charged to it during that quarter in respect of the supplies in question.

 

·       In addition, for that quarter, VDP declared and paid the tax in respect of the importation and the intra-Community acquisition of dental prostheses from laboratories established outside the Netherlands. However, it subsequently took the view that it was not liable to pay that tax so far as concerns the importation of the declared prostheses, in accordance with Article 21(c) of the VAT Code, read in conjunction with Article 143(a) of the VAT Directive, and so far as concerns the intra-Community acquisitions of such prostheses, in accordance with Article 17e(a) of the VAT Code, read in conjunction with Article 140(a) of the VAT Directive. The objection lodged by VDP in this regard was also rejected by the Tax Inspectorate.

 

·       With regard to the first quarter of 2006, the Rechtbank te Haarlem (District Court, Haarlem) dismissed VDP’s action and held that the application of the exemption in accordance with Article 11(1)(g) of the VAT Code meant that, pursuant to Article 15(2) of the VAT Code, input tax could not be deducted. VDP brought an appeal on a point of law against the decision of that court.

 

·       With regard to the third quarter of 2008, the Rechtbank te Haarlem considered that the action brought by VDP was well founded and held that, in accordance, firstly, with Article 21(c) of the VAT Code, read in conjunction with Article 143(a) of the VAT Directive, and, secondly, with Article 17e(a) of the VAT Code, read in conjunction with Article 140(a) of the VAT Directive, no VAT was payable on the importation and intra-Community acquisition of dental prostheses, since the basis was still a supply effected by a foreign dental technician, and such a supply in the Netherlands was exempt. The Staatssecretaris brought an appeal on a point of law against that decision.

 

·       According to the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), both the appeal brought by VDP and that brought by the Staatssecretaris give rise to questions of European Union law.

 

·       In those circumstances, the Hoge Raad der Nederlanden decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘(1)   Should Article 17(1) and (2) of the Sixth Directive be interpreted to mean that if a national statutory provision, contrary to the Directive, provides for an exemption (in respect of which the right to deduct is excluded), the taxable person is entitled to the right to deduct in reliance on Article 17(1) and (2) of the Sixth Directive?

(2)    Should Article 143(a) and Article 140(a) and (b) of the [VAT Directive] be interpreted to mean that the exemptions from VAT contained in those provisions do not apply to the importation and the intra-Community acquisition of dental prostheses? If the answer to that question is in the negative, is the application of the exemptions then subject to the condition that the dental prostheses must have been supplied from another country by a dentist or dental technician and/or supplied to a dentist or dental technician?’

 

Case C‑154/13

 

·       Case C‑154/13 concerns X, which is established in the Netherlands and operates a dentistry practice, the activities of which are, in accordance with the first subparagraph of Article 11(1)(g) of the VAT Code, exempt from VAT without the right to deduct. During the period from 1 January 2008 to 30 September 2008, X acquired, from a dental technician established in Germany, dental prostheses which were transported and supplied to X from Germany without VAT invoicing. X did not pay VAT pursuant to its tax returns in respect of intra-Community acquisitions concerning those purchases. The Tax Inspectorate takes the view that intra-Community acquisitions are nevertheless involved and issued a notice of additional assessment.

 

·       The Rechtbank te ’s-Gravenhage (District Court, The Hague) declared X’s action to be well founded. According to that court, Article 17e of the VAT Code and Article 140 of the VAT Directive must be interpreted as meaning that, in the case of a supply of a dental prosthesis by a dentist or a dental technician established outside the Netherlands, the corresponding intra-Community acquisition by a client in the Netherlands is exempt from VAT, given that such a supply is also exempt when it is made in the Netherlands. The Staatssecretaris brought an appeal on a point of law against that decision and referred to, inter alia, the liability to tax of supplies of dental prostheses in Germany.

 

·       In those circumstances, the Hoge Raad der Nederlanden decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling: 

‘(1)   Must Article 140(a) and (b) of the [VAT Directive] be interpreted as meaning that the exemption from VAT for which that provision provides does not apply to the intra-Community acquisition of dental prostheses? If the answer is no, is the application of the exemption subject to the condition that the dental prostheses are supplied from abroad by a dentist and/or dental technician to a dentist or dental technician?

(2)    If the exemption from VAT (whether or not under the conditions described in Question 1) for which Article 140(a) and (b) of the [VAT Directive] provides applies to the intra-Community acquisition of dental prostheses, does the exemption therefore apply in Member States, such as the Netherlands, which have complied with the exemption provided for in Article 132 of the [VAT Directive], to the intra-Community acquisition of dental prostheses originating from a Member State which has taken advantage of the derogating and transitional arrangements for which Article 370 of the [VAT Directive] provides?’

 

Case C‑160/13

 

·       Case C‑160/13 concerns Nobel, which is established in the Netherlands and has the status of dental technician within the meaning of the first subparagraph of Article 11(1)(g) of the VAT Code. Nobel is an intermediary in the sale of dental prostheses. On receipt of prior orders it sells and supplies those prostheses to dental laboratories established in the Netherlands. The dental prostheses are manufactured in Sweden by Nobel’s parent company, A AB (‘A’), which is also a dental technician. A supplies the prostheses, in return for an agreed remuneration, to Nobel, which then supplies those prostheses to the abovementioned laboratories.

 

·       In the case of the dental prostheses supplied in December 2008, A did not charge VAT. As regards those supplies, Nobel entered in its return VAT in respect of the intra-Community acquisitions. It then submitted an objection in that connection. The Rechtbank te Haarlem ruled in its favour and held that Article 17e of the VAT Code and Article 140 of the VAT Directive had to be interpreted as meaning that, in the case of a supply of a dental prosthesis by a dentist or a dental technician established outside the Netherlands, the corresponding intra-Community acquisition by a client in the Netherlands was exempt from VAT, given that such a supply is also exempt when it is made in the Netherlands. The Staatssecretaris brought an appeal on a point of law against the decision of that court.

 

·       In those circumstances, the Hoge Raad der Nederlanden decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling: 

‘Must Article 140(a) and (b) of the [VAT Directive] be interpreted as meaning that the exemption from VAT for which that provision provides does not apply to the intra-Community acquisition of dental prostheses? If the answer is no, is the application of the exemption subject to the condition that the dental prostheses are supplied from abroad by a dentist and/or dental technician to a dentist or dental technician?’

 

·       By order of the President of the Court of 4 June 2013, Cases C‑144/13, C‑154/13 and C‑160/13 were joined for the purposes of the written and oral procedure and the judgment.

 

The CJEU ruled as follows:

 

(1)          Article 168 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2007/75/EC of 20 December 2007, must be interpreted as meaning that, where the exemption from value added tax provided for by national law is incompatible with Directive 2006/112, as amended by Directive 2007/75, Article 168 does not permit a taxable person both to benefit from that exemption and to exercise the right to deduct tax.

 

(2)          Article 140(a) and (b) and Article 143(a) of Directive 2006/112, as amended by Directive 2007/75, must be interpreted as meaning that the exemption from value added tax for which they provide applies to the intra-Community acquisition and the final importation of dental prostheses supplied by dentists and dental technicians where the Member State of the supply or importation has not implemented the transitional rules provided for in Article 370 of Directive 2006/112, as amended by Directive 2007/75.

 

(3)          Article 140(a) and (b) of Directive 2006/112, as amended by Directive 2007/75, must be interpreted as meaning that the exemption from value added tax provided for in that provision also applies where the intra-Community acquisition of dental prostheses originates from a Member State which has implemented the derogating and transitional arrangements provided for in Article 370 of that directive.

 

For further information click here to be forwarded to the text of the ruling as published on the website of the Court of Justice, which will open in a new window.

 

 

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