December 19, 2014

On December 18, 2014 the European Court of Justice (CJEU) ruled in Case C-131/13, Staatsecretaris van Financiën versus Schoenimport “Italmoda” Mariano Previti (C-131/13) (and Turbu.com BV (C-163/13) and Turbu.com Mobile Phone’s BV (C-164/13) and Staatssecretaris van Financiën)  (ECLI:EU:C:2014:2455).

The following questions were referred to the CJEU for a preliminary ruling:

1. Should the national authorities and courts, on the basis of the law of the European Union, refuse to apply the exemption pertaining to an intra-Community supply, the right to the deduction of VAT in respect of the purchase of goods which, after the purchase, were dispatched to another Member State, or the refund of VAT pursuant to the application of the second sentence of Article 28b(A)(2) of the Sixth Directive, when, on the basis of objective data, it has been established that there has been VAT evasion in respect of the goods concerned, and that the taxable person knew, or should have known, that it was participating therein, if national law does not make provision for refusal of the exemption, the deduction or the refund under those circumstances?

2. If Question 1 is answered in the affirmative, should the aforementioned exemption, deduction or refund also be refused if the VAT evasion occurred in another Member State (other than the Member State from which the goods were dispatched) and the taxable person was, or should have been, aware of the VAT evasion, while the taxable person in the Member State from which the goods were dispatched has met all the (formal) conditions which national statutory provisions impose on the exemption, the deduction or the refund, and it has always provided the tax authorities in that Member State with all the required information in respect of the goods, the dispatch and the persons acquiring the goods in the Member State of arrival of the goods?

3. If Question 1 is answered in the negative, what should be understood by “subject to” [tax] in (the final part of) the first sentence of Article 28b(A)(2): the declaration in the statutorily prescribed VAT returns of the VAT payable in respect of intra-Community acquisitions in the Member State of arrival, or — in the absence of such a declaration — also the measures adopted by the tax authorities of the Member State of arrival to regularise the absence of that declaration? When answering that question, is it significant whether the transaction concerned forms part of a chain of transactions aimed at VAT evasion in the country of arrival and the taxable person was aware, or should have been aware, of it?

    

 The CJEU ruled as follows:

1. The questions referred for a preliminary ruling by the Hoge Raad der Nederlanden in Cases C‑163/13 and C‑164/13 are inadmissible.

2. Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, as amended by Council Directive 95/7/EC of 10 April 1995, must be interpreted as meaning that it is for the national authorities and courts to refuse a taxable person, in the context of an intra-Community supply, the benefit of the rights to deduction of, exemption from or refund of value added tax, even in the absence of provisions of national law providing for such refusal, if it is established, in the light of objective factors, that that taxable person knew, or should have known, that, by the transaction relied on as a basis for the right concerned, it was participating in evasion of value added tax committed in the context of a chain of supplies.

3. Sixth Directive 77/388, as amended by Directive 95/7, must be interpreted as meaning that a taxable person who knew, or should have known, that, by the transaction relied on as a basis for rights to deduction of, exemption from or refund of value added tax, that person was participating in evasion of value added tax committed in the context of a chain of supplies, may be refused the benefit of those rights, notwithstanding the fact that the evasion was carried out in a Member State other than that in which the benefit of those rights has been sought and that taxable person has, in the latter Member State, complied with the formal requirements laid down by national legislation for the purpose of benefiting from those rights.

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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