The European Court of Justice received questions in case C-661/18 (CTT – Correios de Portugal) on 29 November 2018, concerning the recovery of input VAT on costs relating to mixed supplies.
Unofficial translation
Facts (simplified):
- Correios de Portugal (the Portuguese postal services) is mainly engaged in the provision of postal services.
- Its activities consist of both taxable and exempt supplies of goods and services (mixed supplies). As such, it uses a pro-rate for the calculation of the input VAT recovery.
- During 2015, Correios de Portugal used used a provisional pro rata percentage of 16%. At the end of 2015, Correios de Portugal recalculated this pro rata, which resulted in a pro rata of 19%.
- Correios de Portugal than applied this newly calculated pro rata on all its transactions, back to 2013, effectively making a correction of its own VAT Return for 2013, 2014 and 2015. These corrections were submitted in 2015.
- After this VAT payment with retroactive effect, the applicant applied a different criterion, namely that of the actual use of each category of transactions at an earlier stage.
- The Portuguese tax authorities did not agree with these corrections.
The referring court has doubts as to the compatibility with EU law principles of the national provisions and therefore asks preliminary questions.
Preliminary questions:
1. Do the principles of neutrality, effectiveness and equivalence and proportionality mean that a correction of the pro rata cannot be applied to the input VAT that has already been reported and deducted in prior reporting periods??
2. Do these principles preclude legislation such as that provided for in Article 23 (1) (b) and (6) of the CIVA [Código do Imposto sobre o Valor Acrescentado] where that provision is interpreted as meaning that a taxable person who is Calculation of the right to deduct the tax paid on mixed-use goods and services has chosen a coefficient method and / or a criterion for distribution, and corrected the deducted VAT amount on the basis of the final values for the year to which the deduction relates. has, in accordance with paragraph 6 of that provision, not be able to alter those elements retroactively by recalculating the deduction initially applied, which has already been revised in accordance with that provision, following an assessment in the VAT established with retroactive effect an activity that was initially considered exempt?
Source: MinBuZa (Dutch)
