On Dec 5, 1996, the ECJ its decision in the case C-85/95 (Reisdorf). This case is about the Right to deduct VAT in case the original invoice is lost and other evidence can be produced.
Article in the EU VAT Directive
18(1)(a), 22(3) of the Sixth Council Directive
Article 18(1)(a) and (3)
(1) To exercise his right to deduct, the taxable person must:
(a) in respect of deductions under Article 17(2)(a), hold an invoice, drawn up in accordance with Article 22(3);
(3) Member States shall determine the conditions and procedures whereby a taxable person may be authorized to make a deduction which he has not made in
accordance with the provisions of paragraphs 1 and 2.
Article 22(2), (3) and (8) states:
(2) Every taxable person shall keep accounts in sufficient detail to permit application of the value added tax and inspection by the tax authority.
(3) (a) Every taxable person shall issue an invoice, or other document serving as invoice in respect of all goods and services supplied by him to another
taxable person, and shall keep a copy thereof.
Every taxable person shall likewise issue an invoice in respect of payments on account made to him by another taxable person before the supply of goods or services is effected or completed.
(b) The invoice shall state clearly the price exclusive of tax and the corresponding tax at each rate as well as any exemptions.
(c) The Member States shall determine the criteria for considering whether a
document serves as an invoice.
(8) Without prejudice to the provisions to be adopted pursuant to Article 17(4), Member States may impose other obligations which they deem necessary for
the correct levying and collection of the tax and for the prevention of fraud.’
Facts
- According to the file on the main proceedings, in 1988 Mr Reisdorf constructed, in a building owned by him, commercial premises, which he let from November 1988 to a supermarket operator. Having waived exemption from VAT under Paragraph 4(12)(a) of the Umsatzsteuergesetz (Law on Turnover Tax, ‘UStG’), he sought deduction of sums corresponding to the input tax on the construction of the premises.
- During a special VAT inspection carried out by the Finanzamt, Mr Reisdorf was asked to produce the original invoices relating to the amounts claimed as deductions.
- Under Paragraph 15(1)(1) of the UStG, a trader may, subject to certain other requirements which are not relevant to this case, deduct as input tax the tax which is shown separately on invoices, within the meaning of Paragraph 14 of the UStG, in respect of supplies and other services provided for his undertaking by other traders. Paragraph 14(4) provides that an ‘invoice’ means any document by which a trader or a third party on his behalf charges the recipient of goods or services for a supply or other service, irrespective of how that document is described in business dealings.
- Mr Reisdorf presented copies of various invoices, in particular intermediate invoices from the head contractor, but not the originals. As a result, the Finanzamt reduced the amount of input tax.
- After an unsuccessful objection against that reduction, Mr Reisdorf brought an action before the Finanzgericht (Finance Court), which was dismissed. The court held that he had failed to prove, despite having been called upon to do so, that the conditions establishing the right to deduct input tax due or paid laid down by Paragraph 15(1)(1) of the UStG were satisfied, since he had not produced the original invoices, which still existed and which he himself indicated he could obtain.
- Basing its decision on Paragraphs 14 and 15 of the UStG, the Finanzgericht took the view that only the original invoice drawn up and given or sent to the recipient of goods or services for the purposes of settlement with the supplier could be regarded as capable of proving the right to deduct input tax. The original invoice could be distinguished by its uniqueness, inasmuch as it was identifiable and could not be confused with multiple, duplicate or copy invoices. The original invoice had to be produced unless it had been lost or could not be obtained within a certain period, in which case the necessary evidence could be adduced in some other way, using all the means of evidence permitted under national law, including copies of invoices and analogous documents. The plaintiff in the case before it had not pleaded that the original invoices had been lost. He therefore had to bear the adverse consequences in law, since it was for him to prove that he had the right to deduct input tax.
Questions
(1) Is an “invoice” within the meaning of Article 18(1)(a) of the Sixth Directive 77/388/EEC only the original, that is to say, the original copy of the statement of account, or are carbon copies, duplicates or photocopies also to be regarded as invoices in that sense?
(2) Does the term “hold” within the meaning of Article 18(1)(a) of the Sixth Directive 77/388/EEC signify that the taxable person must at all times be in a position to present the invoice to the tax authorities?
(3) Is the exercise of the right to deduct input tax precluded by virtue of Article 18(1)(a) of the Sixth Directive 77/388/EEC where the taxable person no longer “holds” an invoice?’
AG Opinion
(1) An invoice within the meaning of Article 18(1)(a) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment should be interpreted as referring to the original document drawn up by the supplier of goods or services for the purposes of establishing that a taxable supply has occurred. Member States may, pursuant to Article 22(3)(c) of the Sixth Directive, determine criteria for considering whether another document may serve as an invoice.
(2) Member States are entitled under Article 18(1)(a) of the Sixth Directive to require a taxable person to be in a position to present the original invoice to national tax authorities carrying out fiscal inspections.
(3) Article 18(1)(a) of the Sixth Directive should not be interpreted as precluding the exercise of the right to deduct where the taxable person no longer holds the original invoice but where he is able to produce other probative evidence, pursuant to rules laid down under Article 18(3) by the Member States, that the underlying transaction in respect of which the deduction is claimed has actually occurred.
Decision
Article 18(1)(a) and Article 22(3) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating
to turnover taxes — Common system of value added tax: uniform basis of assessment permit the Member States to regard as an invoice not only the original but also any other document serving as an invoice that fulfils the criteria determined by the Member States themselves, and confer on them the power to require production of the original invoice in order to establish the right to deduct input tax, as well as the power, where a taxable person no longer holds the original, to admit other evidence that the transaction in respect of which the deduction is claimed actually took place.
Summary
Member States are permitted to understand not only the original, but also any other document serving as such meeting the criteria set by those Member States, and empower them to require proof of the right to deduct the original of the invoice is produced and to allow the taxable person who is no longer in possession of it to prove by other means that the transaction to which the request for deduction relates actually took place.
Source
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