On March 18, 2021, the ECJ issued its decision in the case C-895/19 (A. (Exercice du droit à déduction)). The case deals with the timing of exercising right to deduct VAT on intra-community acquisitions of goods.
Context: Reference for a preliminary ruling – Indirect taxation – VAT – Directive 2006/112 / EC – Intra-Community acquisition of goods – Deduction of input tax due in respect of such an acquisition – Formal requirements – Substantive requirements – Deadline for filing the tax return – Principles of fiscal neutrality and proportionality
Article in the EU VAT Directive
Articles 167 en 178 of the EU VAT Directive 2006/112/EC
Article 167 (Right to deduct VAT – Origin and Scope of Right of Deduction)
A right of deduction shall arise at the time the deductible tax becomes chargeable.
Article 178 (Right to deduct VAT – Rules Governing Exercise of the Right of Deduction)
In order to exercise the right of deduction, a taxable person must meet the following conditions:
- (a) for the purposes of deductions pursuant to Article 168(a), in respect of the supply of goods or services, he must hold an invoice drawn up in accordance with Sections 3 to 6 of Chapter 3 of Title XI;
- (b) for the purposes of deductions pursuant to Article 168(b), in respect of transactions treated as the supply of goods or services, he must comply with the formalities as laid down by each Member State;
- (c) for the purposes of deductions pursuant to Article 168(c), in respect of the intra-Community acquisition of goods, he must set out in the VAT return provided for in Article 250 all the information needed for the amount of VAT due on his intra-Community acquisitions of goods to be calculated and he must hold an invoice drawn up in accordance with Sections 3 to 5 of Chapter 3 of Title XI;
- (d) for the purposes of deductions pursuant to Article 168(d), in respect of transactions treated as intra-Community acquisitions of goods, he must complete the formalities as laid down by each Member State;
- (e) for the purposes of deductions pursuant to Article 168(e), in respect of the importation of goods, he must hold an import document specifying him as
consignee or importer, and stating the amount of VAT due or enabling that amount to be calculated; - (f) when required to pay VAT as a customer where Articles 194 to 197 or Article 199 apply, he must comply with the formalities as laid down by each Member State.
Facts
A Polish referral asking whether Article 167 of the VAT Directive, in conjunction with Article 178, is to be interpreted as precluding national law which makes the exercise of the right to deduct VAT in the same accounting period as that in which the tax due was payable on transactions constituting Intra-Community acquisitions of goods, subject to entry of the tax due on those transactions in the appropriate tax declaration? Whether Article 167 of the VAT Directive, in conjunction with Article 178, is to be interpreted as precluding national law which makes the exercise of the right to deduct VAT in the same accounting period as that in which the tax due was payable on transactions constituting Intra-Community acquisitions of goods, subject to entry of the tax due on those transactions in the appropriate tax declaration?
Question
Is Article 167 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (as amended), in conjunction with Article 178 thereof, to be interpreted as precluding national legislation which makes the exercise of the right to deduct input tax in the same accounting period as that in which the tax due was payable on the transactions constituting Community acquisitions of goods subject to entry of the tax due on those transactions in the appropriate tax declaration submitted within the mandatory period (in Poland, three months) following the end of the month in which the tax liability arose in relation to the goods and services acquired?
AG Opinion
None
Decision
Articles 167 and 178 of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2010/45 / EU of 13 July 2010 , must be interpreted as meaning that they are opposed to national regulations under which the exercise of the right to deduct value added tax (VAT) relating to an intra-Community acquisition, during the same period taxable than that during which the VAT is due, is subject to the mention of the VAT due in the tax return filed within three months from the end of the month during which the tax obligation relating to the goods acquired took birth.
Source
Summary
Among other things, Company A carries out intra-Community acquisitions (UCVs) of goods in Poland that it uses for transactions that are subject to VAT in Poland. In certain situations, A cannot declare the VAT due on ICVs in the tax return filed within 3 months of the end of the month in which the tax liability for the acquired goods arose. In that case, A would state that VAT after the expiry of this period by means of a correction of her tax return. This could be the case with the delayed receipt of an invoice, an incorrect classification of the transaction by A or a mistake by the person preparing the registers and VAT returns.
According to the Polish tax authorities, this is not allowed and the Polish rules are in accordance with the VAT Directive.
The Polish court has doubts about this and indicates that a new condition in the form of a period has been included in Poland since 1 January 2017, which means that the right to deduction is now subject to the condition that a tax return is submitted within a period of 3 months from the end. of the month in which the tax liability on the acquired goods arose. When this period has expired, the taxable person must correct the previously submitted return and can only deduct the input tax paid on the ICV of goods for the current period. The taxable person thus bears the economic burden of the VAT due and, where appropriate, of the payment of interest. There are situations in which the taxpayer is not able to observe the period of 3 months, in particular in the event of delayed or irregular issuance of the invoice or of irregularities attributable to the postal service operators. However, Polish law makes no distinction according to whether the taxpayer is acting in good faith or not.
According to the ECJ, Articles 167 and 178 of the VAT Directive preclude national legislation which, for the exercise of the right to deduct VAT on an ICV in the same tax period as that in which the VAT is to be credited, requires that the VAT due is stated in the tax return submitted within a period of 3 months after the end of the month in which the tax liability in connection with the acquisition of the goods arose.
Reference to the case in the EU Member States
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