On October 21, 2010, the ECJ issued its decision in the case C-385/09 (Nidera Handelscompagnie BV).
Article in the EU VAT Directive
Articles 9(1), 167, 168, 178, 213, 214(1), 237
Article 9(1) (Taxable person)
Taxable person” shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.
Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as “economic activity”. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.
Article 167 (Right to deduct VAT)
A right of deduction shall arise at the time the deductible tax becomes chargeable.’
Article 168 (Right to deduct VAT)
In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay:
(a) the VAT due or paid in that Member State in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person
Article 178 (Right to deduct VAT)
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 Articles 220 to 236 and Articles 238, 239 and 240;
Article 213 (Identification of Taxable persons)
1. Every taxable person shall state when his activity as a taxable person commences, changes or ceases.
Article 214(1) (Identification of Taxable persons)
1. Member States shall take the measures necessary to ensure that the following persons are identified by means of an individual number:
(c) every taxable person who, within their respective territory, makes intra-Community acquisitions of goods for the purposes of transactions which relate to the activities referred to in the second subparagraph of Article 9(1) and which are carried out outside that territory.
Article 273
Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirement of equal treatment as between domestic transactions and transactions carried out between Member States by taxable persons and provided that such obligations do not, in trade between Member States, give rise to formalities connected with the crossing of frontiers.
The option under the first paragraph may not be relied upon in order to impose additional invoicing obligations over and above those laid down in Chapter 3.
Facts
- The dispute in the main proceedings concerns, in essence, whether Nidera is entitled to deduct the VAT paid upon the purchase in Lithuania of goods which were exported to non-Member States, having regard to the fact that it was not identified in Lithuania as a taxable person for VAT purposes at the time of those commercial transactions.
- Between February and May 2008 Nidera purchased wheat in Lithuania from agricultural produce suppliers. Of the price paid, LTL 11 743 259 (namely approximately EUR 3.4 million) represented the VAT invoiced by those suppliers and paid to them. Nidera then exported the entire quantity of that wheat to non-Member States, Algeria and Turkey, applying zero-rate VAT in accordance with Article 49 of the PVMĮ.
- On 12 August 2008 Nidera registered as a VAT payer in Lithuania. In its VAT declaration for the period from 12 to 31 August 2008, it declared input VAT of LTL 11 743 259 and requested a refund in the same amount from the public treasury. Thus, it wished to deduct VAT paid on goods purchased in Lithuania and exported to non-Member States before its registration as a taxable person for VAT purposes.
- By decision of 16 January 2009, confirmed on 19 March 2009, the Tax Inspectorate for the Vilnius district (‘Vilnius AVMI’) found that Nidera could not deduct that input VAT because the goods in question, which had already been sold, would no longer be used for its activities which were subject to VAT.
- On 14 April 2009 Nidera, lodged a complaint with the State Tax Inspectorate. By decision of 22 June 2009, the State Tax Inspectorate rejected the complaint and supported the position adopted by Vilnius AVMI. According to that decision, only registered VAT payers have the right to deduct that tax and, although Nidera is not obliged to register as a VAT payer in Lithuania under national legislation, it nevertheless had to do so if it wished to recover input VAT paid.
- On 29 July 2009 Nidera appealed to the Tax Disputes Commission. By that appeal, it submits that, in accordance with Article 71(3) of the PVMĮ, as a foreign taxable person in Lithuania, it did not have to register as a VAT payer in Lithuania, because its activity was exclusively the export of goods to non-Member States to which the zero-rate of VAT applies. In Nidera’s opinion, the fact that it exercised its right not to be registered as a VAT payer in Lithuania cannot extinguish its right of deduction of VAT.
- In its decision for reference, the Tax Disputes Commission asks whether the provisions of the PVMĮ, pursuant to which, in order to have a right of deduction, the person in question must not only exercise a taxable activity and hold the correct documents, but must also have been formally identified as a taxable person for VAT purposes in Lithuania, comply with Directive 2006/112 and are compatible with the general principles of the VAT system, in accordance with which VAT is a tax on consumption of which the right of deduction is a fundamental feature.
Questions
AG Opinion
None
Decision
Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as precluding a taxable person for VAT purposes who meets the substantive conditions for the right of deduction, in accordance with the provisions of that directive, and who identifies himself as a taxable person for VAT purposes within a reasonable period following the completion of transactions giving rise to that right of deduction, from being denied the possibility of exercising that right by national legislation which prohibits the deduction of VAT paid on the purchase of goods if the taxpayer was not identified as a taxable person for VAT purposes before using those goods in his taxable activity.
Summary
The VAT Directive must be interpreted as precluding a person liable for VAT who, according to the provisions of this Directive, fulfills the substantive conditions for deduction of VAT and who identifies himself for VAT purposes within a reasonable period of time after the transactions carried out created the right to deduct, the possibility of exercising this right is deprived by national legislation which excludes the deduction of VAT paid on the purchase of goods where that taxable person has not identified himself for VAT purposes before using those goods for its taxed activities.
Source
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