On March 21, 2013, the ECJ issued its Order in the case C-153/12 (Sani treyd).
Context: Article 99 of the Rules of Procedure – VAT – Directive 2006/112/EC – Articles 62, 63, 65, 73 and 80 – Establishment of a building right by natural persons who are neither taxable persons nor persons liable for payment in favour of a company in exchange for the construction of immovable property by that company for those natural persons – Barter contract – VAT on supplies relating to the construction of the immovable property – Chargeable event – When chargeable – Payment on account of the entire consideration – Payment on account – Basis of assessment in the event of consideration in the form of goods or services
Article in the EU VAT Directive
62, 63, 65, 73, 80
Article 62
For the purposes of this Directive:
(1) “chargeable event” shall mean the occurrence by virtue of which the legal conditions necessary for VAT to become chargeable are fulfilled;
(2) VAT shall become “chargeable” when the tax authority becomes entitled under the law, at a given moment, to claim the tax from the person liable to pay, even though the time of payment may be deferred.
Article 63
The chargeable event shall occur and VAT shall become chargeable when the goods or the services are supplied.
Article 65
Where a payment is to be made on account before the goods or services are supplied, VAT shall become chargeable on receipt of the payment and on the amount received.
Article 73
In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply.
Article 80
1. In order to prevent tax evasion or avoidance, Member States may in any of the following cases take measures to ensure that, in respect of the supply of goods or services involving family or other close personal ties, management, ownership, membership, financial or legal ties as defined by the Member State, the taxable amount is to be the open market value:
(a) where the consideration is lower than the open market value and the recipient of the supply does not have a full right of deduction under Articles 167 to 171 and Articles 173 to 177;
(b) where the consideration is lower than the open market value and the supplier does not have a full right of deduction under Articles 167 to 171 and Articles 173 to 177 and the supply is subject to an exemption under Articles 132, 135, 136, 371, 375, 376, 377, 378(2), 379(2) or Articles 380 to 390c;
(c) where the consideration is higher than the open market value and the supplier does not have a full right of deduction under Articles 167 to 171 and Articles 173 to 177.
Facts
- By a notarial deed dated 16 September 2008, two natural persons (hereinafter referred to as “landowners”) established the right to build Sunny Trade on their own real estate. Pursuant to the established right to build, the said company will build a building on the mentioned real estate and will become the owner of 75% of it. As a consideration for obtaining this right, Sunny Trade must design the building, build it with its own funds and forces and transfer to the ownership of the landowners in completed form 25% of the total built-up area within a certain period. With the said act, the latter are also obliged, within 30 days from the completion of the rough construction, to transfer to Sunny Trade the right of ownership over that ideal part of the land property, which is applied as an ideal number to the objects remaining in the ownership of Sunny Trade. The tax assessment of the right to build is BGN 57,375.00.
- On July 29, 2010, after an audit, the Revenue Authority handed Sunny Trade an audit report, which established for the company in September 2008 VAT liabilities in the amount of BGN 30,925.10 and interest in the amount of BGN 6,637.22. BGN. The revenue authority accepts that there is a barter hypothesis within the meaning of Article 130 of the VAT Act and that in application of paragraph 2 of the same article the tax event for the supply of construction services occurred on the date of establishment of the right to build. However, Sunny Trade has not issued a tax invoice to the owners of the land properties and no VAT has been charged for the said delivery. In the course of the audit, an expert assessment was prepared, which determined the market price of the deliveries that Sunny Trade undertook to make, amounting to BGN 618,502. Therefore, the audit act sets a tax base of 154,625,
- Sunny Trade appealed the revision act administratively to the Director. After the latter rejected this appeal with a decision of October 1, 2010, Sunny Trade appealed the same revision act in court before the Varna Administrative Court. By decision of 1 March 2011, the latter partially repealed the revision act, accepting that the tax base must be equal to the tax assessment of the right to build.
- The Director appealed on a point of law against that decision to the Supreme Administrative Court, which quashed it and remitted the case to the referring court. In particular, the Supreme Administrative Court held that the Varna Administrative Court had incorrectly determined the tax base. For the retrial, mandatory instructions were given for the referring court to appoint an additional expert to determine the market price of 25% of the total built-up area of the building as of 16 September 2008.
- Before the referring court, Sunny Trade claims that it cannot be required to charge VAT on the supply which it has undertaken to make in exchange for the building right obtained, since it cannot be individualized on the date of establishment. right, and that there is no way to determine the market value of this supply under the rule of Article 26, paragraph 7 of the VAT Act. In the alternative, it considers that the tax base should be the market value of the consideration received, that is to say, the market value of the building right.
- According to the referring court, the dispute before it raises questions concerning the existence of barter within the meaning of Article 130 (1) of the VAT Act, when the tax event for the two counter-supplies occurs and when Sony Trade was liable to charge VAT. and on what tax base.
- On the first two questions, it states that it is bound by the reasons given in the decision of the Supreme Administrative Court, which remanded the case for retrial and according to which, on the one hand, there was barter and, on the other, the tax event for the two supplies in question. occurs on the date of establishment of the right to build. In addition, it emphasizes that, by virtue of that decision, it is required to strictly apply Article 26 (7) of the VAT Act, according to which the taxable amount for barter is the market price of the goods or services provided.
- However, the referring court states that it has doubts as to the compatibility of Articles 130 (2) and 26 (7) of the VAT Act with Articles 62, 63, 65, 66, 73 and 80 of the VAT Directive. In that regard, it states that it is aware of the references for a preliminary ruling to the Court from the Supreme Administrative Court in two previous cases in which the judgment of 19 December 2012 in Case C-549/11 Orpheus Bulgaria has yet to be delivered. unpublished in the Compendium) and Judgment of 7 March 2013 in the case of Efir (C ‑ 19/12). It held that the issues addressed in those two decisions were relevant to the resolution of the dispute before it. However, it emphasizes that the decisions in both cases did not raise the issue of supplies by natural persons who do not have the status of taxable person or taxpayer,
Questions
- Is the concept of a chargeable event within the meaning of Article 62(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax to be interpreted as also covering cases of exempt transactions, including transactions effected by a person who does not have the status of a taxable person within the meaning of Title III of Directive 2006/112 or that of a person liable for payment within the meaning of Title XI, Chapter 1, Section 1, of that directive?
- Do Articles 62 and 63 of Directive 2006/112 preclude a national provision under which the chargeable event occurs at the time when the exempt transaction is performed, rather than at the time when the condition that that transaction be taxed is satisfied?
- Does Article 63 of Directive 2006/112 preclude a national provision and a national practice whereby the chargeable event in respect of a supply of parts of a building occurs not at the time when ownership is transferred but earlier, that is to say, at the time of the provision of the agreed consideration, which constitutes an exempt transaction effected by a person who does not have the status of a taxable person or that of a person liable for payment?
- Does Article 65 of Directive 2006/112 preclude a national provision which links the chargeability to VAT to a payment which is fully or partially determined in goods or services?
- Do Articles 73 and 80 of Directive 2006/112 preclude a national provision under which, where the consideration for a transaction is fully or partially determined in goods or services, the basis of assessment for taxation of that transaction is in all cases its open market value?
AG Opinion
None
Decision
1) and therefore, in particular, that the services in question are precisely defined and that the value of that right can be quantified, something to be determined by the referring court. In that regard, it is irrelevant that the establishment of that building right is an exempt supply carried out by persons who do not have the status of taxable person or taxable person within the meaning of that directive.
(2) In circumstances such as those at issue in the main proceedings, where the supply was not effected between connected persons within the meaning of Article 80 (1) of Directive 2006/112, which, however, must be established by the referring court, Articles 73 and 80 of this Directive must be interpreted as precluding a national provision such as that at issue in the main proceedings, according to which, if the consideration for the supply of goods or services is determined entirely in goods or services, the taxable amount of the supply is the market value. of the goods or services provided.
Summary
Obligation in the event of early payment of full consideration upon the establishment of the right of superficies in exchange for the construction of a residential complex.
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