On March 7, 2013, the ECJ issued its decision in the case C-19/12 (Efir).
Context: Value added tax – Directive 2006/112 / EC – Articles 62, 63, 65, 73 and 80 – Establishment by individuals of a superficies in favor of a company against the provision by the company of construction services for those persons – Barter – VAT on construction works services – Tax event – Eligibility – Inclusion of both taxable and exempt supplies in the concept of tax event – Advance payment of the entire consideration – Advance payment – Tax basis of the consideration for a consideration consisting of goods or services – Immediate action
Article in the EU VAT Directive
Articles 62, 63, 65, 73 and 80 of the EU VAT Directive 2006/112/EC
Article 62 (Chargeabe event)
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 (Chargeabe event)
The chargeable event shall occur and VAT shall become chargeable when the goods or the services are supplied.
Article 65 (Chargeabe event)
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 (Taxable amount)
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 (Taxable amount)
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 notarial deeds of 22 February and 4 November 2007, several natural persons (hereinafter referred to as “landowners”) established on Ether building rights on their land. By virtue of the established construction rights, Efir receives the right to build buildings on these terrains and to become the exclusive owner of the separate sites described in the above-mentioned acts, the construction of which is forthcoming. Against these rights, Efir undertakes to design and build with its own funds, labor and materials the buildings described in the notarial deeds in a fully completed form, as well as to hand over to the owners of the land properties certain separate sites in the buildings for which the founders reserve the right to build.
- By protocols of February and March 2009, drawn up after the completion of the buildings under construction, Efir charged VAT to the owners of the landed properties on the supplies of construction services, provided as a consideration for the construction rights, respectively in the amount of 37 856, BGN 31 and BGN 31,794.86.
- On 27 April 2009, after a tax audit, the revenue authority at the territorial directorate of the National Revenue Agency in the town of Kardzhali issued an audit report for the tax periods February and November 2007. With this act, an additional VAT amounting to 30 BGN 379.63, as well as interest for delay in the amount of BGN 23,403.47.
- The Revenue Authority considers that, in accordance with Article 130 of the VAT Act, the dates of establishment of the building rights in favor of Ether coincide with the dates on which the VAT-related events occurred on the supply of construction services provided by Efir in favor of Ether. of the owners of the land properties. After an expert determines the value of the construction services that Ether must provide, in the amount of BGN 209,113 and BGN 291,041, respectively, it is assumed that these amounts represent the taxable bases for the mentioned supplies of services. The additional VAT imposed by the audit act corresponds to the difference between the tax determined according to the assessment of the tax bases by the expert and the VAT charged by Efir, together with interest for delay.
- Efir appealed the revision act administratively to the Director of the Appeals and Enforcement Management Directorate, Plovdiv, at the Central Office of the National Revenue Agency. Following the rejection of this appeal by a decision of 1 July 2009, Efir challenged the revision act in court before the Plovdiv Administrative Court, which dismissed the appeal by decision of 14 October 2010. Efir lodged a cassation appeal against the latter decision with the referring court.
- That court observes that, according to the literal interpretation of Article 62 (1) of the VAT Directive, the VAT event occurs when a taxable supply is made. The Court notes, however, that Article 25 (5) (2) of the VAT Act extends the concept of tax event defined in that provision of the VAT Directive to include exempt supplies, whereas, according to recital 24 in the preamble to that directive, the concept of tax event must be harmonized in all Member States.
- In addition, the court emphasizes that in the case before it there are counter-supplies, namely, on the one hand, the establishment of building rights – an exempt supply until the construction of buildings under construction, and, on the other hand, the provision of construction services. It states that in the present case, under Paragraph 130 (2) of the VAT Act, as amended at the material time, the tax event relating to the tax on the two supplies occurs on the date on which the tax event occurred on the earlier one.
- Finally, the referring court also states that the order for reference of 27 October 2011, which subsequently gave judgment in Case C-549/11 Orpheus Bulgaria, not yet published in The Chamber) – it has already referred to the Court questions relating in particular to the interpretation of Articles 65, 73 and 80 of the VAT Directive, which it considers to be relevant to the present case.
Questions
- Must Article 62(1) and (2) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax be interpreted as meaning that the concept of a chargeable event relates to both taxable and exempt transactions?
- Should Question 1 be answered in the negative: Is a national provision such as that applicable in the main proceedings, under which a chargeable event also occurs at the time of an exempt transaction, permissible?
- Do Articles 62 and 63 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax have direct effect?
AG Opinion
None
Decision
1) Articles 63 and 65 of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that, in circumstances such as those in the main proceedings, where rights have been established in favor of a company, of construction for the construction of buildings as a consideration for services for the construction of certain real estate objects, which the company undertakes to hand over in full to the founders of construction rights, these articles allow value added tax for construction services to be required by the time of establishment of the building rights, ie before the provision of the services, as soon as at the time of the establishment of these rights all relevant elements of the future supply of services are already known,therefore, in particular, the services in question are well defined, and once the value of those rights can be quantified, which must be determined by the referring court.
In circumstances such as those in the main proceedings, where the supplies are not made between related parties within the meaning of Article 80 of Directive 2006/112 – which, however, must be established by the referring court, – Articles 73 and 80 of that directive must be applied. interpret that they do not allow a national provision such as that at issue in the main proceedings, according to which, if the consideration for the supply is determined entirely in goods or services, the taxable amount of the supply is the market value of the goods or services provided.
(2) Articles 63, 65 and 73 of Directive 2006/112 have direct effect.
Summary
Obligation in the event of early payment of full consideration upon the establishment of the right of superficies in exchange for construction services provided.
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