On February 9, 2017, the ECJ issued its decision in the case C-21/16 (Euro Tyre).
Context: Reference for a preliminary ruling — VAT — Directive 2006/112/EC — Articles 131 and 138 — Preconditions for the exemption of an intra-Community supply — VAT Information Exchange System (VIES) — Purchaser’s failure to register — Refusal to grant the exemption — Whether permissible
Article in the EU VAT Directive
Artciles 131, 138(1) of the EU VAT Directive 2006/112/EC.
Article 131 (Exemption)
The exemptions provided for in Chapters 2 to 9 shall apply without prejudice to other Community provisions and in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse.
Article 138 (Exemption related to Suppky of goods – Intra-Community Supply of goods)
1. Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, for another taxable person, or for a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods began.
Facts
- Euro Tyre is a Portuguese branch of a company incorporated under Netherlands law, Euro Tyre BV. It is engaged in the import, export and marketing of tyres of various brands for retailers based in Portugal and Spain. In the Spanish market, it sells, in part, directly and, in part, through a distributor, namely Euro Tyre Distribución de Neumáticos SL.
- The dispute in the main proceedings concerns several sales made during the period between 2010 and 2012 to Euro Tyre Distribución de Neumáticos. At the time of those sales, the latter was registered as a taxable person for the purposes of VAT in Spain. However, it was not yet subject, in that Member State, to the system of taxation on intra-Community acquisitions or registered in the VAT Information Exchange System (the ‘VIES system’). It was not until 19 March 2013 that the Spanish tax authorities granted it the status of intra-Community operator and registered it in that system with effect from 1 July 2012.
- Euro Tyre declared those sales to be intra-Community supplies and thus exempt under Article 14(a) of the RITI.
- Following a tax inspection covering the years 2010 to 2012, however, the Inspeção Tributária (Tax Inspectorate, Portugal) considered that the conditions for the exemption provided for in Article 14(a) of the RITI were not met, since, at the time of the sales in question, Euro Tyre Distribución de Neumáticos, was neither registered for intra-Community transactions in Spain nor registered in the VIES system.
- Consequently, the Tax and Customs Authority made adjustments to the VAT due from Euro Tyre for the years 2010 to 2012 together with interest for late payment.
- Euro Tyre contested those adjustments. After its administrative action and appeal were dismissed, that company brought an action before the referring court. Before that court, it claims that the condition laid down in Article 14(a) of the RITI, namely that the purchaser must come under a system of taxation on intra-Community acquisitions of goods and be registered in the VIES system, is the result of an incorrect transposition of the VAT Directive. Such a condition does not appear in Article 138 of that directive and is, at most, a formal requirement imposed only by the Portuguese Republic.
- The referring court asks whether the exemption for intra-Community supplies provided for in Article 138(1) of the VAT Directive may be subject to the condition that the purchaser whose seat is in a Member State other than that in which dispatch or transport of the goods began is registered in that first State for intra-Community transactions and appears in the VIES system.
- In that regard, the referring court notes that since June 2010 Euro Tyre Distribución de Neumáticos has been registered for VAT in Spain for domestic transactions under an identification number which appeared on all invoices relating to sales in question and in the accompanying summary statements. By contrast, at the time of those sales, that company, which was subject to VAT, did not come under a system of taxation on intra-Community acquisitions and was not registered in the VIES system. Euro Tyre was aware of this fact, but expected the Spanish tax authorities to grant, with retroactive effect, Euro Tyre Distribución de Neumáticos the status of intra-Community operator. Furthermore, the Portuguese tax authorities considered that there was neither tax evasion nor avoidance on the part of Euro Tyre.
Questions
Must Articles 131 and 138(1) of Directive 2006/112 be interpreted, in respect of an intra-Community supply of goods, as precluding the tax authority of a Member State from refusing to grant VAT exemption to a seller domiciled in that Member State on the ground that the purchaser, domiciled in another Member State, is not registered in the VIES database nor is subject in that country to a system of taxation on intra-Community acquisitions of goods, although he has, at the time of the transactions, a valid identification number for the purposes of VAT in that other Member State, which has been used in the transaction invoices, and the cumulative material conditions for an intra-Community supply have been fulfilled, namely, that the right to dispose of the goods as owner has been transferred to the purchaser and the seller has established that these goods were dispatched or transported to another Member State and that, after that dispatch or transport, those goods physically left the Member State of departure and were delivered to a taxable purchaser or legal person acting as such in a Member State other than that in which dispatch or transport of the goods began?
Does the principle of proportionality preclude an interpretation of Article 138(1) of Directive No 2006/112/EC to the effect that the benefit of the right to VAT exemption is to be denied in a situation where a seller, domiciled in a Member State, was aware that the purchaser, domiciled in another Member State, although holding a valid identification number for the purposes of VAT in that other Member State, was not registered in the VIES database nor was subject to a system of taxation on intra-Community acquisitions of goods, but was convinced that that purchaser would be retroactively registered as an intra-Community operator?
AG Opinion
None
Decision
Article 131 and Article 138(1) of the Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, must be interpreted as precluding the tax authority of a Member State from refusing to exempt an intra-Community supply from value added tax on the sole ground that, at the time of that supply, the purchaser domiciled in the territory of the Member State of destination and who was in possession of a valid identification number for the purposes of value added tax in that Member State is neither registered in the Value Added Tax Information Exchange System nor comes under a system of taxation on intra-Community acquisitions of goods, where there is no sound evidence pointing to the existence of fraud and it is established that the basic conditions of the exemption are fulfilled. In that case, Article 138(1) of that directive, interpreted in the light of the principle of proportionality, also precludes such refusal where the vendor was aware of the circumstances of the situation of the purchaser with regard to the application of value added tax and was convinced that subsequently the purchaser would be registered as an intra-Community operator with retroactive effect.
Summary
Conditions for exemption for intra-Community supply – VAT Information Exchange System (VIES) – Non-registered customer – Refusal of exemption
Articles 131 and 138(1) of the VAT Directive must be interpreted as precluding the tax authorities of a Member State from refusing to exempt an intra-Community supply from VAT solely because the customer established at the territory of the Member State of destination and for transactions in that State has a valid VAT identification number, at the time of that supply was neither registered in the VAT information exchange system nor subject to a tax regime for intra-Community acquisitions , while there is no serious indication of fraud and it is established that the substantive conditions for the exemption are met. In that case, Article 138(1) of that directive precludes.
Source:
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