ECJ C-641/21 (Climate Corporation Emissions Trading) – Questions – Place of supply when partcipating in tax evasion

Article in the EU VAT Directive

Articles 44 and 196 of the EU VAT Directive 2006/112/EC

Article 44 (Place of supply of services)
The place of supply of services to a taxable person acting as such shall be the place where that person has established his business. However, if those services are provided to a fixed establishment of the taxable person located in a place other than the place where he has established his business, the place of supply of those services shall be the place where that fixed establishment is located. In the absence of such a place of establishment or fixed establishment, the place of supply of services is the place where the taxable person who receives such services has his permanent address or usually resides.

Article 196 (Liability to pay VAT)
VAT shall be payable by any taxable person, or non-taxable legal person identified for VAT purposes, to whom the services referred to in Article 44 are supplied, if the services are supplied by a taxable person not established within the territory of the Member State

Facts

Climate Corporation Emissions Trading GmbH (the applicant) has its registered office in Austria. From 1 to 20 April 2010, the applicant transferred greenhouse gas emission allowances against payment to Bauduin Handelsgesellschaft mbH (Bauduin GmbH), established in Germany, which was a participant in VAT carousel fraud. In a 2010 VAT assessment, the Baden Mödling tax office classified the paid transfers of greenhouse gas emission allowances from the applicant to Bauduin GmbH as taxable supplies of goods which did not fall under the tax exemption for intra-Community supplies because Bauduin GmbH had been part of a fraudulent VAT carousel and the applicant knew or had should know that its services would be used for VAT fraud. The applicant opposes the classification of the transfers of allowances as supplies and denies that it or its drivers were or should have been aware of the VAT fraud. According to the Bundesfinanzgericht, this is not correct. Although the applicant was not aware that the rights it sold to Bauduin GmbH were being used in VAT fraud, it should have known that this was the case.

Consideration:

According to the case law of the Court, transfers of greenhouse gas emission allowances must be regarded as services. According to the wording of the VAT Directive, the place where the applicant supplied the services at issue is, in accordance with the general B2B rule, in Germany. According to the answer to a question referred in Italmoda, national authorities and courts must refuse to grant a taxable person the right to deduct in connection with an intra-Community supply, exemption or refund of VAT if it can be established on the basis of objective data that the taxable person knew or should have known that, with the transaction for which the relevant right is claimed, he was participating in VAT fraud in the context of a chain of deliveries. Another question referred for a preliminary ruling was answered in Italmoda that a taxable person who knew or should have known that the transaction for which the right to deduct, exempt or refund VAT is claimed was participating in VAT fraud in the context of of a supply chain, those rights may be refused even though the tax fraud was committed in a Member State other than the Member State in which those rights are claimed and notwithstanding the fact that the taxable person in the latter Member State has fulfilled the formal conditions laid down in national law for the exercise of those rights. The decision of the Bundesfinanzgericht will depend on whether the cross-border services at issue require a mutatis mutandis application of the above-mentioned answers to the questions referred for a preliminary ruling in Italmoda.

Source Minbuza.nl

Questions

Is Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2008/8/EC of 12 February 2008, to be interpreted as meaning that national authorities and courts must regard the place of a service, which according to written law is formally situated in another Member State where the recipient of the service is established, as a place situated in the domestic territory,when the resident taxable person providing that service should have known that he is participating in value added tax evasion in the context of a supply chain?

AG Opinion

Decision

Summary

Source