On December 18, 2007, the ECJ issued its decision in the case C-368/06 (Cedilac).
Context:(Sixth VAT Directive – Right to deduct – Principles of immediate deduction and fiscal neutrality – Carry forward of the excess VAT to the following period or refund – One-month delay rule – Transitional provisions – Retention of the exemption
Article in the EU VAT Directive
Articles 17, 18(4), 28(3)(d) of the Sixth VAT Directive (Articles 167 and 183 of the EU VAT Directive 2006/112/EC)
Article 167 (Right to deduct VAT)
A right of deduction shall arise at the time the deductible tax becomes chargeable.
Article 183
Where, for a given tax period, the amount of deductions exceeds the amount of VAT due, the Member States may, in accordance with conditions which they shall determine, either make a refund or carry the excess forward to the following period.
However, Member States may refuse to refund or carry forward if the amount of the excess is insignificant.
Article 372
Member States which, at 1 January 1978, applied provisions derogating from the principle of immediate deduction laid down in the first paragraph of Article 179 may continue to apply those provisions.
Facts
- On 26 December 2002, Cedilac requested that the French State pay it the sum of EUR 1 524 806.62 by way of damages for losses which it claims to have suffered from 1993 to 2002 as a result of the application of the transitional measures.
- As the Minister for Economic Affairs, Finance and Industry failed to reply to that claim for damages, Cedilac brought an action before the Tribunal administratif de Lyon (Administrative Court, Lyon) against that implicit decision of rejection.
- Before ruling on Cedilac’s application, that court, by judgment of 15 November 2005, requested the opinion of the Conseil d’État (French Council of State) on the question whether the transitional measures are compatible with Articles 17 and 18(4) of the Sixth Directive.
- By opinion dated 14 June 2006, the Conseil d’État took the view that the question put by the Tribunal administratif de Lyon was of such a difficult nature as to justify a reference for a preliminary ruling to the Court.
- In those circumstances, the Tribunal administratif de Lyon decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:
- Are the enacting provisions adopted by France to accompany the repeal of the one-month delay rule compatible with Articles 17 and 18(4) of [the Sixth Directive]?’
- The national court, taking the view that, in the light of the number of actions already initiated before the administrative courts and the considerable financial stake for the budget of the French State, the question called for an urgent answer from the Court, asked the Court to apply the accelerated procedure to the reference for a preliminary ruling in accordance with the first paragraph of Article 104a of the Rules of Procedure of the Court of Justice.
- The President of the Court rejected that request by Order of 25 September 2006, taking the view that the conditions laid down in the first paragraph of Article 104a had not been met.
- By Order of the President of the Court of 23 March 2007, the application to intervene submitted by the Fromagerie des Chaumes SAS was rejected as inadmissible.
Questions
Are the enacting provisions adopted by France to accompany the repeal of the one-month delay rule compatible with Articles 17 and 18(4) of Directive 1997/388/EEC of the Council of the European Communities of 17 May 1977?
AG Opinion
Articles 17, 18, 28(3)(d) and 28(4) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment do not, in principle, preclude measures of the kind at issue in the main proceedings.
Decision
Articles 17 and 18(4) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, are to be interpreted as not precluding national measures such as the transitional measures provided for by Law No 93-859 of 22 June 1993, the amending Finance Law for 1993, which are designed to accompany the abolition of a national derogating provision authorised by Article 28(3)(d) of the same directive, in so far as the national court verifies that, in its application to the specific case before it, those measures reduce the effects of the national derogating provision.
Summary
Articles 17 and 18(4) of the Sixth Directive must be interpreted as not precluding transitional national rules introduced in the context of the repeal of a provision established by Article 28(3)(d) of that directive permitted derogating national provision, provided that the national court finds that that measure limits the effects of that derogating national provision in the specific case.
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