On February 6, 2022, the ECJ issued its order in the case C-33/13 (Jagiełło).
Context: Reference for a preliminary ruling — Article 99 of the Rules of Procedure of the Court — Taxation — VAT — Sixth Directive — Right of deduction — Refusal — Invoice issued by a company acting as nominee)
Article in the EU VAT Directive
Artciles 4(1), 4(2), 17(1). 17(2) of the Sixth VAT Directive (Article 9(1) and 168 of the EU VAT Directive 2006/112/EC)
Article 9m (Taxable person)
1. ‘Taxable person’ shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.
Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as ‘economic activity’. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.
Article 168 (Right to deduct VAT)
In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay:
(a) the VAT due or paid in that Member State in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person;
(b) the VAT due in respect of transactions treated as supplies of goods or services pursuant to Article 18(a) and Article 27;
(c) the VAT due in respect of intra-Community acquisitions of goods pursuant to Article 2(1)(b)(i);
(d) the VAT due on transactions treated as intra-Community acquisitions in accordance with Articles 21 and 22;
(e) the VAT due or paid in respect of the importation of goods into that Member State.
Facts
- In 2005, Mr Jagiełło, carrying on the business of transporting goods and selling clothes, deducted from the VAT for which he was liable the VAT appearing on fuel purchase invoices issued by Bogromil sp. z oo (‘Bogromil’), a Polish limited liability company,← (‘the invoices at issue’).
- The tax authorities refused Mr Jagiełło the right to deduct that VAT on the ground that the invoices in question did not reflect the economic transactions actually carried out.
- Bogromil, which is also registered as liable for VAT, was involved in transactions relating to illegal fuel and served as a nominee for Mr Kucharski, the true owner and seller of the fuel in question. Bogromil’s accounts did not in fact show any invoice for the purchase of fuel for diesel engines, so that the tax authorities concluded that this company did not have such fuel and that, therefore, it did not was able to resell it to other economic operators.
- That being so, that administration has not challenged the fact that Mr Jagiełło made the purchase and that he used the product delivered for the purposes of an economic activity relating to transport services. Furthermore, that administration neither examined nor found that the quantity and price of the goods actually delivered complied with the data mentioned on the invoices in question.
- Mr Jagiełło brought an action before the referring court against the decision of the Dyrektor Izby Skarbowej w Łodzi refusing him the right to deduct VAT from the invoices in question, on the ground that that decision infringes in particular Article 88(3a)(4)(a) of the VAT Law, read in conjunction with Article 17(2) of the Sixth Directive. He maintains that he fulfills the conditions to be able to deduct this VAT, since he had received the invoice noting the acquisition of the goods as well as the goods. Furthermore, he demonstrated due diligence in the context of the transaction in question, given that he had obtained from Bogromil, in particular, confirmation of his registration as a person subject to VAT.
Questions
(1) Must Article 4(1) and (2), read in conjunction with Article 5(1) of the [Sixth Directive], be interpreted as meaning that it precludes the sale carried out by a person who uses the company name of another person, with the latter’s agreement, for the purpose of concealing his own economic activity, be qualified as a supply of goods?
(2) Must Article 17 of the [Sixth Directive] be interpreted as meaning that it precludes the deduction of VAT from an invoice drawn up by a person who only served as a nominee for the sale of goods carried out by another person, without it being established that the purchaser knew or could have known, on the basis of objective circumstances, that the transaction in which he participated was involved in fraud or other irregularities, committed by the issuer of the invoice or an operator collaborating with the latter?
AG Opinion
None
Decision
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, as amended by Council Directive 2001/115/EC of 20 December 2001, must be interpreted as meaning that a taxable person may not be refused the right to deduct VAT due or paid in respect of goods supplied to him on the ground that, in view of fraud or irregularities committed by the issuer of the invoice for that supply, the supply is considered not to have actually been made by the issuer, unless it is established, on the basis of objective evidence and without requiring of the taxable person checks which are not his responsibility, that that taxable person knew, or should have known, that that supply was connected with VAT fraud — a matter which it is for the referring court to determine.
Summary
Invoice issued by company acting as front man – refusal right to deduct
A taxable person may not be denied the right to deduct the VAT due or paid in respect of goods supplied to him on the ground that, having regard to fraud or irregularities committed by the issuer of the invoice for such supply, this delivery shall be deemed not to have actually been made by the issuer of this invoice, unless it is proved by objective evidence, without the taxable person being required to carry out checks which are not his responsibility, that this taxable person knew or ought to have known that that supply was part of VAT fraud, which is for the referring court to ascertain.
Source:
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