ECJ C-247/21 (Luxury Trust Automobil) – Judgment – Mandatory Invoice requirements for triangulation which can not be corrected later

On December 8, 2022, the ECJ issued the judgment in the case C-247/21 (Luxury Trust Automobil).

Context: Request for a preliminary ruling – Value added tax (VAT) – Intra-Community triangular transaction – Special scheme – Purpose and legal consequences of the special scheme – Reference to a reverse charge in the invoice as a requirement – Correction of an incorrect invoice – Retroactive effect of the correction – Correction without the invoice being received

Articles in the EU VAT Directive 2006/112/EC

Article 42(a), 197(1)(c) and 219(a) of the EU VAT Directive 2006/112/EC.

Article 42 (Place of an intra-Community acquisition of goods)
The first paragraph of Article 41 shall not apply and VAT shall be deemed to have been applied to the intra-Community acquisition of goods in accordance with Article 40 where the following conditions are met:
(a) the person acquiring the goods establishes that he has made the intra-Community acquisition for the purposes of a subsequent supply, within the territory of the Member State identified in accordance with Article 40, for which the person to whom the supply is made has been designated in accordance with Article 197 as liable for payment of VAT

Article 197 (Persons liable to pay VAT)
1. VAT shall be payable by the person to whom the goods are supplied when the following conditions are met:
(c) the invoice issued by the taxable person not established in the Member State of the person to whom the goods are supplied is drawn up in accordance with Sections 3 to 5 of Chapter 3.

Article 219a (Issue of invoices)
1. Invoicing shall be subject to the rules applying in the Member State in which the supply of goods or services is deemed to be made, in accordance with the provisions of Title V.
2. By way of derogation from paragraph 1, invoicing shall be subject to the following rules:
(a) the rules applying in the Member State in which the supplier has established his business or has a fixed establishment from which the supply is made or, in the absence of such place of establishment or fixed establishment, the Member State where the supplier has his permanent address or usually resides, where:
(i) the supplier is not established in the Member State in which the supply of goods or services is deemed to be made, in accordance with the provisions of Title V, or his establishment in that Member State does not intervene in the supply within the meaning of point (b) of Article 192a, and the person liable for the payment of the VAT is the person to whom the goods or services are supplied unless the customer issues the invoice (self-billing);
(ii) the supply of goods or services is deemed not to be made within the Community, in accordance with the provisions of Title V;
(b) the rules applying in the Member State where the supplier making use of one of the special schemes referred to in Chapter 6 of Title XII is identified.
3. Paragraphs 1 and 2 of this Article shall apply without prejudice to Articles 244 to 248.

Facts

The appellant is an Austrian limited liability company with its registered office in Austria. Its business includes cross-border brokering and cross-border sales of luxury vehicles.
On multiple occasions in 2014, the appellant purchased vehicles from a supplier in the United Kingdom and sold them on to a company with its registered office in the Czech Republic (‘M s.r.o.’). The three traders involved each acted under the VAT identification number (VAT ID) of their State of establishment. The vehicles arrived directly from the supplier in the United Kingdom to the recipient in the Czech Republic; the transport of the vehicles had been arranged by the appellant.
The appellant’s three invoices (each from March 2014) stated the Czech VAT ID of the recipient, the Austrian VAT ID of the appellant and the UK VAT ID of the supplier. Each of the invoices included the reference ‘tax-exempt intraCommunity triangular transaction’. Value added tax was not mentioned on the invoices (only the ‘net amount of the invoice’ in each case; similarly, as is apparent from the case documents, the purchasing agreements indicated only a ‘net purchase price’). In the recapitulative statement for the month of March 2014, the appellant reported these supplies of goods in relation to the VAT ID of the Czech recipient and reported the existence of triangular transactions.
The Czech company M s.r.o. is classified by the Czech tax authorities as a ‘missing trader’. The company could not be contacted by the Czech tax administration and it did not declare and pay VAT in the Czech Republic on the triangular transactions. During the period in which the supplies at issue were made, M s.r.o. was registered for VAT in the Czech Republic.
In its decision dated 25 April 2016, the Finanzamt (Austrian Tax Office) assessed the appellant’s VAT for the year 2014. In the grounds of its decision, the Tax Office stated – with reference to a report on an audit by the tax authorities – that the three invoices issued by the appellant to the Czech company M s.r.o. did not contain any reference to the transfer of the tax liability (Article 25(4) of the UStG 1994). Therefore, it deems the transaction to be a ‘failed triangular transaction’ that cannot be remedied after the event. Due to the use of the Austrian VAT ID, an intra-Community acquisition in Austria was assumed to exist in accordance with Article 3(8) of the UStG 1994.
With the judgment under appeal before the Verwaltungsgerichtshof (Supreme Administrative Court), the Bundesfinanzgericht (Federal Finance Court) dismissed the action brought by the appellant against that decision.
In its statement of grounds, the Federal Finance Court added that the applicant had amended the three invoices by adding amendments dated 23 May 2016, making reference to the transfer of the tax liability to the person to whom the supply is made.
It stated that the provisions relating to triangular transactions are not mandatorily applicable in a set of circumstances as referred to in Article 25(1) of the UStG
1994. Rather, the customer (the intermediate trader in a triangular transaction) has the right to choose whether or not to apply the triangular transaction regime with respect to a particular supply. The right of option has to be exercised in accordance with the statutory requirements at the time of the transaction. If the customer wishes to obtain tax exemption for its intra-Community acquisition in the Member State of destination and to transfer the tax liability relating to its
supply to the recipient, it must include in the invoice the details stipulated in Article 25(4) of the UStG 1994. The court deems that the issuing of invoices by the appellant proved to be defective, as the invoices in dispute lack a reference to the liability of the end customer for payment of VAT.
According to the court, if the customer’s invoice does not fulfil the substantive requirements of Article 25(4) of the UStG 1994, the provisions of Article 25 of the UStG 1994 are not applicable. In that case, the chain transaction would have to be treated in accordance with the general rules.
The appellant had credibly shown that it had made amendments to the disputed outgoing invoices and then attempted to send them to the Czech company. Proof of actual service of the invoice amendments to the Czech company has not been established, however, with the result that the appellant did not discharge its burden of proof.
Therefore, in the absence of any amendment of the incorrect invoices, the court believes there is no need to examine the question further of whether a subsequent correction of an invoice makes it possible to benefit from the simplification rules for triangular transactions. In the present case, no tax was paid in the country of destination.
The court went on to state that, as the invoices did not contain any reference to the liability of the end customer for payment of VAT, the simplification rules for triangular transactions could not be applied; the turnover transactions were therefore to be assessed on the basis of the rules for chain transactions. Since the appellant used its Austrian VAT ID, it made an intra-Community acquisition in Austria. The acquisition is considered to have been made in Austria until the appellant establishes that the acquisition was taxed in the country of destination of the Czech Republic. This condition subsequent was not satisfied. Furthermore, the appellant was not entitled to an input tax deduction from the cumulative intraCommunity acquisition.

Question

1. Is Article 42(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax in conjunction with Article 197(1)(c) of that Directive (as amended by Council Directive 2010/45/EU of 13 July 2010) to be interpreted as meaning that the person to whom the supply is made is to be designated as liable for payment of VAT if the invoice, which does not show the amount of value added tax, states: ‘Exempt intraCommunity triangular transaction’?
2. If the first question is answered in the negative:
a) Can such a mention on the invoice be amended so as to apply retroactively (by stating: ‘Intra-Community triangular transaction in accordance with Article 25 of the Austrian Law on turnover tax (‘the UStG’). Liability for payment of VAT is transferred to the customer’)?
b) Is it necessary for the invoice recipient to receive the amended invoice in order for an amendment to be effective?
c) Does the effect of the amendment apply retroactively to the original date of invoicing?
3. Is Article 219a of Directive 2006/112/EC (as amended by Council Directive 2010/45/EU of 13 July 2010 and the Corrigendum in OJ L 299/46 of 17 November 2010) to be interpreted as meaning that the rules on invoicing to be applied are those of the Member State whose provisions would be applicable if a ‘customer’ has not (yet) been designated on the invoice as the person liable for payment of VAT; or are the rules to be applied those of the Member State whose provisions would be applicable if the designation of the ‘customer’ as the person liable for payment of VAT is accepted as valid?

AG Opinion

(1) The person to whom the supply is made is to be regarded as having been designated as liable for payment of VAT within the meaning of Article 197 of Council Directive 2006/112/EC on the common system of value added tax only if the invoice concerned referred to a reverse charge to the recipient of the supply. The indication ‘Exempt intra-Community triangular transaction’ is not sufficient in that regard.

(2) An invoice that contains the required indication ‘Reverse charge’ can still be issued subsequently, but only with ex nunc effect. In that respect, it is necessary that that invoice be received by the recipient of the supply.

Decision

1. Art. 42 letter a of Council Directive 2006/112/EC of November 28, 2006 on the common system of value added tax as amended by Council Directive 2010/45/EU of July 13, 2010 in conjunction with Art. 197(1)(c) of Directive 2006/112 as amended

is to be interpreted as follows

the final purchaser has not been effectively determined as the VAT debtor in the context of a triangular transaction if the invoice issued by the intermediate purchaser does not contain the information “tax liability of the service recipient” in accordance with Art. 226 No. 11a of Directive 2006/112 as amended.

2. Article 226(11a) of Directive 2006/112 as amended by Directive 2010/45

is to be interpreted as follows

the omission of the information “Tax liability of the recipient of the service” required under this provision on an invoice cannot be corrected later by adding a reference to the fact that this invoice relates to an intra-Community triangular transaction and that the tax liability is transferred to the recipient of the delivery.

Source