Flashback on ECJ Cases – C-311/09 (Commission v Poland) – International passenger transport – Flat-rate taxation of carriers established outside national territory

On May 6, 2010, the ECJ issued its decision in the case C-311/09 (Commission v Poland).

Context: “State failure – Taxation – VAT – International passenger transport – Flat-rate taxation of carriers domiciled outside the national territory

Article in the EU VAT Directive

Article 73, 168 and 273 in the EU VAT Directive

Article 73

In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply.

Article 168

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;

(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.

Article 273

Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirement of equal treatment as between domestic transactions and transactions carried out between Member States by taxable persons and provided that such obligations do not, in trade between Member States, give rise to formalities connected with the crossing of frontiers.

The option under the first paragraph may not be relied upon in order to impose additional invoicing obligations over and above those laid down in Chapter 3.

Facts & questions

By its application, the Commission of the European Communities asks the Court to find that, by levying value added tax (hereinafter ‘VAT’) in accordance with the procedures defined in Chapter 13, paragraph 35, points 1 and 3 to 5, of the decree of the Minister of Finance of April 27, 2004 relating to the execution of certain provisions of the law relating to the tax on goods and services (Dz. U n° 97, position 970, hereinafter the “disputed VAT scheme”), the Republic of Poland has failed to fulfill its obligations under Articles 73, 168 and 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ L 347, p. 1).
On 23 October 2007, the Commission addressed formal complaints to the Republic of Poland relating to breaches of Articles 73, 168 and 273 of Directive 2006/112 arising from the application of the disputed VAT scheme.
By letter of 21 December 2007, the Republic of Poland sent its response to the Commission’s formal objections, in which it acknowledged that the disputed VAT scheme derogated from the requirements of Directive 2006/112 and indicated that it was willing to adopt solutions in accordance with this directive.
The Commission, not satisfied with the Republic of Poland’s response, sent it a reasoned opinion on 27 June 2008 in which it maintains that that Member State has failed to fulfill its obligations under Articles 73, 168 and 273 of Directive 2006/112 by applying the contested VAT regime.
By letter of 28 August 2008, the Republic of Poland communicated its response to that reasoned opinion, in which it once again acknowledged that the disputed VAT scheme derogated from the provisions of Directive 2006/112 and stated that work had started with a view to preparing a new request for derogation taking account of the Commission’s observations on the basis of Article 395 of this directive.
Not being satisfied with the answers provided by that Member State, the Commission decided to bring the present action.

AG Opinion

None

Decision

1) By levying value added tax in accordance with the terms defined in Chapter 13, paragraph 35, points 1 and 3 to 5, of the order of the Minister of Finance of April 27, 2004 relating to the execution of certain provisions of the Law on Goods and Services Tax, the Republic of Poland has failed to fulfill its obligations under Articles 73, 168 and 273 of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax.

Summary

International passenger transport – Flat-rate taxation of carriers established outside national territory

By imposing VAT in the manner provided for in section 13, paragraph 35, points 1 and 3 to 5, of the Regulation of the Minister of Finance of 27 April 2004 on the implementation of certain provisions of the law on taxation products and services, the Republic of Poland has failed to fulfill its obligations under Articles 73, 168 and 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax.

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