On October 20, 2022, the ECJ issued the decision in the case C-585/20 (BFF Finance Iberia S.A.U. vs. ES). This is not classified as a VAT case though it links to VAT ….
Context: Reference for a preliminary ruling – Directive 2011/7/EU – Fight against late payment in commercial transactions – Recovery, from a public authority, of debts acquired from several companies by a collection company – Article 6 – Lump sum of 40 euros due as compensation for recovery costs – Article 4 – Time limit for payment when a procedure for certification of the conformity of the goods or services is provided for by law or in the contract – Article 2, point 8 – Concept of “amount due” – Inclusion of value added tax (VAT) in the basis for calculating default interest
On 5 November 2020 the Juzgado Contencioso-Administrativo No 2 de Valladolid (Spanish Court) wishes to find out (a.o.) if according to the Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions default interest should be calculated also on the VAT due.
Articles
Articles 4(1), 6, and 7(2) and (3) of Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions
Facts
- Several trading companies have supplied goods and services to medical centers under the responsibility of the health department.
- The health service has not paid the bills before the due date.
- BFF Finance Iberia has taken over the rights from the trading companies and requested the health service for payment of: EUR 124 662.71 as principal, plus default interest and EUR 40 in recovery costs for each of the invoices not paid within the legally established deadlines.
- The health service did not pay and BFF Finance Iberia lodged an appeal with the administrative court.
Questions
‘In the light of Articles 4(1), 6, and 7(2) and (3) of Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions:
How is Article 2 of the directive to be interpreted? Does the interpretation of the directive support the conclusion that the basis for calculating late-payment interest recognised in the directive includes the VAT due on the service provided, the amount of which is included in the invoice? Or is it necessary to identify and determine the time when the contractor paid the tax to the tax administrative authority?
AG Opinion (Unofficial translation)
1) Article 6 of Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions must be interpreted as meaning that the right to The (minimum) compensation of 40 euros (or equivalent) for recovery costs applies to each invoice (or commercial transaction) giving rise to the collection of default interest.
2) Article 4 of Directive 2011/7 must be interpreted as meaning that it does not preclude national legislation which provides, in the case of transactions between undertakings and public authorities, for a payment period of a maximum duration of 60 days, consisting of an initial period of 30 days for the procedure of acceptance or verification of the conformity of the goods delivered or the services provided with the contract and an additional period of 30 days for payment effective of the agreed price,provided that the application of this additional period is subject to the existence of a specific acceptance or verification procedure which is expressly provided for by law or in the contract and provided that the use of this additional period is objectively justified by the particular nature or by certain elements of the contract in question.
3) Article 2(8) of Directive 2011/7 must be interpreted as meaning that the “amount due” includes late payment interest calculated on the basis of the total amount of the invoice, value added tax being understood, and this independently of the fact that the creditor has previously paid this tax to the Public Treasury.
Decision (Unofficial translation)
1) Article 6 of Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions,
should be interpreted as:
the minimum lump sum of 40 euros, as compensation to the creditor for the recovery costs incurred as a result of the debtor’s late payment, is due for each commercial transaction not remunerated on the due date, evidenced in an invoice, including when this invoice is presented, among other invoices, in a single administrative or judicial complaint.
2) Article 4(3) to (6) of Directive 2011/7
should be interpreted as:
it opposes a national regulation which provides, in general, for all commercial transactions between companies and public authorities, a payment period of a maximum duration of 60 calendar days, including when this period is made up of a initial period of 30 days for a procedure of acceptance or verification of the conformity of the goods or services provided with the contract, followed by an additional period of 30 days for the payment of the agreed price.
3) Article 2(8) of Directive 2011/7
should be interpreted as:
the taking into account, under the “amount due” defined in this provision, of the amount of value added tax appearing on the invoice or the equivalent request for payment is independent of the point of knowing whether, on the date on which the delay payment occurs, the taxable person has already paid this amount to the Treasury.
Source
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