ECJ C-664/21 (NEC Plus Ultra Cosmetics AG) – Judgment – New evidence to substantiate intracommunity supply not necessarilly allowed

On March 2, 2023, the ECJ issued its decision in the case C-664/21 (NEC Plus Ultra Cosmetics AG).

Context: Reference for a preliminary ruling — Common system of value added tax (VAT) — Directive 2006/112/EC — Article 138(1) — Exemptions relating to intra-Community transactions — Supply of goods — Principles of fiscal neutrality, efficiency and proportionality – Satisfaction of substantive requirements – Deadline for presentation of evidence

Article in the EU VAT Directive

Article 131 and 138(1) of the EU VAT Directive 2006/112/EC.

Article 131 (Exemption – General provisions)

The exemptions provided for in Chapters 2 to 9 shall apply without prejudice to other Community provisions and in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse.

Article 138 (Exemption related to the supply of goods)
1. Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, where the following conditions are met:
(a) the goods are supplied to another taxable person, or to a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods begins;
(b) the taxable person or non-taxable legal person for whom the supply is made is identified for VAT purposes in a Member State other than that in which the dispatch or transport of the goods begins and has indicated this VAT identification number to the supplier.
1a. The exemption provided for in paragraph 1 shall not apply where the supplier has not complied with the obligation provided for in Articles 262 and 263 to submit a recapitulative statement or the recapitulative statement submitted by him does not set out the correct information concerning this supply as required under Article 264, unless the supplier can duly justify his shortcoming to the satisfaction of the competent authorities.
2. In addition to the supply of goods referred to in paragraph 1, Member States shall exempt the following transactions:
(a) the supply of new means of transport, dispatched or transported to the customer at a destination outside their respective territory but within the Community, by or on behalf of the vendor or the customer, for taxable persons, or non-taxable legal persons, whose intra-Community acquisitions of goods are not subject to VAT pursuant to Article 3(1), or for any other non-taxable person;
(b) the supply of products subject to excise duty, dispatched or transported to a destination outside their respective territory but within the Community, to the customer, by or on behalf of the vendor or the customer, for taxable persons, or non-taxable legal persons, whose intra-Community acquisitions of goods other than products subject to excise duty are not subject to VAT pursuant to Article 3(1), where those products have been dispatched or transported in accordance with Article 7(4) and (5) or Article 16 of Directive 92/12/EEC;
(c) the supply of goods, consisting in a transfer to another Member State, which would have been entitled to exemption under paragraph 1 and points (a) and (b) if it had been made on behalf of another taxable person.

Facts

The appellant, which is established in Switzerland, supplied goods (cosmetic products) to a purchaser established in Croatia and, in one case, to a purchaser established in Romania. The appellant submits that the Croatian purchaser, or another person on the purchaser’s behalf, removed the goods from a warehouse in Slovenia (EXW clause, [ex factory]) and transported them from Slovenia to another Member State. In relation to those supplies it requested the exemption from value added tax (‘VAT’) laid down for supplies of goods effected within the European Union (‘EU’) within the meaning of Article 46(1) – in the version then in force – of the Zakon o davku na dodano vrednost (Law on value added tax) (‘the ZDDV-1’).
The Finančna uprava Republike Slovenije (Tax Administration of the Republic of Slovenia) (‘the tax authority of first instance’), carried out, in connection with a VAT inspection procedure for 2017, an inspection at the appellant of the evidence and supporting documentation relating to supplies of goods and services to other EU Member States. By decision of 14 February 2019, that authority requested the appellant to submit all the documentation relating to the supplies in question.
In accordance with that request, the appellant produced the invoices and copies of the consignment notes (‘the CMRs’) by which it demonstrated that the goods (from Slovenia) had been transported to another Member State. However, at that time it did not provide the tax authority of first instance with the delivery notes or other documents mentioned in the CMRs, but stated that it did not possess all the documents and was attempting to obtain them.
On 1 April 2019, the tax authority of first instance drew up the report on the tax investigation procedure (‘the report’) and notified it to the appellant. Within the time limit laid down, the appellant attached to its observations on the report copies of price quotations and delivery notes which (further) demonstrated that the supply of the goods concerned had been effected to another Member State. It advanced, as the reason for the late submission, that its office in Hamburg, which was responsible for supplies to Croatia and ceased its activities in August 2018, had failed to provide all the documentation to it in due time.
On 30 May 2019, the tax authority of first instance adopted a decision by which it issued the appellant, in respect of 2017, with an additional VAT assessment notice and ordered it to pay the relevant amount. In the grounds for the decision, that authority stated that appellant had failed to demonstrate, by the invoices and CMRs, that the goods had actually been transported to another Member State.
Consequently, it considered that the conditions for the VAT exemption laid down for supplies of goods effected within the EU in Article 46 of the ZDDV-1 and Article 79 of the Pravilnik o izvajanju zakona o davku na dodano vrednost (Regulation implementing the Law on value added tax) (‘the PZDDV-1’) had not been satisfied. In its decision, the tax authority of first instance did not take account of the supporting documents (price quotations and delivery notes) submitted ex post after the report had been drawn up. It considered that those documents had been submitted out of time by the appellant, within the meaning of Article 140(2) of the Zakon o davčnem postopku (Law on tax procedure) (‘the
ZDavP-2’), without justification. In the view of the tax authority of first instance, the grounds stated for the late submission of the documentation provided by the appellant in its observations on the assessment report merely constitute an indication of its irregular business management.
By decision of the Ministry of Finance, as the tax authority of second instance, the complaint lodged by the appellant was dismissed. In that decision, the Ministry of Finance, on the one hand, confirmed the position of the tax authority of first instance regarding the evidence submitted out of time ex post and, on the other, considered that the individual items of evidence submitted (ex post), and submitted again with the complaint, likewise failed to show that the goods had been transported outside Slovenia.

Questions

Do the provisions of the VAT Directive, in particular Articles 131 and 138(1) thereof, and the principles of EU law, in particular the principles of tax […] neutrality, effectiveness and proportionality, preclude national legislation which prohibits the submission and acceptance of new evidence to demonstrate satisfaction of the substantive requirements laid down in Article 138(1) of the VAT Directive, already during the administrative procedure at first instance, and more specifically in the context of the observations submitted on the tax inspection report issued before a tax assessment notice has been issued?

AG Opinion

None

Decision

Unoffical translation

Article 131 and Article 138(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in conjunction with the principles of fiscal neutrality, effectiveness and proportionality,

should be interpreted as:

they do not preclude national legislation which prohibits the production and collection of new evidence, which establishes that the substantive conditions provided for in Article 138(1) of that directive are fulfilled, during the administrative procedure which led to the adoption of the tax decision, in particular after the tax audit operations but before the adoption of this decision, provided that the principles of equivalence and effectiveness are respected.

Summary

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