Flashback on ECJ Cases C-494/04 (Heintz van Landewijck) – Obligation to reimburse amounts paid for the purchase of excise stamps which correspond to VAT

On June 15, 2006, the ECJ issued its decision in the case C-494/04 (Heintz van Landewijck).

Context: Tax provisions – Harmonisation of laws – Directive 92/12/EEC – Excise duty – Tax stamps – Sixth VAT Directive – Articles 2 and 27 – Disappearance of excise stamps

Article in the EU VAT Directive

Articles 2, 27 of the Sixth VAT Directive (Articles 394 and 395 of the EU VAT Directive 2006/112/EC).

Article 394
Member States which, at 1 January 1977, applied special measures to simplify the procedure for collecting VAT or to prevent certain forms of tax evasion or avoidance may retain them provided that they have notified the Commission accordingly before 1 January 1978 and that such simplification measures comply with the criterion laid down in the second subparagraph of Article 395(1).

Article 395
1. The Council, acting unanimously on a proposal from the Commission, may authorise any Member State to introduce special measures for derogation from the provisions of this Directive, in order to simplify the procedure for collecting VAT or to prevent certain forms of tax evasion or avoidance.
Measures intended to simplify the procedure for collecting VAT may not, except to a negligible extent, affect the overall amount of the tax revenue of the Member State collected at the stage of final consumption.
2. A Member State wishing to introduce the measure referred to in paragraph 1 shall send an application to the Commission and provide it with all the necessary information. If the Commission considers that it does not have all the necessary information, it shall contact the Member State concerned within two months of receipt of the application and specify what additional information is required.
Once the Commission has all the information it considers necessary for appraisal of the request it shall within one month notify the requesting Member State accordingly and it shall transmit the request, in its original language, to the other Member States.
3. Within three months of giving the notification referred to in the second subparagraph of paragraph 2, the Commission shall present to the Council either an appropriate proposal or, should it object to the derogation requested, a communication setting out its objections.
4. The procedure laid down in paragraphs 2 and 3 shall, in any event, be completed within eight months of receipt of the application by the Commission.

Facts

Landewijck operates a manufactured tobacco wholesale business in Luxembourg in which it is an authorised warehousekeeper.
On 6 October 1998, it submitted to the Belastingdienst/Douane te Amsterdam (Amsterdam tax and customs authorities), pursuant to Article 75 of the Law on excise duty, two requests for excise stamps for manufactured tobacco. It entrusted Securicor Omega with the delivery those stamps to it.
On 9 October 1998, the Inspector charged the amounts due by Landewijck in respect of those two transactions, that is NLG 177 809.10 (NLG 140 575 by way of excise duty and NLG 37 234.10 by way of VAT) and NLG 2 711 474.60 (NLG 2 202 857.50 by way of excise duty and NLG 508 617.10 by way of VAT).
On 12 October 1998, the requested stamps were withdrawn from the PTT Post Filatelie, now Geldnet Services BV, by the courier company Smit Koerier acting on behalf of Securicor Omega.
It appears from the report drawn up on 17 December 1998 by an expert acting for the Luxembourg insurance company Le Foyer that, on 13 October 1998 at 19.40, Smit Koerier delivered three packages of stamps to Securicor Omega in Utrecht (Netherlands) and that, on 14 October 1998 at 10.00, Securicor Omega found that those packages had gone missing.
By letter of 23 November 1998, Landewijck informed the Inspector that the stamps handed over to Smit Koerier had still not been delivered to it, they could not, therefore, be used and that Securicor Omega did not accept responsibility for their disappearance. In that letter Landewijck asked the Inspector ‘to consider the particular circumstances of this case before the deadline for payment on 31 January 1999’.
The Inspector treated that letter of 23 November 1998 as a request for the offsetting or reimbursement of the amount due or paid by Landewijck for the stamps concerned, submitted in accordance with the combined provisions of Article 79(3) of the Law on excise duty and Article 52 of the Decree implementing that law. The Inspector refused the request by decision of 30 January 2001.
The complaint lodged by Landewijck against that decision was also dismissed by the Inspector.
The appeal against the dismissal of Landewijck’s complaint, brought before the Gerechtshof te Amsterdam (Regional Court of Appeal, Amsterdam), was also declared unfounded. The Gerechtshof te Amsterdam held, first, that the applicant had failed to establish with sufficient certainty that the stamps no longer existed or that the risk of their still being used was negligible and that, therefore, the stamps could not be regarded as lost within the meaning of Article 79(3)(b) of the Law on excise duty. Second, it held, pursuant to Article 28 of the Law on VAT, in accordance with which VAT on manufactured tobacco is collected according to the rules governing excise duty, that the request for reimbursement of the VAT should be dismissed on the same grounds as those justifying the refusal of reimbursement of excise duty.
Landewijck brought an appeal on a point of law before the Hoge Raad der Nederlanden (Supreme Court of the Netherlands). The Hoge Raad der Nederlanden observed that the Gerechtshof had correctly applied Article 79(3)(b) of the Law on excise duty. It was uncertain, however, whether the refusal to allow reimbursement or offsetting raised in respect of Landewijck in the dispute in the main proceedings was compatible with certain provisions of the Excise Directive, particularly Articles 6(1), 14 and 22.
Furthermore, the Hoge Raad der Nederlanden was uncertain as to whether Article 28 of the Law on VAT was applicable. Landewijck maintained essentially that the special scheme for collecting VAT established by that article had not been notified to the Commission within the period prescribed in Article 27(5) of the Sixth Directive, and that it is therefore incompatible with that provision.
The Hoge Raad der Nederlanden wishes to know in that regard, particularly in the light of the judgment in Case C-74/91 Commission v Germany [1992] ECR I‑5437, whether the late notification of that scheme to the Commission, effected on 12 June 1979, led to the same consequences as a failure to notify, that is that the scheme is not applicable to individuals relying on such a defect. The Hoge Raad der Nederlanden added that, even assuming that the lateness of the notification does not render the scheme inapplicable, it is still appropriate to ascertain whether it is compatible with the requirements of Article 27(1) of the Sixth Directive.

Questions

1. Must the Excise Directive be interpreted as requiring Member States to enact a statutory provision on the basis of which, in cases such as the present, they must reimburse or offset amounts by way of excise duty that have been paid or become chargeable at the time excise stamps are requested in a case in which the requesting party (an authorised warehousekeeper) has not used, nor will be able to use, stamps which disappeared before they were affixed to products subject to excise duty, and third parties cannot have made and will not be able to make lawful use of the stamps, even though it cannot be ruled out that they have used, or will use, the stamps by affixing them to tobacco products which have been put on the market unlawfully?

2(a). Must the Sixth Directive, and in particular Article 27(1) and (5) thereof, be interpreted as meaning that the fact that the Netherlands Government failed to notify the Commission that it wished to maintain the special procedure for charging tax on tobacco products until after the expiry of the time-limit prescribed by Article 27(5) of the Sixth Directive, as amended by the Ninth Directive, means that, if an individual invokes the failure to observe the time-limit after the date when notification was in fact made, that special procedure for charging tax must be disapplied even after the notification is made?

2(b). If the answer to Question 2(a) is in the negative, must the Sixth Directive, and in particular Article 27(1) and (5) thereof, be interpreted as meaning that the special procedure for charging tax on tobacco products laid down in Article 28 of [the Law on VAT] must be disapplied on the grounds that it is incompatible with the conditions laid down by the abovementioned provisions of the directive?

2(c). If the answer to Question 2(b) is in the negative, must the Sixth Directive, and in particular Article 27(1) and (5) thereof, be interpreted as meaning that failure to reimburse VAT in circumstances such as those referred to in Question 1 is contrary to that directive?

AG Opinion

1. Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products does not prevent Member States from applying statutory provisions under which they attribute the financial responsibility for tax stamps going missing to the parties which requested and received those stamps, and under which those Member States are not obliged to refund or offset the amount of excise duty paid when the request for the tax stamps was made in circumstances such as those arising in this case. Those statutory provisions also comply with the principle of proportionality.

2. Article 27(5) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to VATes – Common system of value added tax: uniform basis of assessment lays down a formal time-limit and must therefore be interpreted as meaning that an individual may not have a special procedure for charging tax disapplied on the ground that the period within which Member States must notify that special charging procedure to the Commission has expired, provided that the Commission has actually had the chance to assess the charging procedure at issue and to express its opinion on the matter.

3. The provisions of Article 27(1) and (5) of Sixth Council Directive 77/388/EEC must be interpreted as meaning that a special procedure for charging VAT on tobacco products, as established in Article 28 of the Law on VAT, is compatible with the requirements laid down in those provisions and does not, as a whole, go beyond what is necessary and proportionate for simplifying the procedure for charging the tax and for preventing tax evasion and avoidance.

4. The absence of an obligation to reimburse the amounts paid in respect of the excise stamps which correspond to the amounts of VAT due, in circumstances such as those arising in this case, is compatible with the Sixth Directive, and in particular with Article 27(1) and (5) thereof.

Decision

1. Neither Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products nor the principle of proportionality preclude Member States from adopting legislation which does not provide for reimbursement of the amount of excise duty paid, where the excise stamps disappeared before having been affixed to the tobacco products, if that disappearance is not attributable to force majeure or to an accident and if it is not established that the stamps have been destroyed or rendered permanently unusable, which thereby places the financial responsibility for the loss of tax stamps on the purchaser.

2. Article 27(5) of 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 must be interpreted as meaning that failure to observe the period for notification does not constitute a material procedural defect capable of rendering inapplicable a derogating measure which was notified late.

3. Article 27(1) and (5) of Sixth Directive 77/388 must be interpreted as meaning that a derogating scheme for collecting VAT by means of tax stamps, such as that established by Article 28 of the Law on turnover tax of 28 June 1968 (Wet op de omzetbelasting), is compatible with the requirements laid down by the provisions of the directive and does not exceed what is necessary for the simplification of the procedure for charging the tax.

4. The absence of an obligation to reimburse amounts paid for the purchase of excise stamps which correspond to VAT, where those stamps disappeared before having been affixed to the tobacco products, if that disappearance is not attributable to force majeure or to an accident and if it is not established that the stamps have been destroyed or rendered permanently unusable, is not incompatible with Sixth Directive 77/388 and, in particular, with Article 27(1) and (5) thereof.

Summary

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