On May 17, 2023, the ECJ issued its decision in the case C-418/22 (Cezam).
Context: Reference for a preliminary ruling – Directive 2006/112/EC – Value added tax (VAT) – Obligations to declare and pay VAT – Article 273 – Penalties laid down for the failure of a taxable person to comply with the obligations – Principles of proportionality and neutrality of VAT – Right to deduct VAT – Compatibility of penalties
Relevant articles in EU VAT Directive 2006/112/EC
Articles 62(2), 63, 167, 206, 250, 273 of the EU VAT Directive 2006/112/EC.
Article 62(2):
For the purposes of this directive:
…
(2) VAT shall become “chargeable” when the tax authority becomes entitled under the law, at a given moment, to claim the tax from the person liable to pay, even though the time of payment may be deferred.
Article 63:
The chargeable event shall occur and VAT shall become chargeable when the goods or the services are supplied.
Article 167:
A right of deduction shall arise at the time the deductible tax becomes chargeable.
Article 206:
Any taxable person liable for payment of VAT must pay the net amount of the VAT when submitting the VAT return provided for in Article 250. Member States may, however, set a different date for payment of that amount or may require interim payments to be made.’
Article 250:
1. Every taxable person shall submit a VAT return setting out all the information needed to calculate the tax that has become chargeable and the deductions to be made including, in so far as is necessary for the establishment of the basis of assessment, the total value of the transactions relating to such tax and deductions and the value of any exempt transactions.
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
- The applicant in the main proceedings has failed to submit periodic VAT returns since June 2013.
- A statement of adjustment was drawn up on 10 November 2015 in respect of the year 2013. That statement drew no response, and so a reminder was sent, again to no effect. A formal record of assessment in respect of the year 2013 was therefore drawn up and sent to the company.
- No periodic VAT returns were submitted for the years 2014 and 2015, despite observations and reminders, and so an ex officio assessment was made in respect
of those two years. - Subsequently, in 2017, a special account was set up, since the applicant had once again failed to submit all the relevant returns and had not paid the VAT due that
had been reported in the returns which it had submitted. - According to the demands served, the sums due are as follows:
‒ in respect of 2013:
‒ VAT payable after set off: EUR 278 880.50;
‒ penalties: EUR 265 940;
‒ interest calculated up to 20 March 2016: EUR 58 007.04.
‒ in respect of 2014 and 2015:
‒ VAT payable after set off: EUR 1 430 991.16;
‒ penalties: EUR 923 650.00;
‒ interest calculated up to 20 January 2017: EUR 137 375.04.
‒ as regards the special account relating to the period 31 January 2017 to 30 June 2017:
‒ VAT payable: EUR 88 610.36;
‒ penalties: EUR 14 290;
‒ interest calculated up to 20 December 2017: EUR 4 962.16. - The penalties claimed amount to 20% of the gross amount of VAT, which is to say, with no account being taken of deductible VAT.
Questions
1. Do Articles 62[(2)], 63, 167, 206, 250 and 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and the principle of proportionality, as interpreted, in particular, in the judgment of the Court of Justice of 8 May 2019, EN.SA (C-712/17), taken together with the principle of neutrality, preclude provisions of national legislation such as Article 70[(1)] of the VAT Code, Article 1 of and part V of Table G in the annex to Royal Decree No 41 setting the amounts of the proportionate tax penalties in relation to value added tax, pursuant to which:
‒ in the event of errors as to content discovered on the inspection of accounts,
‒ and in order to sanction the failure, in whole or in part, to enter taxable transactions in relation to which the amount of tax due is greater than EUR 1 250 euros,
that infringement is penalised by a flat-rate fine at a reduced rate of 20% of the tax due, without it being possible, for the purposes of calculating the fine, to deduct therefrom any input tax paid, on account of the fact that it has not been deducted because no return was submitted, where, pursuant to [Article 1(2) of] Royal Decree No 41, the scale of reductions set out in Tables A to J of the annex to that decree applies only where the infringements sanctioned have been committed without any intention to evade or to facilitate the evasion of the tax?
2. Is the answer to that question different if the taxable person has, voluntarily or otherwise, paid the amount of tax that has become chargeable following the inspection, so as to make good the shortfall in payment of the tax and thereby to allow the attainment of the objective of ensuring the correct collection of the tax?
See also
AG Opinion
None
Decision
Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and the principles of proportionality and fiscal neutrality
must be interpreted as not precluding national legislation pursuant to which the failure to comply with the obligation to declare and pay value added tax (VAT) to the Treasury is penalised by a flat-rate fine amounting to 20% of the amount of VAT which would have been due before subtracting deductible VAT, subject to the checks to be carried out by the referring court as regards the proportionate nature of the fine imposed in the case in the main proceedings.
Source
Summary
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