General Court T-638/24 (Finanzamt Österreich) – Questions – VAT Treatment of Intra-Community Acquisitions and Invoice Adjustments

The General Court released the facts and questions in the case T-638/24 (Finanzamt Österreich).

Summary

Case Background: The case involves an appeal by Finanzamt Österreich (Tax Office, Austria) against a decision by the Bundesfinanzgericht (Federal Finance Court, Austria) regarding value-added tax (VAT) for the years 2011 to 2015, involving D GmbH.
Legal Questions Referred: The Verwaltungsgerichtshof (Supreme Administrative Court, Austria) referred two questions to the Court of Justice of the European Union (CJEU) concerning the interpretation of Articles 40, 41, and 203 of Council Directive 2006/112/EC (the VAT Directive) and their compatibility with national provisions under the Umsatzsteuergesetz (Law on turnover tax).
Key Issue: The main issue is whether the use of an Austrian VAT identification number by D GmbH for intra-Community acquisitions, which were treated as exempt supplies in Austria but included Austrian VAT on invoices, precludes the application of national provisions deeming the acquisition to have been effected in Austria until proven otherwise.
Court Proceedings: The Federal Finance Court initially ruled that the intra-Community acquisition was taxable in both Austria and the destination Member State due to the use of the Austrian VAT number. The Supreme Administrative Court set aside this decision, leading to further proceedings and the current referral to the CJEU.
Implications of Invoice Adjustment: The second question addresses whether the removal of VAT from invoices through subsequent adjustment by the issuer affects the timing and recognition of intra-Community acquisitions under Article 41 of the VAT Directive, particularly concerning potential non-taxation scenarios.

Facts & Background

Parties Involved: The case involves an appeal by the Finanzamt Österreich (Tax Office, Austria) against a judgment from the Bundesfinanzgericht (Federal Finance Court, Austria) concerning D GmbH, the interested party.
Time Frame: The dispute centers on value-added tax (VAT) assessments for the years 2011 to 2015.
Transactions: D GmbH acquired goods from Austrian traders and used its Austrian VAT identification number for these transactions. The goods were supplied from Austria to other EU Member States, primarily the Czech Republic and Germany.
VAT Treatment: The invoices issued by the Austrian traders included Austrian VAT. D GmbH attempted to deduct this VAT as input tax but faced refusal from the Tax Office, which stated that the goods’ acquisition was deemed taxable in Austria.
Tax Office’s Position: The Tax Office contended that an intra-Community acquisition was effectively made in Austria due to the usage of the Austrian VAT identification number, leading to tax liabilities in both Austria and the destination Member State.
Court Decisions: Initially, the Federal Finance Court dismissed D GmbH’s complaint, ruling that the intra-Community acquisition was taxable in both jurisdictions and that the Austrian VAT entered on the invoices was incorrectly claimed as deductible input tax.
Supreme Administrative Court’s Intervention: The Supreme Administrative Court later set aside the Federal Finance Court’s decision, referencing a prior judgment from the Court of Justice of the European Union (CJEU), which prompted the current appeal for clarification on the interpretation of EU VAT laws.
Legal Questions: The Supreme Administrative Court referred questions to the CJEU regarding the applicability of the VAT Directive, particularly concerning the treatment of acquisitions when an Austrian VAT identification number is used and the implications of subsequent invoice adjustments on the tax status of those acquisitions.
Concerns Raised: The case raises concerns about compliance, the potential for double taxation, and the need for clarity on the timing and nature of intra-Community acquisitions under EU VAT law.
Contextual Importance: This case is significant as it explores the interplay between national VAT laws and EU directives, examining principles of proportionality and neutrality in tax regulation.

Articles in the EU VAT Directive

Articles 40, 41 and 203 of Council Directive 2006/112/EC

Article 40 (Place of Intra-Community Acquisition of Goods)
The place of an intra-Community acquisition of goods shall be deemed to be the place where dispatch or transport of the goods to the person acquiring them ends.

Article 41
Without prejudice to Article 40, the place of an intra-Community acquisition of goods as referred to in Article 2(1)(b)(i) shall be deemed to be within the territory of the Member State which issued the VAT identification number under which the person acquiring the goods made the acquisition, unless the person acquiring the goods establishes that VAT has been applied to that acquisition in accordance with Article 40.
If VAT is applied to the acquisition in accordance with the first paragraph and subsequently applied, pursuant to Article 40, to the acquisition in the Member State in which dispatch or transport of the goods ends, the taxable amount shall be reduced accordingly in the Member State which issued the VAT identification number under which the person acquiring the goods made the acquisition.

Article 203 (Liability to pay VAT)
VAT shall be payable by any person who enters the VAT on an invoice.

Questions

Do Articles 40, 41 and 203 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (‘the VAT Directive’) as well as the principles of proportionality and neutrality preclude the application of a national provision (second sentence of Article 3(8) of the [Annex (Internal Market) to the] Umsatzsteuergesetz (Law on turnover tax)) whereby an acquisition is deemed to have been effected in the territory of the Member State whose VAT identification number was used by the person acquiring the goods until the person acquiring the goods establishes that the acquisition was taxed in the Member State in which the goods are located at the end of the transport or dispatch in those cases where the intra-Community acquisition is accompanied by an intra-Community supply which was treated in Austria as an exempt supply but where, because Austrian VAT is entered on the invoice, there is a tax liability for that supply on the basis of the invoice issued?
If Question 1 is answered in the affirmative, does the removal, as a result of a subsequent adjustment of the invoice by the issuer, of the VAT wrongly entered on the invoice relating to the exempt intra-Community supply give rise to an intra-Community acquisition within the meaning of Article 41 of the VAT Directive and, if so, at what point in time is that intra-Community acquisition made?

Source

Curia

Reference to other ECJ Cases

C-580/16, Firma Hans Bühler KG: This case is cited by the Supreme Administrative Court as a precedent, particularly regarding the interpretation of VAT regulations and the principles surrounding intra-Community acquisitions.
C-696/20, B. v Dyrektor Izby Skarbowej w W.: This judgment is central to the current case. The CJEU ruled that Article 41 of the VAT Directive does not preclude national legislation treating an intra-Community acquisition as occurring in a Member State when the transaction was incorrectly classified. The Supreme Administrative Court refers to this case to assess the tax implications of the use of a national VAT identification number versus a foreign one.
C-536/08 and C-539/08, X and fiscal eenheid Facet -Facet Trading BV: This case discusses the right to deduct VAT in the context of intra-Community acquisitions, emphasizing that the entitlement to deduct VAT may be limited under certain circumstances.
C-416/17, Commission v French Republic: This case is cited regarding the interpretation of EU law and its application to national legislation, particularly in relation to VAT and the principles of fiscal neutrality and proportionality.
C-123/11, Tulliallan: This case may also be relevant in discussions about VAT compliance and the obligations of Member States regarding intra-Community acquisitions, although it may not be explicitly mentioned in the provided case summary.
C-275/11, K. v. Finanzamt B: This case addresses VAT issues concerning the place of supply and the right to deduct VAT, which may provide context for the current case’s discussions on similar principles.
Case Ro 2021/15/0002: This national case is referenced in connection with legal academic writings and interpretations that inform the decision-making process of the Austrian courts.