On Sept 27, 2012, the ECJ issued its decision in the case C-587/10 (VSTR). This case dealt with the question whether a VAT exemption can be refused if no VAT identification number is available of the person acquiring the goods.
Context: Taxation – Value-added tax – Supply of goods – Taxation of chain transactions – Refusal to exempt on grounds of failure to produce the VAT identification number of the person acquiring goods
Note that this ECJ case was decided before the implementation of the EU VAT Quick Fixes in 2020.
Article in the EU VAT Directive
he first subparagraph of Article 28c(A)(a) of the Sixth Directive provides:
‘Without prejudice to other Community provisions and subject to conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions provided for below and preventing any evasion, avoidance or abuse, Member States shall exempt:
(a) supplies of goods, as defined in Article 5, dispatched or transported by or on behalf of the vendor or the person acquiring the goods out of the territory referred to in Article 3 but within the Community, effected for another taxable person or a non-taxable legal person acting as such in a Member State other than that of the departure of the dispatch or transport of the goods’.
Facts
- In November 1998 a branch of VSTR established in Germany sold two stone‑crushing machines to Atlantic International Trading Co. (‘Atlantic’), established in the United States. Atlantic had a subsidiary in Portugal but was not registered in any Member State of the European Union for VAT purposes.
- The branch of VSTR requested Atlantic to provide its VAT identification number. Atlantic replied that it had sold the machines on to a company established in Finland and gave the seller the VAT identification number of the Finnish company. The branch verified this information.
- Those goods were subsequently collected from the premises of the branch of VSTR by a transport company contracted by Atlantic and taken first by land to Lübeck (Germany) and then by sea to Finland.
- The branch of VSTR issued Atlantic with an invoice without VAT for the supply of the stone-crushers, bearing the VAT identification number of the Finnish undertaking to which those goods were sold.
- However, the Finanzamt Plauen took the view that the supply between the branch of VSTR and Atlantic could not be exempt from VAT as the former did not provide the VAT identification number of the latter.
- The Sächsisches Finanzgericht (Finance Court, Saxony) (Germany), which heard the case at first instance, dismissed the action for annulment brought by VSTR against that decision of the Finanzamt Plauen.
- VSTR then brought an appeal on a point of law before the Bundesfinanzhof (Federal Finance Court) (Germany) (‘Revision’), arguing that the grounds on which the Finanzamt Plauen refused the VAT exemption were contrary to the Sixth Directive. The Finanzamt Plauen contends, rather, that Member States may, without contravening European Union law, specify that the exemption of an intra‑Community supply is conditional on the person acquiring the goods having a VAT identification number in a Member State.
- The Bundesfinanzhof found that the transaction at issue in the main proceedings gave rise to two successive supplies, the first from the branch of VSTR to Atlantic, and the second from Atlantic to the Finnish company.
- It took the view that the first supply could be exempted from VAT as an intra‑Community supply, provided that, inter alia, in accordance with Paragraph 6a(1), first sentence, point 3 of the UStG, the acquisition of the goods by the person acquiring the goods is actually subject to tax in Finland. It considered that such a condition might require that the person acquiring the goods actually have a VAT identification number in the Member State of destination so that the authority in that Member State could impose VAT on the transaction.
- The Bundesfinanzhof took the view that exemption from VAT could be refused pursuant to the first sentence of Paragraph 17c(1) of the Regulation implementing the UStG, which requires the supplier to provide evidence in the accounts of the VAT identification number of the person acquiring the goods.
- It pointed out that, although the first subparagraph of Article 28c(A)(a) of the Sixth Directive does not expressly require that, for an intra-Community supply to be exempt from VAT, the person acquiring the goods must trade under an individual VAT identification number, such a requirement is implied by the condition set out in that provision that the person acquiring the goods must be a ‘taxable person … acting as such in [another] Member State’. Moreover it raised the question whether, having regard to Article 22(8) of the Sixth Directive, in the version resulting from Article 28h thereof, and the first subparagraph of Article 28c(A)(a) of that directive, that condition might authorise Member States to impose such a rule of evidence on the supplier, particularly where, as in the case in the main proceedings, the person acquiring the goods, who is established in a third State, is not registered in any Member State and, moreover, the supplier has not proved that the person acquiring the goods has declared the intra‑Community acquisition to the tax authority.
- The referring court also raises the question whether the obligation to provide a VAT identification number might be justified by reason of the correlation, established by the Sixth Directive and upheld by the case‑law of the Court of Justice, between exemption for intra-Community supplies and taxation of intra‑Community acquisitions.
Questions
AG Opinion
(1) Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes does not allow the Member States to accept an intra-Community supply as tax‑exempt only where the taxable person provides evidence in the accounts of the VAT identification number of the person acquiring the goods.
(2) For these purposes it is irrelevant that the person acquiring the goods was a trader with its seat in a third State, which, although it dispatched the object of the supply in the course of a chain transaction from one Member State to another Member State, is not registered for VAT purposes in any Member State.
Directive 77/388 does not allow the Member States to accept an intra-Community supply as tax-exempt only where the taxable person proves that the person acquiring the goods has submitted a tax return concerning the intra-Community acquisition in the destination Member State.
Decision
The first subparagraph of Article 28c(A)(a) 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, as amended by Council Directive 98/80/EC of 12 October 1998, should be interpreted as not precluding the tax authority of a Member State from making the exemption from VAT of an intra-Community supply subject to the provision by the supplier of the VAT identification number of the person acquiring the goods, with the proviso that the grant of that exemption should not be refused on the sole ground that that requirement was not fulfilled where the supplier, acting in good faith and having taken all the measures which can reasonably be required of him, is unable to provide that identification number but provides other information which is such as to demonstrate sufficiently that the person acquiring the goods is a taxable person acting as such in the transaction at issue.
Summary
The tax authorities of a Member State may make the VAT exemption for intra-Community supplies conditional upon the supplier providing the customer’s VAT identification number, provided, however, that such exemption is not refused merely for non-compliance with this obligation when the supplier, in good acting faithfully and after having done everything that can reasonably be required of him, he cannot provide this identification number and, moreover, provides indications from which it can conclusively show that the customer is a taxable person who acts as such in the transaction concerned.
Source
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