ECJ – C-80/20 (Wilo Salmson France) – Decision – Cancellation and reissuance of invoice does not change period for which VAT refund can be requested

On October 21, 2021, the ECJ issued its decision in the case C-80/20 (Wilo Salmson Frace) related to the input VAT deduction without valid invoice.

Context: Request for a preliminary ruling – Tax law – VAT – Directive 2006/112 / EC – Art. 167 and 178 letter a – Creation of the right to deduct – Creation period – Possession of an invoice as a material requirement – Differentiation from the formal requirements for input tax deduction – Refund Directive (Directive 2008 / 9 / EG) – Art. 14 Para. 1 Letter a and Art. 15 – Finality of an uncontested negative decision – Legal consequences of the cancellation (annulment) of an invoice and its reissue

Article in the EU VAT Directive

Article 167 and 178 of Directive 2006/112/EC

Article 167
A right of deduction shall arise at the time the deductible tax becomes chargeable.

Article 178
In order to exercise the right of deduction, a taxable person must meet the following conditions:

(a) for the purposes of deductions pursuant to Article 168(a), in respect of the supply of goods or services, he must hold an invoice drawn up in accordance with Sections 3 to 6 of Chapter 3 of Title XI;
(b) for the purposes of deductions pursuant to Article 168(b), in respect of transactions treated as the supply of goods or services, he must comply with the formalities as laid down by each Member State;
(c) for the purposes of deductions pursuant to Article 168(c), in respect of the intra-Community acquisition of goods, he must set out in the VAT return provided for in Article 250 all the information needed for the amount of VAT due on his intra-Community acquisitions of goods to be calculated and he must hold an invoice drawn up in accordance with Sections 3 to 5 of Chapter 3 of Title XI;
(d) for the purposes of deductions pursuant to Article 168(d), in respect of transactions treated as intra-Community acquisitions of goods, he must complete the formalities as laid down by each Member State;
(e) for the purposes of deductions pursuant to Article 168(e), in respect of the importation of goods, he must hold an import document specifying him as consignee or importer, and stating the amount of VAT due or enabling that amount to be calculated;
(f) when required to pay VAT as a customer where Articles 194 to 197 or Article 199 apply, he must comply with the formalities as laid down by each Member State.

Article 14(1)(a) of Directive 2008/9/EC

The reimbursement request concerns:

a) the purchase of goods or services which were invoiced during the refund period, provided that the tax became payable before or at the time of invoicing, or for which the tax became payable during the refund period. period of reimbursement, provided that the purchase was invoiced before the tax became payable […] ‘

Facts

A Romanian referral regarding the interpretation of Article 167 of the VAT Directive, read in conjunction with Article 178. Is there a distinction between the moment the right of deduction arises and the moment it is exercised with regard to the way in which the VAT system operates; whether the right to deduct VAT may be exercised where no (valid) tax invoice has been issued for the purchase of goods? Can an application for a refund be made in respect of VAT which became chargeable prior to the ‘refund period’ but which was invoiced during the refund period? What are the effects of the annulment of invoices and the issuing of new invoices? Can national legislation make the refund of VAT conditional on the chargeability of VAT in a situation where a corrected invoice is issued during the application period?

Questions

As regards the interpretation of Article 167 of Directive 2006/112/EC, read in conjunction with Article 178 thereof, is there a distinction between the moment the right of deduction arises and the moment it is exercised with regard to the way in which the system of VAT operates?

To that end, it is necessary to clarify whether the right to deduct VAT may be exercised where no (valid) tax invoice has been issued for purchases of goods.

As regards the interpretation of Articles 167 and 178 of Directive 2006/112/EC, read in conjunction with the first sentence of Article 14(1)(a) of Directive 2008/9/EC, ² what is the procedural point of reference for determining the lawfulness of the exercise of the right to a refund of VAT?

To that end, it is necessary to clarify whether an application for a refund may be made in respect of VAT which became chargeable prior to the ‘refund period’ but which was invoiced during the refund period.

As regards the interpretation of the first sentence of Article 14(1)(a) of Directive 2008/9/EC, read in conjunction with Article 167 and Article 178 of Directive 2006/112/EC, what are the effects of the annulment of invoices and the issuing of new invoices in respect of purchases of goods made before the ‘refund period’ on the exercise of the right to a refund of the VAT relating to those purchases?

To that end, it is necessary to clarify whether, in the event of the annulment, by the supplier, of the invoices initially issued for the purchase of goods and the issuing of new invoices by that supplier at a later date, the exercise of the right of the recipient to apply for a refund of the VAT relating to the purchases is to be linked to the date of the new invoices, in a situation where the annulment of the initial invoices and the issuing of the new invoices is not within the recipient’s control but is exclusively at the supplier’s discretion.

May national legislation make the refund of VAT granted under [Directive 2008/9/EC] conditional upon the chargeability of the VAT in a situation where a corrected invoice is issued during the application period?

AG Opinion

1. The VAT Directive is to be interpreted as meaning that the right of deduction under Article 168(a) of the VAT Directive arises in principle once the tax has become chargeable (Article 167 of the VAT Directive) and in a given amount once an invoice is held (Article 178(a) of the VAT Directive). The correct period for exercising the right of deduction is determined based on when those two conditions are fulfilled. Although the invoice required for that purpose need not fulfil all the formalities specified in Article 226 of the VAT Directive, the VAT Directive does not provide for a right of deduction if no invoice is held.

2. The correct refund period within the meaning of Article 14(1)(a) of the Refund Directive is the period in which the taxable person held such an invoice. The referring court must clarify when that was in the applicant’s case.

3. The (mutually agreed or unilateral) cancellation (annulment) of an invoice has no effect on a right of deduction that has already arisen or on the period in which it is to be exercised.

4. EU law precludes national regulations which link the refund period within the meaning of Article 14(1)(a) of the Refund Directive solely to the time when the tax becomes chargeable in accordance with Article 167 of the VAT Directive. It is also necessary to hold an invoice showing the amount charged in VAT, even if the invoice does not fulfil all the formalities specified in Article 226 of the VAT Directive.

Newsletters after AG Opinion

Decision

Articles 167 to 171 and 178 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2010/45/EU of 13 July 2010 and Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112, to taxable persons not established in the Member State of refund but established in another Member State must be interpreted as meaning that the right to a refund of value added tax (VAT) charged on a supply of goods cannot be exercised by a taxable person established not in the Member State of refund but in another Member State, if that taxable person does not hold an invoice, within the meaning of Directive 2006/112, as amended by Directive 2010/45, relating to the purchase of the goods concerned. Only if a document is so flawed as to deprive the national tax administration of the information necessary to support a refund claim can such a document be considered not to be an ‘invoice’ within the meaning of Directive 2006/112, as amended by Directive 2010/45.
Articles 167 to 171 and 178 of Directive 2006/112, as amended by Directive 2010/45, and the first of the situations referred to in Article 14(1)(a) of Directive 2008/9 must be interpreted as meaning that they preclude the rejection of an application for a refund of value added tax (VAT) relating to a given refund period solely on the ground that that VAT became chargeable during an earlier refund period, even though it was invoiced only during that given period.
Articles 167 to 171 and 178 of Directive 2006/112, as amended by Directive 2010/45 and Directive 2008/9 must be interpreted as meaning that the unilateral cancellation of an invoice by a supplier, after the adoption by the Member State of refund of a decision rejecting the application for a refund of value added tax (VAT), which was based on that invoice, and when that decision has already become final, followed by the issuing by that supplier, during a subsequent refund period, of a new invoice relating to the same supplies, without those supplies being called into question, has no bearing on the existence of the right to a refund of VAT which has already been exercised or on the period in respect of which that right must be exercised.

Summary of the decision

The right to a VAT refund on a supply of goods cannot be exercised by a taxable person who is not established in the Member State of refund but in another Member State if that taxable person does not have an invoice = An invoice is required to deduct VAT
Only where a document is affected in such a way that it deprives the national tax administration of the data necessary to substantiate a refund claim, it is possible to consider that such a document does not constitute an invoice = Only if a document does not allow to substantiate the transaction, it can not be considered an invoice
A VAT refund relating to a particular refund period can not be rejected on the sole ground that such VAT became chargeable in a previous refund period, even though it was invoiced in that particular period = VAT can be deducted in the month of the issuance of invoice if this is later than the amount of VAT was due
The unilateral cancellation of an invoice by a supplier, after rejecting the VAT refund based on that invoice, followed by the issue by that supplier, in a subsequent refund period, of a new invoice relating to the same supplies, without those supplies being carried out again, has no effect on the existence of the right to a VAT refund which has already been exercised or on the period within which that right must be exercised. = The correction of an invoice has no impact on the right to deduct VAT

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