The ECJ released the facts & questions in the case C-515/24 (Randstad España).
Context: Request for a preliminary ruling on interpretation – Article 267 TFEU – Standstill clause – Exception to the principle of VAT neutrality – Exclusions provided for in national law prior to the date of accession – Meaning of the expression ‘provided for’ – Directive 2006/112/EC – Article 176, second paragraph – Goods and services used by the business owner for his or her taxed transactions – Article 168(a) – ‘Direct and exclusive’ application to the business or professional activity of the taxable person – Law 37/1992 on value added tax –
Article 96(One)(4) and (5).
Article in the EU VAT Directive
Article 168(a) and Article 176 of the EU VAT Directive 2006/112/EC
Facts
- Inspection Initiation: On May 27, 2013, Randstad España, SLU, was notified of a general tax inspection by the Spanish Central Office for Large Taxpayers for VAT for the years 2009, 2010, and 2011.
- Tax Assessment: On April 29, 2014, tax assessment procedures were initiated, and by July 14, 2014, decisions were issued confirming VAT adjustments, disallowing input VAT deductions on expenses related to client entertainment, which are non-deductible under Spanish VAT law.
- Initial Challenge: Randstad challenged these decisions before the Central Tax Tribunal, which rejected the challenge on November 22, 2017.
- Administrative Action: Randstad then brought an administrative action before the National High Court of Spain, which on January 17, 2022, partially ruled in favor of Randstad, annulling the VAT assessments for 2009, 2010, and 2011, but upheld the non-deductibility of entertainment expenses.
- Appeal: The judgment was appealed to the Supreme Court of Spain, which is currently reviewing the case.
Questions
1. Is a rule such as that contained in Article 96(One)(4) and (5) of Law 37/1992 of 28 December 1992 on value added tax consistent with Article 168(a) and Article 176, first paragraph, of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, where, in accordance with that rule, no proportion of the input VAT amounts resulting from the acquisition of goods and services such as [tickets for] sporting events, or those used to show appreciation for clients, salaried employees or third parties, is deductible, even if the taxpayer proves that such expenditure is directly related to his or her business or professional activity, that it had a strictly business or professional purpose and that the goods and services were used by the taxable person to carry out taxable transactions, and even though the amount of such expenditure is tax deductible for the purposes of income taxes (personal income tax and corporation tax)?
2. Is a rule such as that contained in Article 96(One)(4) and (5) of Law 37/1992 of 28 December 1992 on value added tax, which introduces a condition limiting the exercise of the right of deduction, consistent with Article 176, second paragraph, of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, where that rule entered into force the same day that the Kingdom of Spain joined the European Union, on 1 January 1986, and where no legislation in force until the date of accession provided for such a
restriction?
Source
Reference to other ECJ Cases
- Judgment of 15 April 2010, X Holding and Oracle Nederland (C-538/08 and C-33/09, EU:C:2010:192, paragraphs 37 and 39).
- Judgment of 23 April 2009, PARAT Automotive Cabrio (C-74/08, EU:C:2009:261, paragraphs 22 and 23).
- Judgment of 2 May 2019, Grupa Lotos (C-225/18, EU:C:2019:349).
- Judgment of 19 September 2000, Ampafrance and Sanofi (C-177/99 and C-181/99, EU:C:2000:470, paragraph 34).
- Judgment of 8 January 2002, Metropol and Stadler (C-409/99, EU:C:2002:2, paragraphs 42, 44 and 58).
- Judgment of 22 December 2008, Magoora (C-414/07, EU:C:2008:766, paragraph 28).
- Judgment of 30 September 2010, Oasis East (C-395/09, EU:C:2010:570).
- Judgment of 18 July 2013, AES-3C Maritza East 1 (C-124/12, EU:C:2013:488).
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