CELEX: 62021CJ0664
Reference for a preliminary ruling
Common system of value added tax (VAT)
Directive 2006/112/EC
Article 138(1)
Exemptions for intra-community transactions
Supply of goods
Principles of tax neutrality, effectiveness and proportionality
Compliance with substantive requirements
Time limit for the submission of evidence

This request for a preliminary ruling concerns the interpretation of Article 131 and Article 138(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1) as well as the principles of tax neutrality, effectiveness and proportionality.
The request has been made in proceedings between Nec Plus Ultra Cosmetics AG (‘Nec’) and Republika Slovenija (Republic of Slovenia), represented by the Ministrstvo za finance (Ministry of Finance, Slovenia), concerning an adjustment of value added tax (VAT).

Legal context

European Union law
Article 131 of Directive 2006/112, the sole provision of Chapter 1 of Title IX thereof, entitled ‘Exemptions’, provides:
‘The exemptions provided for in Chapters 2 to 9 shall apply without prejudice to other Community provisions and in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse.’
Article 138(1) of that directive, which forms part of Chapter 4 of Title IX, is worded as follows:
‘Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, for another taxable person, or for a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods began.’

Slovenian law
Article 46(1) of the zakon o davku na dodano vrednost (Law on Value Added Tax) of 4 February 2011 (Uradni list RS, No 13/11), in the version applicable at the time of the facts in the main proceedings, provided:
‘The following shall be exempt from payment of VAT:
1.      supplies of goods dispatched or transported by the vendor or the person who receives the goods or another person acting on behalf of one or other of those persons from the territory of Slovenia to another Member State, where the supplies are made in favour of another taxable person or a non-taxable legal person acting as such in that other Member State.’
Article 140 of the zakon o davčnem postopku (Law on Tax Procedure) (Uradni list RS, No 13/11) (‘the ZDavP-2’) provides:
‘(1)      Within 10 days of the completion of the tax inspection, the tax authority shall draw up a report, which it shall then notify to the taxable person. The report shall set out the factual situation established, including all facts and circumstances relevant to the decision. The report shall draw the attention of the taxable person to the possibility of submitting and having taken into account new facts and evidence within the meaning of paragraph 2 of this article. The taxable person may submit observations on the report within 20 days of the notification thereof, and must be informed of that possibility in the report itself. The time limit for submitting observations shall be extended upon application by the taxable person before the expiry of the time limit, provided that there is justification for the extension. Whether the time limit is extended shall be determined in a decision. Further extensions of the time limit shall not be permitted.
(2)      In its observations on the report referred to in paragraph 1 of this article, the taxable person may put forward new facts and evidence, but must set out the reasons why he or she did not rely on them before the report was issued. The tax administration shall draw up a supplementary report within 30 days of receiving the observations, where they affect the amount of the tax liability. The new facts and evidence shall be taken into account only if they existed before the report was issued and if the taxable person was unable, with justification, to invoke or produce them before the report was issued. Paragraph 1 of this article shall apply to the notification and submission of observations on the supplementary report.’
Article 141(1) of ZDavP-2 provides:
‘Following the completion of the tax inspection, the tax authority shall issue an assessment notice within the meaning of Article 84 of this Law or a decision identifying irregularities which do not affect the amount of the tax liability.’
Article 238(3) of the zakon o splošnem upravnem postopku (Law on General Administrative Procedure) (Uradni list RS, No 24/06)  provides:
‘In its administrative appeal, the appellant may rely on new facts and evidence, but must set out the reasons why he or she did not rely on them before the body of first instance. The new facts and evidence may be taken into consideration as grounds of appeal only if they existed at the time of adoption of the decision at first instance and if the party concerned was unable, with justification, to invoke or produce them at the hearing.’
Article 52 of the zakon o upravnem sporu (Law on Administrative Disputes) (Uradni list RS, No 105/06)  provides:
‘In the court action, the applicant may rely on new facts and evidence, but must set out the reasons why he or she did not rely on them during the procedure for issuing the administrative act. The new facts and evidence may be taken into consideration as grounds for the action only if they existed at the time of adoption of the decision in the procedure at first instance in the context of the procedure for issuing the administrative act and if the party could not reasonably have submitted or produced them during the procedure for issuing the administrative act.’

The dispute in the main proceedings and the question referred for a preliminary ruling
Nec, the applicant in the main proceedings, is a company established in Switzerland. In 2017, it supplied cosmetic products to a customer established in Croatia and, in one case, to a customer established in Romania. According to Nec, a purchaser in Croatia or a third party, acting on behalf of the purchaser, took charge of those goods, which were located in a warehouse in Slovenia. They were transported from Slovenia to another Member State, with the result that the supplies in question benefited from the exemption from payment of VAT laid down in respect of the supply of goods within the territory of the European Union by Article 46(1) of the Law on Value Added Tax, in the version applicable at the time material to the main proceedings.
In the context of a tax inspection concerning the VAT due for 2017, the Finančna uprava Republike Slovenije (Tax Authority of the Republic of Slovenia; ‘the First Instance Tax Authority’) checked with Nec the supporting documentation relating to supplies of goods and services made in other Member States. By decision of 14 February 2019, that authority invited Nec to submit all the documentation relating to the supplies in question.
In response to that decision, Nec submitted invoices and copies of consignment notes demonstrating that goods were transported from Slovenia to another Member State. The delivery notes and other documents mentioned in the consignment notes had not, at that stage, been produced before the First Instance Tax Authority, since Nec stated that it did not possess all the documents and was attempting to obtain them.
On 1 April 2019, the First Instance Tax Authority issued a report on the tax inspection and notified it to Nec. In its observations on the report, which were submitted within the period prescribed for that purpose, Nec produced copies of quotes and delivery notes, which showed that the goods in question had been supplied in a Member State other than Slovenia. In addition, Nec justified the late submission of that evidence by asserting that its office in Hamburg (Germany), which was responsible for deliveries in Croatia, had closed in August 2018 and had not provided it with all the necessary documentation within the prescribed period.
On 30 May 2019, the First Instance Tax Authority adopted a tax assessment notice closing the first instance administrative procedure, by means of which it demanded that Nec pay an additional amount of VAT for 2017. In that regard, it found that Nec had not demonstrated, by means of invoices and consignment notes, that the goods at issue had actually been transported to a Member State other than Slovenia. It therefore took the view that the exemption conditions in respect of VAT on the supplies concerned were not satisfied. In that context, it did not take into account the evidence submitted after the report was issued, on account of that evidence having been submitted late and pursuant to Article 140(2) of the ZDavP-2.
The appeal lodged by Nec against the tax assessment notice was rejected by the Ministry of Finance, acting as the Second Instance Tax Authority, which upheld the analysis carried out by the First Instance Tax Authority. Similarly, the action brought by Nec against that ministry’s decision was dismissed by judgment of the Upravno sodišče (Administrative Court, Slovenia), on grounds comparable to those in the decisions of the tax authorities.
Subsequently, Nec sought leave to appeal on a point of law against that judgment to the Vrhovno sodišče (Supreme Court, Slovenia), which is the referring court. By decision of 18 November 2020, that court upheld that request in part, in particular with a view to resolving a legal question, which it regarded as important, concerning whether the time-bar laid down in Article 140(2) of the ZDavP-2, imposed on the production of evidence in a tax procedure after a tax inspection report is issued, can take precedence over the principle of neutrality of the VAT system.
The Vrhovno sodišče (Supreme Court) notes that Directive 2006/112 does not set the date after which a supplier of goods can no longer submit evidence in administrative or judicial proceedings for the purpose of establishing that the conditions for exemption from VAT laid down in Article 138(1) of that directive are satisfied. It also notes that Article 131 of that directive provides only that the exemptions in Chapters 2 to 9 of that directive are to apply under conditions laid down by the Member States.
In that context, that court refers, inter alia, to the case which gave rise to the judgment of 9 September 2021,
GE Auto Service Leasing
(C‑294/20, EU:C:2021:723), in which the Court addressed a similar question. Nevertheless, the factual and legislative context in that case is not substantially comparable to that of the dispute pending before the referring court. Therefore, that court is uncertain whether the solution adopted in that judgment may also be applied in the present dispute.
In that regard, it considers that, in the dispute pending before it, the principle of legal certainty is sufficiently protected by the limitation periods for bringing an action after the adoption of the tax assessment notice and by the regime applicable to the taking into account of new facts and evidence  in the administrative appeal procedure and the contentious administrative procedure.
In those circumstances, the Vrhovno sodišče (Supreme Court) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:
‘Do the provisions of [Directive 2006/112], in particular Articles 131 and 138(1) thereof, and the principles of EU law, in particular the principles of tax neutrality, effectiveness and proportionality, preclude national legislation which prohibits the submission and [gathering] of new evidence to demonstrate satisfaction of the substantive requirements laid down in Article 138(1) of [Directive 2006/112], already during the administrative procedure at first instance, and more specifically in the context of the observations submitted on the tax inspection report issued before a tax assessment notice has been issued?’

Consideration of the question referred
By its question, the referring court asks, in essence, whether Article 131 and Article 138(1) of Directive 2006/112, read in conjunction with the principles of tax neutrality, effectiveness and proportionality, preclude national legislation which prohibits the production and gathering of new evidence which establishes that the substantive conditions laid down in Article 138(1) of that directive are satisfied, during the administrative procedure which resulted in the adoption of the tax assessment notice, in particular after the tax inspection stage but before the adoption of that decision.
It is clear from the case-law of the Court concerning the right to deduct VAT that the common system of VAT must ensure neutrality of taxation of all economic activities, whatever the purpose or results of those activities, provided that those activities are themselves, in principle, subject to VAT (see, to that effect, judgment of 18 November 2020,
Commission
v
Germany (VAT refund – Invoices
), C‑371/19, not published, EU:C:2020:936, paragraph 77).
The Court has repeatedly held that the right to deduct and, accordingly, to a refund, is an integral part of the VAT scheme and in principle may not be limited. That right is exercisable immediately in respect of all taxes charged on input transactions (judgment of 18 November 2020,
Commission
v
Germany (VAT refund) – Invoices
), C‑371/19, not published, EU:C:2020:936, paragraph 79 and the case-law cited).
Also in relation to the right to deduct VAT, the Court has additionally held that the fundamental principle of VAT neutrality requires the deduction or refund of input VAT to be allowed if the substantive requirements are satisfied, even if the taxable person has failed to comply with some of the formal requirements. The position may, however, be different if non-compliance with such formal requirements effectively prevents the production of conclusive evidence that the substantive requirements have been satisfied (judgment of 18 November 2020,
Commission
v
Germany (VAT refund) – Invoices
), C‑371/19, not published, EU:C:2020:936, paragraphs 80 and 81 and the case-law cited).
Such considerations also apply as regards the rules determining which transactions are subject to VAT, and more particularly the rules relating to the exemption of such transactions, including those in Article 131 and Article 138(1) of Directive 2006/112 on the exemption of intra-Community supplies.
In that regard, Article 138(1) of Directive 2006/112 provides that Member States are to exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, for another taxable person, or for a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods began.
As is apparent from the order for reference, the dispute in the main proceedings does not concern the infringement of formal requirements which would prevent the production of evidence that the substantive requirements of the right to exemption from VAT for the supplies of goods at issue have been satisfied, but rather when that evidence may be adduced.
In that regard, it should be recalled that the Court has held, with regard to the provisions of the Eighth Council Directive 79/1072/EEC of 6 December 1979 on the harmonisation of the laws of the Member States relating to turnover taxes – Arrangements for the refund of value added tax to taxable persons not established in the territory of the country (OJ 1979 L 331, p. 11; ‘the Eighth VAT Directive’), regarding the right to a refund of VAT, that those provisions do not preclude national legislation under which the right to a VAT refund may be refused where, without reasonable justification and despite having been sent formal requests for information, the taxable person has not produced the documents to prove that the substantive requirements for obtaining that refund have been satisfied before the tax authority adopts its decision. However, the same provisions do not preclude Member States from accepting the production of such evidence subsequently to that decision (judgment of 9 September 2021,
GE Auto Service Leasing
, C‑294/20, EU:C:2021:723, paragraph 58).
The Court has also held that since it is not governed by the Eighth VAT Directive, the enactment of measures under which evidence is not to be taken into account where it is produced after a decision rejecting a refund application has been adopted is a matter for the national law of each Member State, by virtue of the principle of the procedural autonomy of Member States, provided nevertheless that those measures are not less favourable than those governing similar domestic situations (principle of equivalence) and do not make it impossible in practice or excessively difficult to exercise rights conferred by EU law (principle of effectiveness) (judgment of 9 September 2021,
GE Auto Service Leasing
, C‑294/20, EU:C:2021:723, paragraph 59).
On that basis, the Court ruled that the provisions of the Eighth VAT Directive and the principles of EU law, in particular the principle of tax neutrality, do not preclude an application for the refund of VAT from being rejected where the taxable person has failed to produce all the documents and information required to prove its right to a VAT refund to the competent authority within the time limits given, even where requested by the tax authority, irrespective of the fact that the documents and information in question were submitted by the taxable person, at its own initiative, in the review procedure or legal action brought against the decision rejecting such a right to a refund, provided that the principles of equivalence and effectiveness have been complied with (judgment of 9 September 2021,
GE Auto Service Leasing
, C‑294/20, EU:C:2021:723, paragraph 63 and the operative part).
It must be held that that case-law applies, by analogy, to the provisions of Directive 2006/112 concerning the exemption of supplies of goods dispatched or transported to a destination outside the territory of a Member State but within the European Union, in particular to Article 138(1) of that directive.
Consequently, having regard to Article 131 of Directive 2006/112, according to which the exemptions provided for in Chapters 2 to 9 of that directive, which include the exemption provided for in Article 138(1) of that directive, are to apply without prejudice to other provisions of EU law and in accordance with conditions which the Member States are to lay down for the purpose of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse, the enactment of measures under which evidence is not to be taken into account, as in the main proceedings, in the context of an adjustment of VAT, fall within the domestic legal order of each Member State, in accordance with the principle of the procedural autonomy of the Member States, provided nevertheless that those measures are not less favourable than those governing similar domestic situations (principle of equivalence) and do not make it impossible in practice or excessively difficult to exercise rights conferred by EU law (principle of effectiveness) (see, by analogy, judgment of 9 September 2021,
GE Auto Service Leasing
, C‑294/20, EU:C:2021:723, paragraph 59 and the case-law cited).
As regards, in the first place, the principle of effectiveness, it must be observed that the possibility of providing additional evidence, in a VAT adjustment procedure, without any temporal limit would be contrary to the principle of legal certainty, which requires the tax position of the taxable person, having regard to his or her rights and obligations vis-à-vis the tax authorities, not to be open to challenge indefinitely (see, by analogy, judgment of 9 September 2021,
GE Auto Service Leasing
, C‑294/20, EU:C:2021:723, paragraph 60 and the case-law cited).
Nevertheless, it should be noted that failing to take into account evidence establishing that the conditions for the VAT exemption for intra-Community supplies of goods are met results in a situation in which the principle of tax neutrality, the importance of which for the common system of VAT has been recalled in paragraphs 28 to 30 of the present judgment and which may not, in principle, be limited, has been disregarded in relation to the economic activities concerned.
It follows that, while it is true that the right to exemption from VAT may be refused in certain situations, in particular on account of late submission by the economic operator concerned of the evidence necessary to establish the existence of that right after several unsuccessful reminders from the tax authorities and when the procedure was already at a contentious stage, as in the case which gave rise to the judgment of 9 September 2021,
GE Auto Service Leasing
(C‑294/20, EU:C:2021:723), the fact remains that, where the tax authority refuses to grant a taxable person the benefit of an exemption from VAT at an early stage of the tax procedure, it must ensure strict compliance with the principle of tax neutrality.
Thus, if, in a situation where the tax authorities have not yet adopted a tax assessment notice in respect of a taxable person on the date on which that person provides additional evidence supporting the right which he or she claims, a refusal to take that evidence into account may indeed be relied on against that taxable person, however it must be based on particular circumstances such as, inter alia, there being no justification for the delay or the fact that the delay resulted in a loss of tax revenue.
The refusal to take into account evidence from a date prior to the adoption of such a tax assessment notice is capable of making it excessively difficult to exercise the rights conferred by EU law, in so far as such a refusal restricts the possibility for the taxable person to produce evidence that the substantive conditions for obtaining a VAT exemption are satisfied. National legislation which, at that stage of the tax procedure, does not allow the taxable person to provide evidence which is still outstanding, in order to substantiate the right which he or she claims and which does not take account of any explanations as to why that evidence was not provided earlier thus appears difficult to reconcile with the principle of proportionality and also with the fundamental principle of VAT neutrality.
In the present case, it is for the referring court to assess, in the light of the foregoing considerations, whether or not the refusal to take those factors into account complies with the principle of effectiveness.
In that context, the referring court must, in particular, take account of the fact that, according to its own indications, the tax inspection report does not close the tax inspection procedure and is merely an interim procedural act intended solely to inform the taxable person of the factual situation established by the First Instance Tax Authority and of the opportunity to submit observations.
As regards the observation of the applicant in the main proceedings that the Republic of Slovenia recently undertook to amend the national legislation at issue in the main proceedings, that amendment being, in its view, intended, inter alia, to repeal the provision stating that new facts and evidence are to be taken into account only if they existed before the report was issued and the taxable person could not reasonably have mentioned them and produced them before that report was issued, suffice it to state that that party in no way claims that the legal framework applicable to the dispute in the main proceedings will be affected by it.
In the second place, it is for the referring court to determine whether the principle of equivalence, which requires that the national procedural provisions governing exemption from VAT for intra-Community supplies of goods are not less favourable than those governing similar domestic situations, has been complied with in the present case (see, by analogy, judgment of 9 September 2021,
GE Auto Service Leasing
, C‑294/20, EU:C:2021:723, paragraph 62 and the case-law cited).
In the light of all the foregoing, the answer to the question referred is that Articles 131 and Article 138(1) of Directive 2006/112, read in conjunction with the principles of tax neutrality, effectiveness and proportionality, must be interpreted as not precluding national legislation which prohibits the production and gathering of new evidence which establishes that the substantive conditions laid down in Article 138(1) of that directive are satisfied, during the administrative procedure which resulted in the adoption of the tax assessment notice, in particular after the tax inspection stage but before the adoption of that decision, provided that the principles of equivalence and effectiveness have been complied with.

Costs
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Tenth Chamber) hereby rules:
Article 131 and Article 138(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in conjunction with the principles of tax neutrality, effectiveness and proportionality,
must be interpreted as not precluding national legislation which prohibits the production and gathering of new evidence which establishes that the substantive conditions laid down in Article 138(1) of that directive are satisfied, during the administrative procedure which resulted in the adoption of the tax assessment notice, in particular after the tax inspection stage but before the adoption of that decision, provided that the principles of equivalence and effectiveness have been complied with.
[Signatures]
*
Language of the case: Slovenian.