CELEX: 62020CJ0696
Reference for a preliminary ruling
Taxation
Value added tax (VAT)
Directive 2006/112/EC
Article 41
Intra-Community acquisition of goods
Place
Chain of successive transactions
Incorrect classification of some of the transactions
Principles of proportionality and fiscal neutrality

This request for a preliminary ruling concerns the interpretation of Article 41 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (
OJ 2006 L 347, p. 1
; ‘the VAT Directive’) and the principles of proportionality and fiscal neutrality.
The request has been made in proceedings between the company B. and the Dyrektor Izby Skarbowej w W. (Director of the Tax Chamber in W, Poland), concerning the determination of the value added tax (VAT) difference to be refunded for April 2012.
Legal context
European Union law
Article 2 of the VAT Directive provides:
‘1.   The following transactions shall be subject to VAT:
…
(b)
the intra-Community acquisition of goods for consideration within the territory of a Member State by:
(i)
a taxable person acting as such …
…
…’
The first paragraph of Article 20 of that directive provides:
‘“Intra-Community acquisition of goods” shall mean the acquisition of the right to dispose as owner of movable tangible property dispatched or transported to the person acquiring the goods, by or on behalf of the vendor or the person acquiring the goods, in a Member State other than that in which dispatch or transport of the goods began.’
Article 40 of that directive states:
‘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 of the VAT Directive provides:
‘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.’
Polish law
Under Article 25 of the Ustawa o podatku od towarów i usług (Law on the tax on goods and services) of 11 March 2004 (Dz. U. of 2004, No 54, item 535; ‘the Law on VAT’):
‘1.   An intra-Community acquisition of goods shall be deemed to have been made in the territory of the Member State in which the goods are located at the time when their dispatch or transport ends.
2.   Notwithstanding paragraph 1, where the person acquiring the goods referred to in Article 9(2), in making an intra-Community acquisition of goods, has provided the number assigned to him or her by the Member State concerned for the purposes of intra-Community transactions other than the Member State in which the goods are located at the time when their dispatch or transport ends, the intra-Community acquisition of goods shall also be deemed to have been made in the territory of that Member State, unless the person acquiring the goods demonstrates that the intra-Community acquisition of goods:
(1)
has been taxed in the territory of the Member State in which the goods are located at the time when their dispatch or transport ends, or
(2)
is deemed to have been taxed in the territory of the Member State in which the goods are located at the time when their dispatch or transport ends due to the application of the simplified intra-Community triangular transaction procedure referred to in Chapter XII.’
The dispute in the main proceedings and the question referred for a preliminary ruling
B. is a company established in the Netherlands, the activities of which are subject to VAT in that Member State. In April 2012, the period at issue in the main proceedings, that company was also registered for VAT in Poland.
During that period, B. took part in chain transactions relating to the same goods, concluded by at least three operators. The goods were transported directly from the first operator in the chain, located in a Member State, to the last operator in that chain, located in another Member State. B. acted as an intermediary between the supplier and the recipient.
Specifically, B. acquired goods from BOP, established in Poland, stating the latter’s Polish VAT identification number. The supplies from BOP to B. were classified as domestic supplies and the VAT rate of 23% relating to that type of supply was applied to them. By contrast, B. regarded its own supplies to its customers in other Member States as intra-Community supplies of goods, subject to a VAT rate of 0% in Poland, which resulted in tax refunds in its favour.
By decision of 11 June 2015, the Dyrektor Urzędu Kontroli Skarbowej (Director of the Tax Audit Office, Poland; ‘the tax authority’) took the view that B. had committed an error in the classification of the supplies forming part of the chain of transactions, which led to the amount of VAT payable being reduced. According to the tax authority, the transport of the goods at issue had to be ascribed to the supply between BOP and B., which was, accordingly, in the nature of an intra-Community supply of goods on the part of BOP and intra-Community acquisition of goods on the part of B..
Consequently, the tax authority took the view that the supplies of the goods at issue made by B. to contracting parties established in other Member States did not fall within the arrangements for intra-Community supplies of goods and that those supplies should have been taxed as supplies made within the Member States where the dispatch of the goods ended.
As regards the supplies made by BOP to B., the tax authority took the view that B. should have registered for VAT in the territory of the Member States where dispatch of the goods in question ended and invoiced those supplies there as intra-Community acquisitions of goods. In addition, that authority took the view that B., since it had indicated its Polish VAT identification number in connection with those supplies, which was the number issued by a Member State other than the Member State in which the transport of the goods ended, was required, in accordance with point 1 of Article 25(2) of the Law on VAT, also to invoice VAT in Poland. Furthermore, BOP, which had issued invoices showing an incorrect amount of VAT, was obliged to invoice VAT at a rate of 23%, whereas B. was refused the right to deduct the VAT due on those invoices. Consequently, B. was subject to an actual VAT liability of 46%.
By decision of 11 September 2015, the Dyrektor Izby Skarbowej (Director of the Tax Chamber) annulled the tax authority’s decision of 11 June 2015 and increased the amount of the refund of the tax difference paid to B. in respect of April 2012, while adhering, in principle, to all the essential factual and legal findings made by that authority.
B. brought an action against that decision before the Wojewódzki Sąd Administracyjny w Warszawie (Regional Administrative Court, Warsaw, Poland), which was dismissed as unfounded by judgment of 16 May 2017.
That court confirmed the application to B. of point 1 of Article 25(2) of the Law on VAT, since that company, as a taxable person carrying out an intra-Community acquisition of goods and having indicated a VAT identification number other than that issued by the Member State on the territory of which the transport of the goods ended, had created two places of acquisition of goods, one in the Member State in which the transport of the goods ended and the other in the Member State which issued the VAT identification number under which the person acquiring the goods carried out that acquisition (‘the Member State of identification’). Since B. had failed to demonstrate that it had itself applied tax to the acquisition of the goods at issue in the Member State in which the transport ended, the intra-Community acquisition of those goods is deemed to have taken place in Poland, even though it has been established that the persons acquiring those goods from B. had proved that those goods had been acquired in the Member State in which the transport ended and that there was no loss of VAT.
B. brought an appeal on a point of law before the Naczelny Sąd Administracyjny (Supreme Administrative Court, Poland), the referring court, against the judgment of 16 May 2017.
That court states that, in the present case, the supplies made in the successive chain of transactions were subject to VAT and that VAT was paid at each stage of the chain. It considers that the Polish tax authorities rightly took the view that B. made errors in the classification of the various supplies at issue and that those errors led to the application of Article 25(2) of the Law on VAT, the provision transposing Article 41 of the VAT Directive into national law.
The referring court is uncertain, however, about the application of Article 25(2) by the tax authority. According to that authority’s interpretation of that provision, no corrective mechanism is applied to take account of the fact that the goods supplied were taxed in the Member State of identification and also in the Member State in which the transport of the goods ended, where it was not B. itself that taxed the acquisition of goods in the latter Member State but its customers. It points out, in that regard, that the second paragraph of Article 41 of the VAT Directive provides for a corrective mechanism for avoiding situations of double taxation and that the objective of Article 41 is to combat tax avoidance. However, the activities of B. and its contracting partners do not constitute fraud or abuse. The lack of competence of the authorities conducting the procedure to verify the entire chain of supply has the effect of infringing the principle of VAT neutrality and the principle of proportionality.
Accordingly, since it has doubts as to the interpretation of Article 41 of the VAT Directive in the light of those principles, the Naczelny Sąd Administracyjny (Supreme Administrative Court) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:
‘Do Article 41 of [the VAT Directive] and the principles of proportionality and neutrality preclude the application, in a situation such as that at issue in the main proceedings, of a national provision such as Article 25(2) of the Law on VAT to an intra-Community acquisition of goods by a taxable person:
–
if that acquisition has already been taxed in the territory of the Member State in which dispatch ends, by the persons acquiring the goods from that taxable person;
–
where it has been established that the taxable person’s actions did not involve any tax fraud, but that they were the result of an incorrect designation of supplies in chain transactions and that that taxable person’s Polish VAT identification number was provided for the purposes of a domestic rather than an intra-Community supply?’
Consideration of the question referred
As a preliminary point, it should be borne in mind that, as regards circumstances such as those at issue in the main proceedings, in which transactions forming a chain of two successive supplies have given rise to only a single intra-Community transport, it is settled case-law that that transport can be ascribed to only one of the two supplies, that supply being alone exempted, in the Member State of departure of the transport of the goods, as an intra-Community supply. In order to determine to which of the two supplies that transport must be ascribed, it is necessary to undertake an overall assessment of all the specific circumstances of the case (see, inter alia, judgment of 26 July 2017, Toridas,
C‑386/16
,
EU:C:2017:599
, paragraphs
and
and the case-law cited).
In the present case, B. submits that the first and second supplies of the chain at issue in the main proceedings were correctly classified, respectively, as a national supply and an intra-Community supply, since the transport had to be ascribed to the second supply in the chain.
In that connection, it should be pointed out that, in the context of the procedure provided for in Article 267 TFEU, which is based on a clear separation of functions between the national courts and the Court of Justice, only the national courts may establish and assess the facts of the dispute in the main proceedings and determine the exact scope of national laws, regulations or administrative provisions. The Court is only empowered to rule on the interpretation or validity of EU law in the light of the factual and legal situation as described by the referring court, and cannot call that situation into question or determine its accuracy (judgment of 9 September 2021, Real Vida Seguros,
C‑449/20
,
EU:C:2021:721
, paragraph
and the case-law cited).
In the present case, the tax authority concluded, on the basis of its findings of fact, that the transport had to be attributed to the first supply of the chain at issue in the main proceedings and that, therefore, it was that supply which had to be classified as an intra-Community supply, whereas the second supply of the chain had to be classified as a national supply, made in the Member State of arrival of the transport.
Since the referring court does not call into question those findings of fact and the legal classification of the first and second supplies of the chain at issue in the main proceedings, which is the consequence thereof, the answer to the question referred must be given in the light of the information set out in the order for reference, according to which the first supply of that chain was in the nature of an intra-Community supply on the part of BOP and an intra-Community acquisition on the part of B..
It follows that it must be held that, by its question, the referring court asks, in essence, whether Article 41 of the VAT Directive, read in the light of the principles of proportionality and fiscal neutrality, is to be interpreted as precluding legislation of a Member State under which an intra-Community acquisition of goods is regarded as having been made in the territory of that Member State, where that acquisition, which constitutes the first transaction in a chain of successive transactions, was wrongly classified as a domestic transaction by the taxable persons involved, which indicated for that purpose their VAT identification number allocated by that Member State, and the subsequent transaction, which was wrongly classified as an intra-Community transaction, was subject to VAT as an intra-Community acquisition of goods by the persons acquiring the goods in the Member State in which the transport of the goods ended.
In order to answer that question, it is necessary to examine in turn the following three aspects, relating to the fact that, in the present case, the tax authority relies on the rule laid down in Article 41 of the VAT Directive and implemented in national law by Article 25(2) of the Law on VAT, after reclassifying as an intra-Community supply a supply initially classified as a national supply and constituting the first stage of a chain of successive transactions.
First, it is necessary to determine whether Article 41 of the VAT Directive is applicable where the Member State that relies on that provision in order to apply VAT to an intra-Community acquisition of goods, as the Member State of identification, is the Member State in which the transport of the goods began.
Next, for the purposes of interpreting that article, it is necessary to examine the consequences, for the tax at issue, of the application of VAT to the goods in the Member State in which the transport ends, by the respective persons acquiring those goods, at the time of the second supply carried out in the chain of successive transactions at issue.
Lastly, it is necessary to address the fact that, according to the order for reference, despite the reclassification carried out by the tax authority, the taxable person who is the vendor at the time of the first supply of the chain of successive transactions at issue, namely BOP, remains required to invoice VAT at the standard rate, whereas the purchaser, namely B., cannot deduct input VAT.
It must be recalled in that regard that, pursuant to Article 40 of the VAT Directive, the place of an intra-Community acquisition of goods is deemed to be the place where dispatch or transport of the goods to the person acquiring them ends.
However, where the person acquiring the goods does not establish that that VAT has been applied to that acquisition in accordance with Article 40, the place of an intra-Community acquisition of goods is deemed, in accordance with the first paragraph of Article 41 of the VAT Directive, to be within the territory of the Member State of identification.
The second paragraph of Article 41 of the VAT Directive adds that, 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 of identification.
Furthermore, according to settled case-law of the Court, when interpreting a provision of EU law, it is necessary to consider not only its wording but also its context and the objectives pursued by the rules of which it is part (judgment of 21 March 2019, Tecnoservice Int.,
C‑245/18
,
EU:C:2019:242
, paragraph
and the case-law cited).
As regards the question whether Article 41 of the VAT Directive is applicable where the Member State which relies on that provision, as the Member State of identification, is the Member State in which the transport of goods began, it should be noted, in the first place, that such a situation is covered by the wording of Article 41.
In the second place, as regards the context of Article 41 of the VAT Directive, B. submits that an intra-Community acquisition of goods, within the meaning of Article 20 of that directive, presupposes that the taxable person must have acted with a VAT identification number issued by a Member State other than the Member State in which the transport of the goods began.
Under Article 20 of the VAT Directive, ‘intra-Community acquisition of goods’ means the acquisition of the right to dispose as owner of movable tangible property dispatched or transported to the person acquiring the goods, by or on behalf of the vendor or the person acquiring the goods, in a Member State other than that in which dispatch or transport of the goods began.
As the Advocate General observed, in essence, in point 54 of his Opinion, it cannot be inferred from Article 20 of the VAT Directive that the determination of whether a transaction is or is not an intra-Community transaction depends on the use of a specific VAT identification number. Therefore, the fact that, in the present case, B. used the VAT identification number of the Member State in which the transport of goods began does not, in itself, rule out the intra-Community nature of the transaction and the applicability of Article 41 of the VAT Directive.
B.’ s argument relating to Article 138(1)(b) of the VAT Directive, as amended by Council Directive (EU) 2018/1910 of 4 December 2018 (
OJ 2018 L 311, p. 3
), which provides that Member States are to exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the European Union, where the taxable person or non-taxable legal person for whom the supply is made is identified for VAT purposes in a Member State other than that in which the dispatch or transport of the goods begins and has indicated this VAT identification number to the supplier, is irrelevant in this context.
Even if, under Article 138(1)(b) of that version, the fact that the person acquiring the goods uses a VAT identification number issued by a Member State other than that in which the dispatch or transport of the goods begins must be regarded as an additional substantive condition to which the exemption in the case of an intra-Community supply of goods is subject, the fact remains that, in any event, that provision, inserted by Directive 2018/1910, is not applicable
ratione temporis
to the facts of the case in the main proceedings.
In the third place, as regards the objectives pursued by Article 41 of the VAT Directive, the Court has held that that provision seeks, first, to ensure that a given intra-Community acquisition is subject to tax and, secondly, to prevent double taxation in respect of the same acquisition (judgment of 22 April 2010, X,
C‑536/08 and C‑539/08
,
EU:C:2010:217
, paragraph
).
Those two objectives may indeed be pursued by the Member State of identification when that Member State is also the Member State in which the transport of the goods began.
Accordingly, Article 41 of the VAT Directive is applicable where the Member State that relies on that provision to apply VAT to an intra-Community acquisition of goods, as the Member State of identification, is the Member State in which the transport of the goods began.
As regards the second aspect, referred to in paragraph 29 of the present judgment, namely the application of VAT in the Member State in which the transport of the goods ends to the acquisition initially classified as an intra-Community acquisition, it should be recalled that, under the first paragraph of Article 41 of the VAT Directive, the rule concerning the place of an intra-Community acquisition of goods laid down in that provision is relevant only in so far as the person acquiring the goods has not established that VAT was applied to that acquisition, in accordance with Article 40 of that directive.
The national court raises the issue in that context of the effect of the application of VAT by the respective persons acquiring the goods, in the Member State in which the transport of the goods ends, to the second supply of the chain of successive transactions at issue, namely that which was incorrectly classified as an intra-Community acquisition of goods.
In that regard, as the Advocate General observed, in essence, in point 73 of his Opinion, the ‘person acquiring the goods’, in the first paragraph of Article 41 of the VAT Directive, is the person who made the ‘intra-Community acquisition’ of goods, that acquisition being deemed under that provision to be within the territory of the Member State of identification.
Since the main proceedings concern the taxation of the first supply of the chain of successive transactions at issue, it follows that B. must be regarded as the ‘person acquiring the goods’ within the meaning of that provision. On the other hand, the tax paid by B.’s customers at the time of the second supply of the same chain refers to a separate transaction.
Accordingly, the fact that B.’s customers applied VAT to the acquisitions of goods wrongly classified as an intra-Community acquisitions in the Member State in which the transport of the goods ended has no bearing on the assessment of the applicability of Article 41 of the VAT Directive.
However, in order to provide the referring court with a useful answer enabling it to settle the dispute before it, it is still important to examine the third aspect, mentioned in paragraph 30 above, namely the relevance of the fact that, according to that court, despite the reclassification by the tax authority of the first supply of the chain of successive transactions at issue as an intra-Community transaction, the vendor, namely BOP, remains required to invoice VAT at the normal rate whereas the purchaser, namely B., cannot deduct input VAT.
In that regard, it should be noted that the wording of Article 41 of the VAT Directive does not, as such, make it possible to determine whether such a fact is relevant for the purposes of the applicability of that provision.
As regards the context of Article 41, it should be noted, however, that, as the Advocate General observed, in essence, in points 83 and 84 of his Opinion, under the general scheme of the VAT Directive, intra-Community supplies are in principle exempt in the Member State of departure of the transport of the goods, whereas intra-Community acquisitions are taxed in the Member State in which the transport ends, the corollary of an intra-Community acquisition of goods being an exempt intra-Community supply.
In the present case, although the tax authority reclassified, on the basis of its findings of fact, the supply made by BOP to B. from a domestic transaction to an intra-Community transaction, BOP remains required to collect VAT at the standard rate on that supply. Since tax is therefore applied to that transaction in Poland, it must be held that the intra-Community supply of goods from BOP to B. is treated as non-exempt.
Given that the intra-Community supply of goods is non-exempt in the Member State of departure of the transport of the goods, there is no risk of tax avoidance, so that the application of tax to that transaction in that Member State on the basis of the rule laid down in Article 41 of the VAT Directive runs counter to the objectives pursued by that provision, as set out in paragraph 41 above.
It should be added that, although the Member States may adopt measures in order to ensure the correct levying and collection of the tax and the prevention of tax evasion, those measures must, in accordance with the principle of proportionality, not go further than is necessary to attain the objectives thereby pursued and may not therefore be used in such a way that they would have the effect of undermining the neutrality of VAT, which is a fundamental principle of the common system of VAT established by the relevant EU law (judgment of 18 March 2021, P (Fuel cards),
C‑48/20
,
EU:C:2021:215
, paragraph
and the case-law cited).
The application of the rule set out in Article 41 of the VAT Directive to an intra-Community acquisition of goods that results from a non-exempt intra-Community supply of goods gives rise to additional taxation that does not comply with the principles of proportionality and fiscal neutrality.
Having made those preliminary observations, the answer to the question referred is that Article 41 of the VAT Directive is to be interpreted as not precluding legislation of a Member State under which an intra-Community acquisition of goods is regarded as having been made in the territory of that Member State, where that acquisition, which constitutes the first transaction in a chain of successive transactions, was wrongly classified as a domestic transaction by the taxable persons involved, which indicated for that purpose their VAT identification number allocated by that Member State, and VAT was applied to the subsequent transaction, which was wrongly classified as an intra-Community transaction, as an intra-Community acquisition of goods by the persons acquiring the goods in the Member State in which the transport of the goods ended. That provision, read in the light of the principles of proportionality and fiscal neutrality, nevertheless precludes such legislation of a Member State where the intra-Community acquisition of goods which is regarded as being realised within the territory of that Member State results from an intra-Community supply of goods which has not been treated as an exempt transaction in that Member State.
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 (Sixth Chamber) hereby rules:

Article 41 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax is to be interpreted as not precluding legislation of a Member State under which an intra-Community acquisition of goods is regarded as having been made in the territory of that Member State, where that acquisition, which constitutes the first stage of a chain of successive transactions, was wrongly classified as a domestic transaction by the taxable persons involved, which indicated for that purpose their value added tax (VAT) identification number allocated by that Member State, and VAT was applied to the subsequent transaction, which was wrongly classified as an intra-Community transaction, as an intra-Community acquisition of goods by the persons acquiring the goods in the Member State in which the transport of the goods ended. That provision, read in the light of the principles of proportionality and fiscal neutrality, nevertheless precludes such legislation of a Member State where the intra-Community acquisition of goods which is regarded as being realised within the territory of that Member State results from an intra-Community supply of goods which has not been treated as an exempt transaction in that Member State.

[Signatures]
(
*1
)	Language of the case: Polish.