Opinion of the Advocate General — ECLI:EU:C:2017:500
Date: 2017-06-28
Language of the case: English
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: United Kingdom

Summary — Judgment of the Court (Third Chamber), 12 October 2017 1. Harmonisation of fiscal legislation — Common system of value added tax — Special schemes — Flat-rate scheme applicable to farmers — Possibility of excluding a farmer from that scheme — Exhaustive list of the grounds of exclusion (Council Directive 2006/112, Arts 296(2) and 297 to 299) 2. Harmonisation of fiscal legislation — Common system of value added tax — Special schemes — Flat-rate scheme applicable to farmers — Category of farmers — Concept — Farmers recovering substantially more by being subject to that scheme than by being covered by the normal value added tax arrangements or the simplified value added tax arrangements — Not included (Council Directive 2006/112, Art. 296(2)) 1. Article 296(2) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as laying down exhaustively all the cases in which a Member State may exclude a farmer from the common flat-rate scheme for farmers. Article 296(2) of the VAT Directive refers only to the possibility of excluding from the flat-rate scheme certain categories of farmers and farmers for whom application of the normal VAT arrangements, or of the simplified procedures provided for in Article 281 of the directive, is not likely to give rise to administrative difficulties. Neither the objectives of the flat-rate scheme nor the context of Article 296(2) of the VAT Directive mean that the legislature is to be regarded as having intended to allow other grounds of exclusion. It is true that one of the objectives pursued by the flat-rate scheme is to enable farmers who are subject to it to offset the VAT costs which they have borne on account of their activity. However, the risk of excessive offsetting in respect of VAT is taken into consideration by Article 299 of the VAT Directive with regard to flat-rate farmers as a whole. To that end, Article 299 prohibits the Member States from setting flat-rate compensation percentages at levels which would have the effect of obtaining for flat-rate farmers as a whole refunds greater than the input VAT charged. Furthermore, Articles 297 to 299 of the VAT Directive provide that the flat-rate compensation percentages are set globally by each Member State in the light of macroeconomic statistics for flat-rate farmers alone for the preceding three years. Therefore, Article 299 of the directive cannot justify the adoption of a decision to exclude, on an individual basis, a farmer from the flat-rate scheme in the light of the refunds obtained by applying those percentages. (see paras 36-39, 44, operative part 1) 2. Article 296(2) of Directive 2006/112 must be interpreted as meaning that farmers who are found to be recovering substantially more as members of the common flat-rate scheme for farmers than they would if they were subject to the normal value added tax arrangements or the simplified value added tax arrangements cannot constitute a category of farmers within the meaning of that provision. Article 296(2) of the VAT Directive sets out the possibilities for excluding farmers from the flat-rate scheme, stating that such an exclusion may in particular concern categories of farmers, but it does not define the concept of ‘categories of farmers’. It is true that such a concept refers to the activity engaged in by the farmers concerned, who, in order to form a category, must share one or more characteristics. Nevertheless, in the light of the principle of legal certainty, categories of farmers, as referred to in Article 296(2) of the VAT Directive, must be laid down on the basis of objective, clear and precise criteria, by national legislation or, as the case may be, by the executive empowered in that regard by the national legislature. In addition, as the Advocate General has observed in point 36 of his Opinion, those criteria must be laid down in advance, in the sense that the category subject to exclusion must be defined beforehand and in an abstract way, so that any farmer faced with a potential decision about entering the scheme is in a position to assess whether he belongs to the category that is subject to exclusion and whether he will still belong to that category in the future. Thus, a farmer must be able to carry out in advance an individual analysis of his situation in order to determine whether, in the light of the objective criteria laid down by that legislation, he falls within a category of farmers that is excluded from the flat-rate scheme. Conversely, if the requirements of clarity and certainty in legal situations are not to be disregarded, a category of farmers, within the meaning of Article 296(2) of the VAT Directive, cannot be defined by reference to a criterion which would not permit the persons concerned to conduct an individual analysis of that kind. (see paras 46-49, 51, operative part 2)