Judgment;Summary — ECLI:EU:C:2024:742
Date: 2024-09-12
Language of the case: Bulgarian
Court formation: Seventh Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Bulgaria

Summary  C-429/23 – 1 
Case C-429/23 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
11 July 2023 
Referring court: 
Administrativen sad Varna (Administrative Court, Varna, Bulgaria) 
Date of the decision to refer: 
30 June 2023 
Applicant: 
NARE-BG EOOD 
Defendant: 
Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’ 
Varna pri Tsentralno Upravlenie na Natsionalnata Agentsia za 
Prihodite 
  
Subject matter of the main proceedings 
The main proceedings concern examination of a tax assessment notice by which a 
tax authority refused to allow the applicant in the main proceedings to make a 
correct in respect of an earlier period and exercise the right to deduct input tax in 
respect of supplies which it had received before registering under the Zakon za 
danak varhu dobavenata stoynost (Law on value added tax; ‘the ZDDS’). 
Subject matter and legal basis of the request 
In the present case, special legal provisions were adopted in Bulgaria in 
connection with the COVID 19 pandemic while the 12-month period provided for 
in the ZDDS for exercising the right to deduct input tax in respect of supplies 
received by the applicant prior to its registration under the ZDDS was running. In 
view of the difficulties which the pandemic entailed for economic operators, those 
legal provisions extended the time limits for the declaration and payment of 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-429/23 
 
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certain taxes, but did not provide for such possibility for the declaration, payment 
and right to deduct VAT. The applicant argues that, precisely because of COVID 
19 and the subsequent self-isolation of its accountant, it made a technical error, 
which it was not permitted to correct in accordance with the tax assessment notice 
contested in the main proceedings. As a result, the applicant is unable in practice 
to exercise its right to deduct input tax in respect of the supplies which it received 
prior to its registration under the ZDDS. 
The referring court asks the Court of Justice whether the applicable national 
legislation and practices render the exercise of the right to deduct input tax in 
those circumstances practically impossible or excessively difficult and whether 
they are compatible with Articles 184 and 186 of Council Directive 2006/112/EC 
of 28 November 2006 on the common system of value added tax (‘the VAT 
Directive’), and the principles of fiscal neutrality, equivalence and effectiveness. 
The referring court further asks the Court of Justice whether it is permissible 
under the abovementioned provisions of the VAT Directive to refuse the right to 
deduct input tax in respect of supplies received by a taxable person prior to its 
registration pursuant to the ZDDS, where it has declared VAT on those supplies 
by means of a correcting declaration for a period falling within the last tax period 
of the 12-month limitation period for exercising the right to deduct input tax in 
respect of those supplies. 
The request is made pursuant to Article 267 TFEU. 
Questions referred for a preliminary ruling 
1. In the context of the measures introduced by law to contain the epidemic, 
including the imposition of administrative measures to restrict people from 
leaving home and moving freely in localities, restrict contact with other 
persons and close retail premises, where, in connection with those measures 
to contain the epidemic, the time limits for declaring and paying tax debts 
pursuant to the Zakon za korporativnoto podohodno oblagane (Law on 
corporation tax) (ZKPO) (which lays down the time limits for declaring and 
paying taxes on income in national law) were extended, does a limitation 
period such as that at issue in the present proceedings have the effect of 
rendering practically impossible or excessively difficult the exercise of the 
right to deduct input tax by taxable persons during the period in which the 
measures to contain the epidemic are in force, and, from that point of view, 
are national legislation and tax administration practices such as those at 
issue in the present proceedings compatible with Article 184 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’), in conjunction 
with Article 186 thereof, in the light of the principle of fiscal neutrality 
introduced by the VAT Directive and the principles of equivalence and 
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effectiveness enshrined in European Union law (judgment of 8 May 2008, 
Ecotrade, C-95/07 und C-96/07, EU:C:2008:267)? 
2. In the light of the possibility provided for in the Zakon za danak varhu 
dobavenata stoynost (Law on value added tax) (ZDDS) of correcting the 
information declared by means of a VAT declaration pursuant to the ZDDS, 
is, in the circumstances of the present case, a practice of the tax authority 
permitted under Article 184 of the VAT Directive, in conjunction with 
Article 186 thereof, whereby a taxable person is refused the right to deduct 
input tax on the ground that the VAT was declared by means of a correcting 
declaration submitted in order to correct the data in respect of the last tax 
period of the limitation period (12 months) for exercising the right to deduct 
input tax in respect of supplies, received by the taxable person before the 
date of its registration pursuant to the ZDDS, provided that the transactions 
were not concealed, the data on the performance thereof were available in 
the applicant’s accounts, the tax administration had the necessary 
information, and there is no evidence that the budget was damaged? 
Provisions of European Union law and EU case-law relied on 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax, Articles 167, 168, 178, 179, 180, 182, 184, 185, 250 to 252, and 
273 
Judgment of 7 July 2022, Staatssecretaris van Financiën (Limitation of the right 
of deduction) (C-194/21, EU:C:2022:535); ‘judgment in Staatssecretaris van 
Financiën’ 
Judgment of 8 May 2008, Ecotrade (C-95/07 and C-96/07, EU:C:2008:267); 
‘judgment in Ecotrade’ 
Judgment of 12 July 2012, EMS-Bulgaria Transport (C-284/11, EU:C:2012:458); 
‘judgment in EMS-Bulgaria Transport’ 
Judgment of 9 July 2015, Salomie and Oltean (C-183/14, EU:C:2015:454); 
‘judgment in Salomie and Oltean’ 
Provisions of national law relied 
Zakon za danak varhu dobavenata stoynost (Law on VAT; ‘the ZDDS’) – 
Articles 74, 75, 125 and 126 
Zakon za merkite i deystviyata po vreme na izvanrednoto polozhenie, obyaveno s 
reshenie na Narodnoto sabranie ot 13 mart 2020 i za preodolyavane na posleditsite 
(Law on measures and actions to be taken during the state of emergency, imposed 
by the decision of the National Assembly on 13 March 2020, and addressing the 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-429/23 
 
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consequences thereof; ‘the ZMDIPPP’) (the title of that law was supplemented 
with effect from 14 May 2020; the previous title was: Zakon za merkite i 
deystviyata po vreme na izvanrednoto polozhenie, obyaveno s reshenie na 
Narodnoto sabranie ot 13 mart 2020 [Law on measures and actions to be taken 
during the state of emergency imposed by the decision of the National Assembly 
of 13 March 2020]) – Paragraphs 25, 27, 28, 29, and 49 of the transitional and 
final provisions of that law 
Zakon za korporativnoto podohodno oblagane (Law on corporation tax; ‘the 
ZKPO’) – Articles 92, 93, and 219(1), (4) and (5) 
Succinct presentation of the facts and procedure in the main proceedings 
1 The subject matter of the investigation in the proceedings before the referring 
court is a tax assessment notice of 24 January 2022, which was issued by a tax 
authority of the Teritorialna direktsia na Natsionalnata agentsia za prihodite 
(Regional Directorate of the National Agency for Revenues) in Varna. 
2 The scope of the investigation in terms of the nature of the liability and the period 
concerned is as follows: VAT for the period from 1 July 2021 to 31 July 2021 and 
VAT for the period from 1 October 2020 to 30 June 2021. 
3 When issuing the tax assessment notice, the tax authority identified irregularities 
committed by the applicant in applying the provisions of the ZDDS in relation to 
the amounts which can be offset or are to be refunded. 
4 Those amounts are set out in detail in the form a table showing the invoice 
number, date, supplier, subject matter, taxable amount, and VAT amount. Listed 
are 71 invoices issued during the period 2017 to 2019. That period is prior to the 
date of registration of the undertaking under the ZDDS. The total taxable amount 
in respect of the 71 invoices listed is 587 293.93 leva (BGN), and the total amount 
of VAT is BGN 117 458.80. It is not disputed that the supplies were made. It is 
also common ground that the VAT was paid by the suppliers. 
5 It was established that the undertaking was registered under the ZDDS on 
25 November 2019. 
6 In respect of the period from 25 November 2019 to 30 September 2020, the 
applicant submitted a VAT declaration for BGN 0. 
7 On 10 December 2020, the applicant submitted a VAT declaration for the tax 
period November 2020, in which it declared supplies with an entitlement to full 
input tax deduction in the amount of BGN 50 627 and VAT in the amount of 
BGN 10 125.40 (resulting in recoverable VAT in the amount of BGN 10 125.40); 
on 14 January 2021, it submitted a VAT declaration for December 2020, in which 
it declared supplies with an entitlement to full input tax deduction in the amount 
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of BGN 587 293.93 and VAT in the amount of BGN 117 458.93 (resulting in 
recoverable VAT in the amount of BGN 117 458.80). 
8 By letter of 15 January 2021, the applicant informed the tax authorities, pursuant 
to Article 126(3) of the ZDDS, that it had made the following technical errors in 
the accounting ledgers under the ZDDS for the tax periods November and 
December 2020: Invoices that should have been included in the accounting 
ledgers under the ZDDS for November 2020 had been erroneously included in the 
purchase ledger and the tax declaration for December 2020. As the reason for the 
errors, the applicant the cites the fact that the accountant acquired COVID 19 and 
subsequently self-isolated, as a result of which the work was transferred to a 
colleague who replaced him. 
9 The period for exercising the right to deduct input tax in respect of the supplies in 
question was 12 months and ended in November 2020, and the right to deduct 
input tax had to be exercised by submitting a tax declaration by 14 December 
2020 at the latest. The right to deduct input tax in respect of those supplies was 
not exercised in the declaration for November 2020. 
10 The tax authority refused the right to deduct input tax from the abovementioned 
invoices with reference to Article 72(1) of the ZDDS, which provides that a 
person registered under the ZDDS is entitled to exercise the right to deduct input 
tax in respect of the tax period in which that right arose or in one of the 12 
subsequent tax periods. 
11 The tax authority notes that under Article 75(1) and (2) of the ZDDS, the right to 
deduct input tax in respect of assets and services existing before the taxable 
person’s registration arises on the date of its registration under the ZDDS and is 
exercised in the tax period in which it arose or in one of the 12 subsequent tax 
periods. In the light of the foregoing, the tax authority concludes that the 
limitation period for exercising the right to deduct input tax in respect of the 
invoices referred to in the tax assessment notice expired in the tax period 
December 2020 and that the right to deduct input tax was precluded. 
12 In addition, the tax authority states that the undertaking under investigation 
exercised the right to full deduction of input tax in breach of Article 72 of the 
ZDDS and that the deduction of input tax for December 2020 in respect of those 
invoices should be adjusted downwards. 
13 Therefore, by tax assessment notice of 24 January 2022 the applicant was refused 
the right to deduct input tax in respect of 71 invoices from suppliers registered 
under the ZDDS for the period 2017 to 2019 with a taxable amount of 
BGN 587 293.93 and a total VAT amount of BGN 117 458.80. 
14 On 13 March 2020, the National Assembly of the Republic of Bulgaria imposed a 
state of emergency in the territory of the country in connection with the COVID-
19 pandemic for the period from 13 March 2020 to 13 April 2020. Subsequently, 
the ZMDIPPP was adopted. Through a series of decisions of the Council of 
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Ministers and orders of the Minister for Health, measures to combat the epidemic 
were introduced in the country throughout 2020, and the period of the epidemic-
related state of emergency was gradually extended until 30 April 2021. 
The essential arguments of the parties in the main proceedings 
15 The applicant takes the view that the dispute set out in the reference for a 
preliminary ruling is of a purely legal nature in view of the undisputed facts. The 
questions referred for a preliminary ruling relate to provisions of the VAT 
Directive, in particular Articles 179(1), 180 and 273, and the principles of fiscal 
neutrality, effectiveness and equivalence, as addressed in the judgments in 
Ecotrade and EMS-Bulgaria Transport. 
16 The applicant considers that the judgment in Staatssecretaris van Financiën cited 
by the defendant is not applicable. 
17 The defendant argues that the applicant exercised the right to deduct input tax in 
respect of the 71 invoices at issue in breach of Article 75(2) of the ZDDS. Those 
invoices relate to services and advances which the applicant received prior to its 
registration under the ZDDS and which existed at the time of its registration, but 
which it was late in declaring in its VAT declaration – it included them in its 
purchase ledger for the tax period December 2020 rather than the tax period 
November 2020 at the latest. According to the information provided by the 
applicant, the reason for that delay was that its accountant in charge had been ill 
with COVID-19 for a certain period in December 2020. 
18 In the light of those circumstances, the defendant takes the view that the dispute 
before the referring court concerns the application of Article 75(2) of the ZDDS, 
in conjunction with Article 75(1) thereof, and not the conditions for correcting 
errors in submitted declarations under Article 125 of the ZDDS since the applicant 
did not submit a VAT declaration for the period from 25 November 2019 to 
30 September 2020 and did not enter the invoices at issue in its purchase ledger 
for the tax periods October 2020 and November 2020 in accordance with 
Article 124 of the ZDDS. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
19 In the view of the referring court, the question is whether it is permissible for the 
applicant – by submitting a VAT declaration for December 2020 and a notice of 
correction for November 2020 – to make a correction in respect of a previous 
period (November 2020) and exercise the right to deduct input tax in respect of 
supplies received before the date of its registration under the ZDDS, namely 
25 November 2019, provided that, within the one-year period laid down in 
national law for the right to deduct input tax in respect of supplies received by 
taxable persons before the date of their registration under the ZDDS, measures 
have been introduced by law in Bulgaria which lay down time limits for the 
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declaration and payment of certain taxes, having regard to the epidemic situation, 
but no such provision is made for the declaration and payment of VAT. 
20 The referring court takes the view that that the Court of Justice, in its previous 
case-law, has ruled on cases in which the facts and the national tax rules differed 
from those at issue in the present case and that, therefore, the guidelines for the 
interpretation and application of the relevant provisions of national law 
transposing the VAT Directive are partially irrelevant and thus a reference for a 
preliminary ruling is necessary. 
21 The first question referred arises from the difference between the circumstances of 
the present case and those examined in the judgments in EMS-Bulgaria Transport 
and Ecotrade. In that regard, the referring court, states, with reference to 
paragraph 49 of the judgment in EMS-Bulgaria Transport and paragraphs 46 and 
48 of the judgment in Ecotrade, that the difference in the present case lies in the 
special legal provisions which, on account of the difficulties faced by economic 
operators in connection with the COVID 19 pandemic, lay down longer time 
limits for the declaration and payment of taxes due under the ZKPO, but does not 
provide for a similar possibility for declaration, payment and the right of 
deduction in respect of VAT. 
22 The second question referred arises from the difference between the circumstances 
of the case in which the judgment in Staatssecretaris van Financiën was delivered 
and the circumstances of the present case, as regards the period during which the 
correcting declaration was submitted. In that judgment, that period covered the 
years 2006 to 2015, during which the taxable person received a tax assessment 
notice (2015) and, after that notice was issued, claimed a deduction of input tax in 
respect of the VAT paid on the purchase of the goods in 2006, whereas in the 
present case, the applicant itself identified the discrepancy in the data declared 
and, in the following tax period, after the expiry of the time limit for exercising 
the right to deduct input tax in November 2020 (but within the period for 
submitting a correcting declaration – December 2020), submitted the correcting 
declaration.