Judgment — ECLI:EU:C:2012:458
Date: 2012-07-12
Language of the case: Bulgarian
Court formation: Second Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Bulgaria

Summary of the Judgment 1. Harmonisation of tax legislation — Common system of value added tax — Deduction of input tax — Exercise of the right — Limitation period — Whether permissible — Conditions — Compliance with the principle of effectiveness — Assessment by the national court (Council Directive 2006/112, Arts 179, first para., 180 and 273) 2. Harmonisation of tax legislation — Common system of value added tax — Deduction of input tax — Principle of fiscal neutrality — Refusal of the right to deduct if the tax is accounted for belatedly — Not permissible — Payment of default interest — Whether permissible — Condition — Compliance with the principle of proportionality (Council Directive 2006/112) 1. The first paragraph of Article 179, Article 180 and Article 273 of Directive 2006/112 on the common system of value added tax must be interpreted as meaning that they do not preclude a limitation period for the exercise of the right to deduct, to the extent that it does not render the exercise of that right excessively difficult or impossible in practice. It is for the national court to carry out such an assessment and it may take into account, inter alia, a subsequent considerable extension of the limitation period and the duration of a value added tax registration procedure which had to be completed within that same period for it to be possible to exercise that right to deduct. (see para. 64, operative part 1) 2. The principle of fiscal neutrality precludes a penalty consisting in a refusal of the right to deduct if VAT is accounted for belatedly, but does not preclude the payment of default interest, provided that that penalty complies with the principle of proportionality, which it is for the national court to determine. Although Member States may impose penalties in the event of non-compliance with obligations which seek to ensure that the tax is collected correctly and that evasion is prevented, those penalties must not go further than is necessary to attain the objective pursued. In view of the preponderant position which the right to deduct has in the common system of value added tax, a penalty consisting of an absolute refusal of the right to deduct appears disproportionate where no evasion or detriment to the budget of the State is ascertained. (see paras 67, 70, 77, operative part 2)