Judgment — ECLI:EU:C:2024:976
Date: 2024-11-21
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-624/23 – 1 
Case C-624/23 
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:  
10 October 2023  
Referring court:  
Administrativen sad Varna (Bulgaria) 
Date of the decision to refer:  
27 September 2023 
Applicant:  
‘SEM Remont’ 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 subject matter of the action before the Administrativen sad Varna 
(Administrative Court, Varna) concerns the tax assessment notice No R – 
03000322001265-091-001 of 25 August 2022 issued by the revenue office of the 
Varna regional directorate of the Natsionalnata agentsia za prihodite (National 
Revenue Agency, ‘the NAP’), refusing the applicant ‘SEM Remont’ EOOD the 
right of deduction for the tax period from 1 December 2021 to 31 December 2021. 
Subject matter and legal basis of the request 
Request for a preliminary ruling under Article 267 TFEU concerning the 
interpretation of Articles 63, 167, 168(a), 176, 178(a), 218, 219, 220, 203, 226 and 
228 of Council Directive 2006/112/EC of 28 November 2006 on the common 
system of value added tax 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-624/23 
 
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Questions referred for a preliminary ruling 
1. Is a practice on the part of the revenue office permitted pursuant to 
Articles 63, 167, 168(a), 178(a), 218, 219, 220, 226 and 228 of Council Directive 
2006/112/EC on the common system of value added tax as regards the application 
of national provisions and in particular of Article 71(1) of the Zakon za danak 
varhu dobavenata stoynost (Bulgarian Law on Value Added Tax, ‘the ZDDS’) in 
conjunction with Article 25(1) of the ZDDS in conjunction with Articles 102(4), 
114, 116 and 117 of the ZDDS in conjunction with Articles 125 and 126 of the 
ZDDS, that practice being one in accordance with which the recipient of a service 
subject to VAT was refused the right of deduction both for the period in which the 
service was rendered and also for the period of its declaration in the tax return on 
the ground that no VAT was indicated on the invoice issued to the recipient by the 
service provider and, at a later date (during the tax audit of the service provider), a 
document was issued that does not meet the requirements regarding the content of 
invoices (a memorandum was drawn up in which its author was described as both 
the recipient and provider of the service according to the memorandum) and in 
which the invoice issued to the recipient of the service was declared and VAT was 
calculated on the basis of the taxable amount indicated therein, which VAT was 
paid, and the recipient of the service only afterwards claimed the right of 
deduction (‘right to claim a tax credit’ under the ZDDS) on the basis of that 
memorandum, and is the exercise of the right of deduction rendered practically 
impossible or excessively difficult for the taxable person as a result of such a 
practice? 
2. If the first question is answered in the negative: At what point can the right 
of deduction be exercised, at the time when the invoice is issued without VAT 
being indicated therein or at the time when the memorandum is issued by the 
service provider? 
3. Is a provision such as Article 102(4) of the ZDDS and a practice on the part 
of the national tax authority permitted under Article 203, in conjunction with 
Articles 178(a) and 176 of the VAT Directive and the principle of tax neutrality, 
whereby a provider of a service that is subject to VAT who has not submitted an 
application for registration under the ZDDS within the period prescribed by law 
from the time when he was required to register under the ZDDS is required only 
to pay VAT in respect of the services he provided in the period from the date on 
which the registration obligation arose until registration with the revenue office, 
without any provision being made for the service provider in respect of whom 
VAT liability has been established pursuant to Article 102(4) of the ZDDS to be 
able to issue corrected invoices (or another document) to the recipients of services 
so that they can exercise the right of deduction? 
SEM REMONT 
 
3 
Provisions of European Union law and case-law relied on 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax (‘the VAT Directive’), Articles 63, 167, 168(a), 176, 178(a), 218, 
219, 220, 203, 226 and 228 
Judgment of the Court of Justice of the European Union (‘Court of Justice’) of 
21 June 2012, Mahagében and Dávid, C-80/11 and C-142/11, EU:C:2012:373 
Judgment of the Court of Justice of 6 February 2014, Fatorie, C-424/12, 
EU:C:2014:50 
Judgment of the Court of Justice of 15 September 2016, Senatex, C-518/14, 
EU:C:2016:691 
Judgment of the Court of Justice of 15 September 2016, Barlis 06 – Investimentos 
Imobiliários e Turísticos, C-516/14, EU:C:2016:690 
Judgment of the Court of Justice of 12 April 2018, Biosafe – Indústria de 
Reciclagens, С-8/17, EU:C:2018:249 
Judgment of the Court of Justice of 8 December 2022, Finanzamt Österreich 
(Wrongly invoiced VAT to final consumers), C-378/21, EU:C:2022:968 
Judgment of the Court of Justice of 15 September 2022, HA.EN., С-227/21, 
EU:C:2022:687 
Judgment of the Court of Justice of 9 July 2015, Salomie and Oltean, С-183/14, 
EU:C:2015:454 
Provisions of national law relied on 
Zakon za danak varhu dobavenata stoynost (Law on Value Added Tax, ‘the 
ZDDS’), Articles 25(1), 71(1), 102(4), 114, 116, 117, 125 and 126 
Succinct presentation of the facts and procedure in the main proceedings 
1 At issue in the proceedings before the Administrative Court, Varna, is the tax 
assessment notice No R-03000322001265-091-001 of 25 August 2022, issued by 
the revenue office of the Varna regional directorate of the NAP. 
2 In issuing this tax assessment notice, the revenue office found that there had been 
irregularities on the part of ‘SEM Remont’ EOOD in the application of the 
provisions of the ZDDS, and, on the basis of those findings, refused it the right of 
deduction of 752 305.05 Bulgarian leva (BGN). 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-624/23 
 
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3 ‘SEM Remont’ EOOD is a taxable person within the meaning of Article 3 of the 
ZDDS. 
4 ‘Gidrostroy-Rusia’ OOD is a company that is registered in the Russian Federation, 
but also pursuant to the ZDDS, and operates in the field of hydraulic engineering, 
hiring out ships with technical crew for dredging work. 
5 ‘SEM Remont’ EOOD and ‘Gidrostroy-Rusia’ OOD are not affiliated 
undertakings. 
6 On 4 August 2020, ‘Gidrostroy-Rusia’ OOD entered into a contract with ‘SEM 
Remont’ EOOD to carry out dredging work in the port of Varna, Channel 1 and 
Channel 2. Under that contract, ‘Gidrostroy-Rusia’ OOD is the service provider 
and ‘SEM Remont’ EOOD is the customer. 
7 ‘Gidrostroy-Rusia’ OOD issued invoices No 1010 of 31 October 2020 and 
No 1017 of 15 November 2020 to ‘SEM Remont’ EOOD in respect of the 
contractual activities carried out. No VAT on the value of the service was shown 
on either of the invoices. 
8 Before the date on which the service was rendered and ‘SEM Remont’ EOOD was 
invoiced, ‘Gidrostroy-Rusia’ OOD had already achieved a turnover requiring 
compulsory registration pursuant to the ZDDS, but had not fulfilled its registration 
obligation under the ZDDS at the time the invoices were issued to ‘SEM Remont’ 
EOOD. 
9 Declarations were submitted by ‘SEM Remont’ EOOD in respect of the dredging 
and excavation operations completed and accepted. 
10 By letter of 12 July 2021, in the context of a tax audit, ‘Gidrostroy-Rusia’ OOD 
issued memorandum No 1 of 29 June 2021 in accordance with Article 117(1) of 
the ZDDS, in which ‘Gidrostroy-Rusia’ OOD was recorded as the organisation 
providing and receiving the service, that is to say one and the same person, and in 
which invoices No 1010 of 31 October 2020 and No 1017 of 15 November 2020 
were each described with the taxable amount stated and VAT calculated 
accordingly. 
11 On the basis of that memorandum, ‘SEM Remont’ EOOD included the services 
referred to in the aforementioned invoices in its VAT return and purchase ledger 
as services in respect of which there was a right of deduction for the tax period 
from 1 December 2021 to 31 December 2021. 
12 The revenue offices found that ‘EIS-Stroitelna kompania’ AD is an authorised 
representative of ‘Gidrostroy-Rusia’ OOD and that ‘EIS-Stroitelna kompania’ AD 
and ‘SEM Remont’ EOOD had concluded a loan agreement dated 13 July 2021 
for the sum of BGN 752 303.05, that is to say, the amount for which a right of 
deduction was refused by way of the tax assessment notice at issue. 
SEM REMONT 
 
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13 By letter of 13 July 2021, ‘EIS-Stroitelna kompania’ AD informed ‘SEM Remont’ 
EOOD that the amount in question was used to pay the VAT due, which had been 
calculated in memorandum No 1 of 29 June 2021 in respect of the two invoices 
issued to ‘SEM Remont’ EOOD. 
The essential arguments of the parties in the main proceedings 
Opinion of ‘SEM Remont’ EOOD 
14 The company contests the tax assessment notice, asserting that it is entitled to 
deduction as a result of its having declared memorandum No 1, issued by the 
service provider, in the tax return, on the following grounds: 1. The service 
provider, it argued, is a registered person for the purposes of the ZDDS; 2. The tax 
was calculated in memorandum No 1 of 29 June 2021; 3. The customer ‘SEM 
Remont’ EOOD is a registered person pursuant to the ZDDS; 4. The services are 
taxable with place of performance in the sovereign territory of the Republic of 
Bulgaria; 5. The services had actually been provided; 6. The customer ‘SEM 
Remont’ EOOD uses the product of the services received in its commercial 
activity, that is to say, for the subsequent supply of taxable services; 7. The VAT 
due was stated in the tax return by the service provider ‘Gidrostroy’ and had been 
duly paid to the tax authorities. 
Opinion of the Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna 
praktika’ Varna pri Tsentralno upravlenie na Natsionalnata agentsia po 
prihodite (Director of the ‘Appeals and Tax and Social Security Practice’ 
Directorate Varna within the Central Administration of the National Revenue 
Agency, Bulgaria; ‘the Director’) 
15 The Director considers that, at the time that memorandum No 1 of 29 June 2021 
was issued, no taxable event had yet occurred and that no tax was then chargeable. 
‘SEM Remont’ EOOD did not satisfy the conditions laid down in Article 71 of the 
ZDDS, he argued, since it was not in possession of an invoice showing VAT, but 
merely of a memorandum which exclusively dealt with estimates of the VAT 
owed by the company (‘Gidrostroy-Rusia’ OOD) registered late under the ZDDS 
as between ‘Gidrostroy-Rusia’ OOD and the NAP and which consequently did not 
constitute appropriate proof of the existence of the right of deduction. The 
provisions of domestic law mentioned were consistent with the provisions of 
Council Directive 2006/112/EC. 
16 Having regard to the fact that the supplying undertaking did not issue a corrected 
invoice, but, by means of the memorandum that it did issue, calculated the full 
amount of the tax under the reverse charge procedure, since it had been 
established by the revenue office in the tax audit report, it must be assumed that 
the service provider would not have issued the memorandum if it had not been the 
subject of an audit. Furthermore, he argued, the memorandum does not 
substantiate a VAT liability for the customer since ‘SEM Remont’ EOOD is not 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-624/23 
 
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shown as the customer according to the information in the memorandum. The 
memorandum is a stand-alone document, distinct from the invoice, by means of 
which the service provider calculates the VAT ‘using the reverse charge 
procedure’ for the [relevant] period and undertakes to pay the tax by stating it in 
the VAT return. The corresponding memorandum cannot be regarded as an 
invoice, he argues, either within the meaning of the Directive or of the ZDDS, 
since it contains neither the necessary information for that purpose nor any basis 
for the customer’s liability for payment of the tax. On the contrary, the issuer of 
the memorandum is liable for payment of the tax for the reasons mentioned above. 
17 It must be concluded, he contends, that the loan agreement had been signed in 
order to justify payment of the liabilities of the service provider ‘Gidrostroy-
Rusia’ OOD to the NAP by a third party, namely ‘EIS – Stroitelna kompania’ AD, 
and that the contract between ‘EIS – Stroitelna kompania’ AD and ‘SEM Remont’ 
EOOD is a sham agreement. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
18 In the proceedings before the Administrative Court, Varna, it is disputed whether 
the VAT Directive permits provisions of national law and a practice on the part of 
the national tax authority, such as those in the present proceedings, whereby the 
customer would be denied the right of deduction in the following circumstances: 
1. The provision of the service is not in dispute; 2. An invoice was issued for the 
supply of the service in which the service provider did not indicate any VAT; 3. 
The VAT liability of the service provider was established in the course of the tax 
audit of that service provider, on the basis of the special provision of 
Article 102(4) of the ZDDS (the service provider achieved a turnover, before 
providing the service and issuing the invoice without specifying VAT, which 
required compulsory registration pursuant to the ZDDS); 4. The service provider 
was registered in accordance with the ZDDS at the request of the revenue office 
after providing the service; 5. During the tax audit to which it was subject, the 
service provider issued a memorandum in which it stated that it was both the 
service provider and also the customer; furthermore, the invoices issued to the 
customer were declared and the VAT was calculated on the basis of the taxable 
amount of those invoices; 6. An authorised representative of the service provider 
paid the VAT for this service to the tax authorities using funds from a loan which 
it had obtained from the customer; and 7. The basis on which the customer 
exercised the right of deduction is the memorandum referred to above and not a 
corrected invoice issued by the service provider. 
19 The present dispute differs from the cases dealt with in the abovementioned 
judgments of the Court of Justice, so that the guidance provided by the Court of 
Justice on the interpretation and application of the national provisions which 
implement the provisions of the VAT Directive are to some extent not relevant. 
This request for a preliminary ruling must therefore be made. 
SEM REMONT 
 
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20 Thus, the judgment of 21 June 2012 in Mahagében and Dávid (C-80/11 and 
C-142/11) concerned the question of irregularities by the service provider or by 
one of its suppliers, and the obligations of the customer to satisfy himself when 
exercising the right of deduction that his supplier had the status of a taxable 
person. 
21 The judgment of 6 February 2014 in Fatorie (C-424/12) examined whether the 
national tax authority can refuse the right of deduction to a person to whom the 
reverse charge procedure applies but who has paid the VAT to the supplier 
because it had been shown on the invoice issued by that supplier. 
22 As is evident from the grounds and operative part of the judgment of 
15 September 2016 in Senatex (C-518/14), the question in that case concerned the 
correction of specific information in the invoice, namely the VAT identification 
number, and the period in respect of which the right to deduct may be exercised in 
the light of the correction of the invoice. 
23 In the judgment of 15 September 2016 in Barlis 06 – Investimentos Imobiliários e 
Turísticos (C-516/14), the question as to the content of invoices was examined, in 
particular as regards missing information, whereas the present dispute relates to 
another tax document drawn up in accordance with the ZDDS, namely a 
memorandum, and relates in fact not to missing information but to the manner in 
which it was issued and the fact that the same person, namely the service provider, 
was described both as the service provider and the customer. 
24 In the judgment of 12 April 2018 in Biosafe – Indústria de Reciclagens (C-8/17), 
the provisions regarding the period laid down for the exercise of the right of 
deduction were interpreted in the event of invoices being issued to correct 
invoices already issued after an additional VAT liability of the supplier had been 
established. The difference between the present case and that one lies in the 
document that was issued with regard to the correction, its content and the 
national provision of Article 102(4) of the ZDDS. 
25 In the judgment of 8 December 2022 in Finanzamt Österreich (Wrongly invoiced 
VAT to final consumers) (C-378/21), the Court examined the consequences, for 
the issuer of invoices, of calculating VAT on the basis of the wrong rate of tax. 
26 In the judgment of 15 September 2022 in ‘HA.EN’ (C-227/21), the tax authority’s 
practice was examined as regards the denial of the right of the purchaser to deduct 
the VAT paid on the basis of the supplier’s failure to pay the tax. 
27 In the judgment of 9 July 2015 in Salomie and Oltean (C-183/14), the Court of 
Justice examined the rules regarding the registration of the holder of the right 
under the ZDDS and his right to deduct following his registration under the ZDDS 
for transactions carried out prior to registration but used in the course of his 
economic activity.