Opinion of the Advocate General — ECLI:EU:C:2010:354
Date: 2010-06-17
Language of the case: German
Subject matter: Taxation;Value added tax;Anti-discrimination;Non-discrimination on grounds of nationality
Procedure: Reference for a preliminary ruling
Origin: Austria

Summary of the Judgment 1. Freedom to provide services – Restrictions – Tax legislation (Art. 49 EC; Council Directives 77/388, Arts 24(3), and 28i, and 2006/112, Art. 283(1)(c)) 2. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Special scheme for small undertakings (Council Directives 77/388, Art. 24 and 24 bis, and 2006/112, Art. 284 to 287) 1. It is not contrary to Article 49 EC for Articles 24(3) and 28i of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 2006/18, or Article 283(1)(c) of Directive 2006/112 on the common system of value added tax, to allow Member States to grant an exemption from value added tax with loss of the right of deduction to small undertakings established in their territory, but to exclude that possibility for small undertakings established in other Member States. Admittedly, excluding small undertakings established outside the territory of a Member State from eligibility for the value added tax exemption renders the provision of services in that Member State less attractive for those small undertakings, and entails, in consequence, a restriction of the freedom to provide services. Nevertheless, at this stage in the evolution of the system of value added tax, the objective consisting in guaranteeing the effectiveness of fiscal supervision in order to combat fraud, tax evasion and possible abuse and the objective of the scheme for small undertakings, which is to support their competitiveness, justify limiting the applicability of the value added tax exemption to the activities of small undertakings established in the territory of the Member State in which the value added tax is due. Restricting eligibility for the value added tax exemption to small undertakings established in the territory of the Member State which applies it is appropriate to ensure the effectiveness of fiscal supervision aimed at ascertaining whether the conditions for eligibility for that exemption have actually been met, given that undertakings generally retain the documents relating to all of their economic activities in the place of their establishment. Effective supervision of activities pursued under the freedom to provide services by a small undertaking not established in that territory is not easily achievable by the host Member State. As regards the need to limit eligibility for that scheme to small undertakings established in the Member State in question, the rules on administrative assistance resulting from Regulation No 1798/2003 on administrative cooperation in the field of value added tax and repealing Regulation No 218/92, and Directive 77/799 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation, cannot ensure a useful exchange of data as regards small undertakings active in the territory of the Member State which applies a value added tax exemption. Pursuant to Article 272(1)(d) of Directive 2006/112, Member States may release small undertakings from all the formalities provided for in Articles 213 to 271 of that directive, which are intended to inform the tax authorities of the Member States of the activities subject to value added tax in their territory. Accordingly, as a general rule, small undertakings are not fiscally identified as regards value added tax in their Member State of establishment and that Member State does not hold any information concerning their turnover. As regards Directive 77/799, it concerns the exchange of information on taxes on income, capital and insurance services. While it cannot be ruled out that information relating, in particular, to income might prove useful, in particular for the investigation of possible value added tax fraud, the fact remains that that information does not include turnover liable to value added tax. (see paras 51, 53, 59-61, 64-67, 71, 76, operative part 1) 2. Articles 24 and 24a of Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 2006/18, and Articles 284 to 287 of Directive 2006/112 on the common system of value added tax must be interpreted as meaning that the term ‘annual turnover’ refers to the turnover generated by an undertaking in one year in the Member State in which it is established. (see para. 77, operative part 2)