Judgment;Summary — ECLI:EU:C:2022:535
Date: 2022-07-07
Language of the case: Dutch
Court formation: Tenth Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Netherlands

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:  
29 March 2021 
Referring court:  
Hoge Raad der Nederlanden (Supreme Court of the Netherlands) 
Date of the decision to refer:  
26 March 2021 
Appellant:  
Staatssecretaris van Financiën 
Respondent:  
X 
      
Subject matter of the main proceedings 
The issue in the main proceedings is whether, on the basis of Netherlands tax law, 
X is entitled to deduct the turnover tax charged to him by B on the supply of two 
plots of land in 2006, which X did not deduct at the time despite their taxable 
purpose, from the turnover tax payable on the supply of those two plots of land to 
B in 2013.  
Subject matter and legal basis of the request 
The request for a preliminary ruling concerns the interpretation of Articles 184 
and 185 of Council Directive 2006/112/EC of 28 November 2006 on the common 
system of value added tax (‘the VAT Directive’) and, in particular, whether those 
provisions may be interpreted as meaning that, where a taxable person has failed 
to deduct input tax within the applicable national time limit, he is entitled to make 
that deduction when an adjustment is made.  
The request for a preliminary ruling is made pursuant to Article 267 TFEU. 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-194/21 
 
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Questions referred for a preliminary ruling 
1. Must Articles 184 and 185 of the VAT Directive 2006 be interpreted as 
meaning that a taxable person who, at the time of acquiring goods or services, has 
failed to deduct input tax (‘the initial deduction’) within the applicable national 
time limit in accordance with the intended use for tax purposes, is entitled, when 
an adjustment is made – on the occasion of the subsequent first use of those goods 
or services – to make that deduction if the actual use at the time of the adjustment 
does not differ from the intended use? 
2. Is the answer to Question 1 affected by the fact that the failure to make the 
initial deduction does not involve fraud or abuse of rights and that no detrimental 
impact on the treasury has been established? 
Provisions of European Law relied on 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax (OJ 2006 L 347, p. 1): Article 12(1)(b); Article 12(3); 
Article 135(1)(k); Articles 167, 168, 178, 179, 180, 182, 184, 185, 186 and 188 
Provisions of national law relied on 
Wet op de omzetbelasting 1968 (Law on turnover tax of 1968) (Stb. 1968, 329): 
Article 11(1)(a)(1); Article 15 
Uitvoeringsbeschikking omzetbelasting 1968 (Implementing Decision on turnover 
tax of 1968) (Stcrt. 1968, 169): Article 12(2) and (3) 
Succinct presentation of the facts and procedure in the main proceedings  
1 The main proceedings concern an appeal in cassation against a judgment of the 
gerechtshof Arnhem-Leeuwarden (Arnhem-Leeuwarden Court of Appeal) of 
5 February 2019, on X’s appeal against a judgment of the rechtbank Gelderland 
(Gelderland District Court) of 2 November 2017. 
2 X purchased ten plots of land from B. B supplied the plots on 20 April 2006. The 
intention was that the plots would be developed for recreational purposes by the 
building of mobile homes with accessories. The mobile homes together with the 
ground on which they stood were subsequently to be sold.  
3 B charged X turnover tax in respect of that supply. X did not deduct that turnover 
tax. 
4 Due to economic circumstances, the intended development of the plots did not get 
off the ground. On 8 February 2013, X supplied B with two of the ten plots of 
STAATSSECRETARIS VAN FINANCIËN 
 
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land in return for payment. X charged B turnover tax on that payment. X did not 
submit a tax return for that turnover tax. 
5 The turnover tax referred to in paragraph 4 was retrospectively levied from X by 
an assessment dated 26 November 2015. X objected to this, taking the view that, 
pursuant to Article 15(4) of the Law on turnover tax of 1968, the retrospective 
assessment should have been reduced by a proportionate amount of the turnover 
tax referred to in paragraph 3.  
Essential arguments of the parties in the main proceedings  
6 The staatssecretaris van Financiën (State Secretary for Finance) submits that X 
should have deducted the input tax in the period in which the turnover tax relating 
to the supply of the plots in 2006 became chargeable in accordance with the use 
for tax purposes which the plots had at that time.  
7 After all, the adjustment mechanism laid down in Article 15(4), second to fourth 
sentences, of the Law on turnover tax of 1968 is not intended to enable the 
deduction of the turnover tax which the trader failed to deduct when submitting a 
return for the period concerned.  
8 According to the State Secretary for Finance, the adjustment mechanism laid 
down in the aforementioned statutory provision, read in conjunction with 
Articles 184 and 185 of the VAT Directive, concerns only cases in which the 
initial deduction is higher or lower than that to which the taxable person was 
entitled. Since, in the present case, the intended purpose of the two plots when 
they were purchased corresponds to their actual use after they were taken into use, 
there is no need for an adjustment.  
9 X’s reasoning is not provided. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
10 According to the referring court, there is uncertainty as to whether a taxable 
person who has failed to make a timely deduction of turnover tax is entitled to 
make that deduction through the adjustment mechanism provided for by the Law 
on turnover tax of 1968 and the VAT Directive, if it transpires that the original 
intended purpose and the actual use of the items when they were first taken into 
use are the same, and that the national time limit on the exercise of the right of 
deduction has expired. It is of the view that the answer to that question cannot be 
clearly deduced from the wording of Articles 184 and 185 of the VAT Directive. 
In its view, those provisions can be interpreted in two ways. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-194/21 
 
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First view: broad interpretation 
11 The broad interpretation entails interpreting the adjustment mechanism provided 
for in Articles 184 and 185 as meaning that an adjustment made when goods or 
services are first put to use amounts to the correction of an omission made in 
respect of the deduction at the time of the acquisition of those goods or services, 
irrespective of the nature of that omission.  
12 Allowing the taxable person to make good errors in the initial deduction in respect 
of goods or services not put to use immediately after their acquisition when they 
are subsequently put to use, even if this is after expiry of the national time limit on 
the initial deduction, ensures – in line with the principle of fiscal neutrality – that 
the amount of the deduction accurately reflects the actual use of that good or 
service. 
13 Such an interpretation has two dimensions.  
14 First, it ensures that a taxable person who deducts the VAT that he was charged on 
the acquisition of goods or services despite their exempt purpose, cannot use those 
goods or services for exempt purposes without incurring a VAT charge (see 
judgment of 11 April 2018, SEB Bankas, C-532/16, EU:C:2018:228, 
paragraph 39).  
15 Second, it ensures that a taxable person who fails to deduct, in whole or in part, 
the VAT he was charged when he acquired the goods or services, is not faced with 
the cost of the VAT when he actually starts to use those goods or services for 
(exclusively) taxable purposes. 
16 Furthermore, the referring court stresses that the Court of Justice did not expressly 
exclude from the adjustment mechanism the case where the taxable person, at the 
time of acquiring the goods or services, failed to exercise the right of deduction to 
which he was entitled at that time. In its view, it appears disproportionate, in cases 
where there was an inadvertent failure to make an initial deduction, and no fraud 
or abuse of rights are involved and no detrimental effects for the treasury have 
been established, not to permit that taxable person to make the deduction when the 
goods or services are first put to use (judgment of 30 April 2020, CTT – Correios 
de Portugal, C-661/18, EU:C:2020:335, paragraph 56).  
Second view: narrow interpretation 
17 The referring court points out that the broad interpretation set out above is not in 
line with the case-law of the Court of Justice, according to which it follows from a 
combined reading of Articles 184 and 185(1) of the VAT Directive that it is 
appropriate to apply those provisions where an adjustment proves to be necessary 
following a change in one of the factors used to determine the amount to be 
deducted, and that the amount of that adjustment must be calculated in such a way 
that the final amount to be deducted corresponds to that to which the taxable 
STAATSSECRETARIS VAN FINANCIËN 
 
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person would have been entitled if that change had initially been taken into 
account (see, inter alia, judgment of 27 June 2018, Varna Holideis, C-364/17, 
EU:C:2018:500, paragraph 29 and the case-law cited). The Court of Justice seems 
thereby to be limiting the scope of Articles 184 and 185(1) of the VAT Directive 
to cases where there has been a change of circumstances after the period of the 
initial deduction.  
18 In addition, the broad interpretation appears to be at odds with the case-law of the 
Court of Justice, according to which an insufficiently diligent taxable person who 
fails to deduct VAT in good time – that is, within the applicable time limit – may 
be penalised by the loss of the right of deduction (judgment of 1 October 2020, 
Vos Aannemingen, C-405/19, EU:C:2020:785, paragraphs 22 to 24). If the 
deduction is nonetheless granted, there may be a breach of the principle of legal 
certainty which requires that a taxable person’s tax position – in particular his 
rights and obligations towards the tax authorities – should not be left uncertain for 
an indefinite period of time.