Opinion of the Advocate General — ECLI:EU:C:2020:310
Date: 2020-04-23
Language of the case: Lithuanian
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Lithuania

Summary C-312/19–1 
C-312/19 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date of receipt: 
16 April 2019 
Referring court: 
Lietuvos vyriausiasis administracinis teismas (Lithuania) 
Date of the decision to refer: 
10 April 2019  
Applicant: 
XT 
Defendant: 
Valstybinė mokesčių inspekcija prie Lietuvos Respublikos finansų 
ministerijos (State Tax Inspectorate under the Ministry of Finance 
of the Republic of Lithuania) 
  
Subject matter of the main proceedings 
Tax dispute concerning the decision of the Vilniaus apskrities valstybinė 
mokesčių inspekcija (Vilnius State Tax Inspectorate; ‘the Vilnius STI’) of 
3 November 2015 approving the inspection report which, inter alia, requested the 
applicant to pay the calculated value added tax (‘VAT’) of EUR 39 586.71 and 
VAT default interest of EUR 11 695 and imposed upon him a VAT fine of 
EUR 3 959. 
Subject matter and legal basis of the request 
Request on the basis of the third paragraph of Article 267 TFEU to interpret the 
provisions of Council Directive 2006/112/EC of 28 November 2006 on the 
common system of value added tax (‘the VAT Directive’) in so far as they 
concern the establishing of the ‘independence’ of the activity of a participant in 
EN 
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joint activity and the allocation of tax liabilities between participants in joint 
activity. 
Questions referred for a preliminary ruling 
1. Are Article 9(1) and Article 193 of Council Directive 2006/112/EC of 
28 November 2006 on the common system of value added tax to be 
interpreted as meaning that, in circumstances such as those in the case under 
consideration, a natural person such as the applicant cannot be regarded as 
having ‘independently’ carried out the (economic) activity in question and as 
having to pay by himself the value added tax on the contested supplies, that 
is to say, for the purposes of Article 9(1) and Article 193 of Directive 
2006/112/EC, is the taxable person liable for the obligations at issue to be 
taken to be the joint activity/partnership (the participants in the joint activity 
collectively; in the instance under consideration, the applicant and his 
business partner collectively) – which under national law is not regarded as a 
taxable person and does not enjoy legal personality – and not solely a natural 
person such as the applicant? 
2. If the first question is answered in the affirmative, is Article 193 of Directive 
2006/112/EC to be interpreted as meaning that, in circumstances such as 
those in the case under consideration, VAT is paid individually by each of 
the participants (in the instance under consideration, the applicant and his 
business partner) in the joint activity/partnership – which joint 
activity/partnership is, under national law, not regarded as constituting a 
taxable person and does not enjoy legal personality – on the part of each 
payment by way of consideration that is received by them (or is receivable 
by or owed to them) for the taxable supplies of immovable property? Is 
Article 287 of Directive 2006/112/EC to be interpreted as meaning that, in 
such circumstances such as those in this case, the annual turnover referred to 
in that provision is established by taking into account the entire revenue of 
the joint activity (received collectively by the participants in the joint 
activity)? 
Provisions of EU law cited 
Articles 9(1), 193 and 287 of the VAT Directive. 
Provisions of national law cited 
The following provisions of the Lietuvos Respublikos pridėtinės vertės mokesčio 
įstatymas (Law of the Republic of Lithuania on value added tax; ‘the Law on 
VAT’) are applicable to the facts of the main proceedings: 
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– Article 2(2): ‘“Taxable person” shall mean a taxable person of the Republic 
of Lithuania or a foreign State’; 
– Article 2(15): ‘“Taxable person of the Republic of Lithuania” shall mean a 
legal or natural person of the Republic of Lithuania carrying out economic 
activities of any type, as well as a collective investment undertaking 
established in the Republic of Lithuania which does not have the status of 
legal person and acts as an investment fund’; 
– Article 71(1): ‘The obligation to register for VAT and calculate VAT and 
pay it into the budget shall be owed by taxable persons supplying goods and 
services in the territory of the country ... A person liable to register for VAT 
must submit an application for registration for VAT.’  
– Article 71(2): ‘Notwithstanding paragraph 1 of [Article 71 of the Law on 
VAT], a taxable person of the Republic of Lithuania shall not be liable to 
submit an application for registration for VAT and to calculate VAT and pay 
it into the budget, in the manner laid down …, where the total annual 
amount of consideration within the last 12 months for goods supplied and/or 
services provided in the territory of the country while carrying out economic 
activities has not exceeded LTL 155 000. VAT shall be begun to be 
calculated from the month when that limit has been exceeded. No VAT shall 
be calculated in respect of the goods supplied and services provided the 
consideration for which did not exceed the specified amount of 
LTL 155 000. ...’ 
– Article 71(4): ‘Failure to submit an application for registration for VAT ... 
shall not exempt a taxable person from the obligation to calculate VAT in 
respect of the goods and/or services supplied by him … and pay it into the 
budget ...’ 
– Article 79(1): ‘A taxable person ... shall document the supply of goods or 
services that has taken place by means of a VAT invoice ...’; 
– Article 79(5): ‘In the manner and in cases determined by the Government of 
the Republic of Lithuania or an institution authorised by it, goods or services 
supplied jointly by several VAT payers may be documented in one invoice.’ 
The following provisions of the Lietuvos Respublikos civilinis kodeksas (Civil 
Code of the Republic of Lithuania) are applicable to the facts of the main 
proceedings:  
– Article 6.969(1): ‘By a joint activity (partnership) agreement two or more 
persons (partners), co-operating by means of their property, work or 
knowledge, undertake to act jointly for a certain goal or certain activities 
which do not contravene the law’; 
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– Article 6.971(1): ‘The property contributed by the partners, which was 
previously in their ownership, as well as the production during joint 
activities and the income and fruits from them, shall be in the joint partial 
ownership of all the partners, unless otherwise established by law or the 
joint activity agreement’;  
– Articles 6.972(1) and (2): While managing joint affairs, each of the partners 
shall be entitled to act on behalf of all the partners, unless the joint activity 
agreement provides that joint affairs shall be managed by one of the partners 
or all the partners together. In the case of relations with third parties, the 
right of a partner to conclude the transactions on behalf of all the partners 
shall be affirmed by a power of attorney issued by the remaining partners, or 
by the joint activity agreement; 
– Article 6.974(1): ‘The allocation of joint expenses and joint losses related to 
the joint activity shall be established by the joint activity agreement. If there 
is no such agreement, each partner shall be liable for joint expenses and joint 
losses in proportion to the amount of his share’; 
– Article 6.975(3): ‘If the joint activity agreement is related to the commercial 
activity of the partners, all the partners shall be jointly and severally liable 
under the joint obligations, irrespective of the basis upon which those 
obligations arise’. 
Succinct presentation of the facts and procedure in the main proceedings 
1 It has been established in the case that on 19 February 2010 the applicant and 
another natural person (‘the business partner’) concluded a joint activity 
agreement for the purpose of cooperation in constructing a residential property in 
or around Vilnius. 
2 On 25 April 2010 the applicant together with his business partner decided to 
purchase a parcel of agricultural land of 0.5 ha in the District of Vilnius. On 
27 April 2010 the applicant and the owners of that parcel of land signed a sale 
contract for the parcel of land. The business partner contributed 70% and the 
applicant contributed 30% of the transaction amount. They made a decision to 
register ownership of the parcel of land in the applicant’s name. 
3 On 5 May 2010 the applicant and the business partner decided to build a complex 
of five buildings, to oblige the applicant to deal with all documents required for 
the construction and to appoint the private limited company Konsela (‘Konsela 
UAB’), the director of which was the applicant, to manage the construction. 
4 On 2 November 2010 the applicant received a construction permit issued in his 
name from the Vilnius District Municipal Authority giving permission to 
construct five buildings on the parcel of land of 0.5 ha. On 22 April 2010 the 
construction works contract was concluded, signed by the applicant, as the client, 
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and the representative of Konsela UAB. The contractor issued a VAT invoice for 
the construction of Buildings Nos 1 to 4 on 15 February 2011 and for the 
construction of Building No 5 on 11 February 2013. 
5 By decision of 2 December 2010 the applicant and the business partner decided to 
sell Building No 1 with a part of the parcel of land and to use the amount received 
for construction, together with the contractor. That immovable property was sold 
under a sale contract of 14 December 2010 between the applicant and the 
purchasers (natural persons), which provided for the sale of the building and a part 
of the parcel of land and set the detailed rules for use of the parcel of land. 
6 On 10 January 2011 the applicant and the business partner concluded an 
agreement concerning termination of the joint activity agreement of 19 February 
2010 and the division of property and liabilities. Under this agreement it was 
decided to terminate the joint activity agreement and to grant the right to produced 
assets (Buildings Nos 4 and 5) to the business partner, while the applicant 
undertook to reimburse the business partner by 2017 the difference between his 
contributions and the share of the joint assets received in the amount of 
LTL 300 000 (EUR 86 886). Buildings Nos 1 to 3 fell to the applicant under that 
agreement. 
7 Buildings Nos 2 and 3 together with the parts of the parcel of land allocated to 
them were respectively sold under sale contracts concluded between the applicant 
and natural persons on 30 May 2011 and 13 November 2012. 
8 On 1 February 2013 the applicant and the business partner drew up a property 
transfer (alienation) deed stipulating that, having regard to the agreement of 
10 January 2011, the applicant transferred to the business partner Buildings Nos 4 
and 5 together with the parts of the parcel of land that were allocated thereto. 
9 By decision of 6 February 2013 under the joint activity agreement of 19 February 
2010, the applicant and the business partner resolved that the applicant would sell 
Building No 5 and the part of the parcel of land allocated thereto, registered in his 
name, and immediately transfer the amount received to the business partner. By 
sale contract of 13 February 2013 that immovable property was sold to a legal 
person established in Lithuania. 
10 The applicant and the business partner did not regard those sales of immovable 
property carried out on 14 December 2010, 30 May 2011, 13 November 2012 and 
13 February 2013 (collectively, ‘the contested supplies’) as (economic) activity 
subject to VAT, which was why they did not calculate and identify the VAT to be 
paid by the purchasers (did not issue VAT invoices), did not declare and pay the 
VAT and did not use a VAT deduction. 
11 After carrying out a tax inspection in respect of the applicant regarding personal 
income tax (‘PIT’) and VAT for 2010 to 2013, the local tax authority classified 
the contested supplies as a single activity subject to VAT and held the applicant to 
be a taxable person liable for performance of the VAT obligations relating to (all) 
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those supplies. Accordingly, by decision of 3 November 2015 approving the 
inspection report, the Vilnius STI confirmed the additional VAT calculated in the 
inspection report and the related amounts (the default interest and the fine). 
12 Having examined a complaint concerning that decision of the local tax authority, 
the defendant, by decision of 3 March 2016, upheld the decision of the Vilnius 
STI. The applicant’s complaints were also dismissed by decision of the 
Mokestinių ginčų komisija (Commission on Tax Disputes) of 18 July 2016 and by 
the decision of the Vilniaus apygardos administracinis teismas (Regional 
Administrative Court, Vilnius) that is being contested on appeal. 
13 It should be specifically noted that, when calculating the VAT due, the local tax 
authority acknowledged on its own initiative the applicant’s right to a deduction of 
VAT under the aforementioned VAT invoices issued by Konsela UAB and 
calculated the contested VAT amounts payable after deducting the VAT for the 
acquisition (construction) of the aforementioned buildings. 
Grounds of the referring court 
14 In circumstances such as those of the present case, the question arises first of all 
whether the taxable person liable for those obligations is to be taken to be 
constituted by only the applicant or by both participants in the joint activity, that is 
to say, by the joint activity/partnership (the applicant and the business partner 
collectively). In the case under consideration the local tax authority and the 
defendant did not examine and question the reality of the joint activity. 
‘Independence’ of the activity of a participant in joint activity 
15 The Law on VAT, which is applicable to the legal relations at issue, has been 
adopted in national law inter alia for implementing the VAT Directive, 
Article 193 of which provides that VAT is to be payable by any taxable person 
carrying out a taxable supply of goods or services. 
16 The Court of Justice has stated that Article 9(1) of the VAT Directive gives to the 
notion of ‘taxable person’ a broad definition focused on independence in the 
pursuit of an economic activity to the effect that all persons – natural or legal, both 
public and private, even entities devoid of legal personality – who, in an objective 
manner, satisfy the criteria set out in that provision must be regarded as being 
taxable persons for the purposes of VAT (judgment of 12 October 2016, Nigl and 
Others, C-340/15, paragraph 27). 
17 Article 9(1) of the VAT Directive shows that one of the necessary attributes of a 
taxable person is the independence of his economic activity, which must be 
established by checking whether the person concerned performs his activities in 
his own name, on his own behalf and under his own responsibility, and whether he 
bears the economic risk associated with carrying out those activities (see, for 
example, judgments of 27 January 2000, Heerma, C-23/98, paragraph 18; of 
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18 October 2007, van der Steen, C-355/06, paragraph 23; and of 29 September 
2015, Gmina Wrocław, C-276/14, paragraph 34). The independence of activity 
must be established taking into account the criteria listed in paragraphs 34 and 35 
of the judgment of 29 September 2015, Gmina Wrocław, C-276/14. 
18 The tax authority’s failure to disprove the circumstances pertaining to the 
aforementioned joint activity agreement and the fact that the case file contains no 
data disproving those circumstances give rise to doubts regarding the acceptance 
that the applicant carried out ‘independent’ economic activity for the purposes of 
the VAT Directive. Indeed: 
(1) as is apparent, for example, from the aforesaid joint activity agreement, the 
joint assets produced and the liabilities assumed in the course of the activity were 
allocated between the participants in accordance with an established method, 
which means that, as the fact of the joint activity has not been disproved, there are 
probably no grounds for finding that the applicant provided the contested supplies 
acting solely at his own economic risk; 
(2) as the tax authority did not question and even essentially confirmed that the 
applicant decided together with the business partner on matters relating to the 
purchase, production (construction) and sale of the items of immovable property 
at issue, and as the case file does not contain any information to the contrary, the 
view is to be taken that the applicant also cannot be found to have independently 
made decisions concerning the supplies provided in the course of the contested 
activity; 
(3) as the tax authority classified the income for PIT purposes – that is to say, in 
essence, the consideration for the items of immovable property sold – as received 
by both the applicant and his business partner, the respective income from the 
contested supplies may be said not to be that of the applicant; 
(4) in circumstances such as those in the case under consideration, the mere fact 
that it was the applicant who was registered in the Immovable Property Register 
as the owner of the contested immovable property and who concluded the sale 
contracts does not of itself show that the applicant made independent decisions on 
the contested supplies; 
(5) the view is also to be taken that, as the aforesaid circumstances relating to the 
involvement of the business partner have not been disproved, the applicant may 
not automatically be recognised as having independently decided on the transfer 
of the right to dispose of the assets, that is to say, the supply of the goods 
(Article 14(1) of the VAT Directive), to the purchasers. 
19 In such circumstances the view can reasonably be taken that – on the assumption 
at this stage of examination of the case that the contested supplies are to be 
regarded as an economic activity subject to VAT – the criteria for a taxable person 
set out in Article 9(1) of the VAT Directive could objectively be met by the 
applicant and the business partner, having acted together under the joint activity 
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agreement, but not by the applicant alone. The view is therefore to be taken that 
for the purposes of Article 193 of the VAT Directive the applicant perhaps may 
not be regarded as liable by himself for the VAT obligations arising from the 
contested supplies. 
20 On the other hand, as is apparent from the case file, it was only the applicant who 
was involved in relations with third parties, including the contested supplies: the 
parcel of land was purchased, the construction permit was issued and the works 
contract was concluded in his name; he concluded the sale contracts for the 
aforesaid buildings and the corresponding parcels of land in his name and those 
contracts did not refer to the joint activity agreement, so that the view may 
reasonably be taken that the purchasers involved in the contested supplies were 
unaware of the business partner. In other words, the actions relating to the 
construction and the sale of buildings were actually performed solely by the 
applicant while the business partner in essence only co-financed the purchase of 
the parcel of land. 
21 It should be noted that the Court of Justice has stated that it is especially important 
for the uniform application of the VAT Directive that the notion of ‘taxable 
person’, defined in Title III thereof, is given an autonomous and uniform 
interpretation (see judgment of 17 September 2014, Skandia Sverige, C-7/13, 
paragraph 23). 
22 It is therefore expedient to refer the first question to the Court of Justice for a 
preliminary ruling. 
Allocation of tax liabilities between participants in joint activity 
23 Should the Court of Justice determine that, for the purposes of Articles 9(1) and 
193 of the VAT Directive, both participants in the joint activity, and not only the 
applicant, are nevertheless to be regarded as a taxable person liable for the 
obligations at issue, the question arises as to how tax liabilities should be 
allocated. 
24 Indeed, as already mentioned, under the general rule laid down in national law, 
only natural and legal persons, and also the aforesaid collective investment 
undertakings, are recognised as taxable persons of the Republic of Lithuania. The 
national provisions relevant to the legal relations at issue do not provide that 
natural persons acting under a joint activity agreement are to be regarded as a 
single taxable person within the meaning of the provisions of the Law on VAT; 
moreover, they do not provide that only one of those natural persons is liable for 
all obligations associated with the joint (taxable) economic activity where goods 
are supplied without a VAT invoice being issued as in the case under 
consideration. 
25 However, even if in the case under consideration the joint activity/partnership not 
enjoying legal personality under national law does meet the criteria for a taxable 
person set out in Article 9(1) of the VAT Directive, the aforesaid national rules 
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should not negate the obligation of the participants in that joint activity to pay the 
corresponding VAT. 
26 The view is to be taken that, where there are no relevant (special) statutory 
provisions, in the case of economic activity subject to VAT conducted by natural 
persons as joint activity, VAT on the supply of goods which falls within the scope 
of that activity and is carried out without a VAT invoice being issued must be 
calculated and paid by each participant in that activity in the respective 
proportions. 
27 As far as those proportions are concerned, it should be noted that VAT is 
calculated on the taxable amount, which, in accordance with the general rule, is 
the total consideration obtained or to be obtained by the supplier of goods or 
services from the purchaser. As the taxable amount is the consideration actually 
received and the tax authorities may not collect an amount of VAT exceeding the 
tax which the taxable person received (judgment of 6 December 2018, Tratave, 
C-672/17, paragraph 29), the view is to be taken that in the case at issue the 
participants in the joint activity are liable for VAT-related obligations to the extent 
of their shares of the consideration received, which are calculated on the basis of 
the taxable amount. 
28 Accordingly, it is also expedient to refer the first part of the second question to the 
Court of Justice for a preliminary ruling. 
Application of Article 287 of the VAT Directive 
29 The issue of application of Article 71(2) of the Law on VAT is also relevant in the 
case under consideration, that is to say, whether, in circumstances such as those in 
the case, the annual (12-month) turnover threshold laid down in that provision the 
exceeding of which gives rise, under national law, to the obligation to register as a 
VAT payer and the obligation to calculate and pay VAT applies (1) jointly to the 
participants in the joint activity (calculated on the basis of the total income of the 
joint activity) or (2) individually to each participant in the joint activity (calculated 
on the basis of the income received individually by each participant in the joint 
activity). 
30 Article 287(11) of the VAT Directive provides that Member States which acceded 
after 1 January 1978 may exempt taxable persons whose annual turnover is no 
higher than, in Lithuania’s case, EUR 29 000. It should be noted that Council 
Implementing Decision 2011/335/EU of 30 May 2011 provisionally increased that 
amount to EUR 45 000. 
31 It is to observed in that regard that, as is apparent from recital 5 of the VAT 
Directive, a VAT system achieves the highest degree of simplicity and of 
neutrality when the tax is levied in as general a manner as possible. That seems to 
imply that where, in circumstances such as those in the case under consideration, 
joint activity/a partnership (the participants in joint activity collectively) 
constitutes a taxable person within the meaning of Article 9(1) of the VAT 
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Directive, the specific obligations of each of the participants should be decided 
upon by taking into account the annual turnover threshold, set in Article 287 of 
the VAT Directive, in relation to the extent of the entire joint activity (to the 
turnover indicated in Article 288 of the VAT Directive) irrespective of how the 
income received from that activity is allocated between the participants. 
32 On the other hand, under provisions of national law, joint activities/partnerships, 
which do not enjoy legal personality, are not regarded as a taxable person. 
Furthermore, as is apparent from administrative practice, where a taxable supply 
is carried out by spouses supplying property that is in their joint ownership, they 
are considered to be separate taxable persons and their turnover for the purposes 
of national provisions aligned with and/or transposing Article 287 of the VAT 
Directive is evaluated separately: a spouse is exempt from liability to pay VAT 
where the share of the supply attributable to him or her does not exceed the 
aforesaid turnover threshold even if the joint supply carried out by the spouses has 
exceeded that threshold. 
33 Accordingly, the second part of the second question is also to be referred to the 
Court of Justice.