62018CJ0446_RES
Case C‑446/18
Agrobet CZ, s. r. o.
v
Finanční úřad pro Středočeský kraj
(Request for a preliminary ruling from the Nejvyšší správní soud)
Judgment of the Court (Second Chamber), 14 May 2020
(Reference for a preliminary ruling — Common system of value added tax (VAT) — Directive 2006/112/EC — Deduction of input tax — Excess VAT — Excess VAT withheld following the initiation of a tax investigation procedure — Request for refund of the part of the excess relating to transactions not covered by that procedure — Refusal of the tax administration)
Harmonisation of fiscal legislation — Common system of value added tax — Deduction of input tax — Rules governing exercise of the right of deduction — Refund of excess — Initiation of a tax investigation procedure — Refusal to refund the part of the excess relating to transactions not covered by that procedure before the end of that procedure — Whether permissible — Conditions for refusal of a partial carryover or refund of the excess — Verification a matter for the national court
(Council Directive 2006/112, Arts 179, 183 and 273)
(see paragraphs 31-33, 36-39, 47, 48, 51 and operative part)
Harmonisation of fiscal legislation — Common system of value added tax — Deduction of input tax — Rules governing exercise of the right of deduction — Refund of excess — Initiation of a tax investigation procedure — Refusal to allow a taxable person to provide, in the course of that procedure, proof that part of the excess is undisputed and allow the refund of that part before the end of the procedure — Not permissible — Obligations on tax authorities under the principle of good administration
(Council Directive 2006/112, Art 273)
(see paragraphs 42-46)
Résumé
In the judgment in Agrobet CZ (C‑446/18), delivered on 14 May 2020, the Court held that Articles 179, 183 and 273 of Directive 2006/112 (
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) (‘the VAT Directive’), read in the light of the principle of fiscal neutrality, do not oppose a national law that does not provide for the possibility, for the tax administration, of granting, before the end of a tax investigation procedure relating to a VAT return stating an excess for a specified taxa period, a refund of the part of the excess relating to transactions not covered by that procedure at the time of its opening, in so far as it is not possible to determine in a clear, precise and unequivocal manner that excess VAT, the amount of which may be lower than that relating to operations not covered by that procedure, will remain regardless of the outcome of that procedure.
In the present case, a Czech company lodged two VAT returns for the tax periods corresponding to the months of December 2015 and January 2016, with each stating a VAT excess. The Czech tax authorities then initiated tax investigation procedures that were limited to certain operations covered by those two VAT returns, namely those relating to rapeseed oil. Since rapeseed oil from Poland had been marketed in the Czech Republic in an unmodified form before being delivered to Poland again by the company concerned, the Czech tax administration had doubts regarding compliance with the conditions necessary for the company to be able to benefit from the VAT exemption on deliveries of rapeseed oil and to be able to deduct the input VAT paid on the relevant purchases. Having brought complaints against the initiation of those procedures, the Czech company claimed that, since the tax administration’s doubts concerned only a small part of the declared excess VAT, the retention of the entirety of that excess was incompatible with EU law. However, the tax administration claimed, as was indeed confirmed by the referring court, that, since the Czech Code of tax procedure did not expressly provide for the possibility of issuing a partial tax assessment, it could not adopt such a power in the absence of any legal basis and that, since the excess VAT related to the entire tax period, it could only be treated as an indivisible whole.
In its judgment, the Court first recalled that, under the VAT Directive, the taxable person is to make the deduction by subtracting from the total amount of VAT due for a given tax period the total amount of VAT in respect of which, during the same period, the right of deduction has arisen. Where, for a given tax period, the amount of deductions exceeds the amount of VAT due, the excess may be refunded or carried forward to the following period and Czech law opted for refunds. The Court held that, while it is true that such excess VAT may only appear in the VAT return as a single figure, that does not mean that the excess must be considered to constitute an inseparable whole that is impossible to divide into a disputed part and an undisputed part relating respectively to specific operations covered or not by a tax investigation procedure. The VAT Directive does not preclude the partial or split carryover or refund of the excess VAT and draws a clear distinction between the substantive requirements of the right to deduct VAT and the formal requirements of that right. Thus, the obligation to comply with the procedures for exercising the right to deduct VAT when submitting a VAT return does not prevent the taxable person, in the absence of any contrary provisions in that directive, from subsequently exercising, in a partial manner, the rights and material claims deriving, for each transaction, from the substantive requirements of the right to deduct.
The Court also recalled that those modalities may not infringe the principle of fiscal neutrality. Modalities that do not enable a taxable person to target a part of the excess VAT, which it considers to be undisputed, would amount to preventing it from claiming the existence of such an undisputed part and from being able to claim a refund of that part by forcing it to bear, in part, the burden of the tax, which is not in accordance with the principle of fiscal neutrality.
The Court concluded from this that, read in the light of the principle of fiscal neutrality, the VAT Directive may not be interpreted as meaning that it excludes, in principle, the possibility of identifying, for a tax period, an undisputed part of the excess VAT indicated on a VAT return that is likely to give rise to a partial carryover or refund of that excess.
As regards, next, under what conditions it may be considered that a part of the excess VAT is undisputed in the context of a tax investigation procedure, the Court noted that it is possible to regard part of that excess as undisputed only if the amount of tax due and the amount of deductible tax relating to those transactions are themselves undisputed.
In that respect, the Court noted that the tax administration must ensure not only that, at the end of that procedure, the amount of tax due and the amount of deductible tax corresponding to transactions not covered by said procedure will not be likely to vary from the amounts declared by the taxable person, but also that the elements which contributed to the calculation of the part of the excess claimed to be undisputed cannot be called into question before the end of the procedure and that it will therefore not be required to broaden the scope of the latter to include all or part of the operations that were originally not covered by the procedure.
Lastly, the Court pointed out that the possibility for the taxable person to claim that part of the excess VAT for a taxable period is undisputed in order to obtain a refund before the end of the tax investigation procedure does not automatically imply an obligation on the tax administration to refund or carryover that part in advance, even when it accepts that part to be undisputed. Such an obligation is conditional upon the existence of excess VAT relating to the entire tax period in question. Thus, that obligation, since it relates to a specific tax period, must not exist only with regard to the amount of tax due and the amount of deductible tax corresponding to the transactions not covered by that procedure, identified as being undisputed by the tax administration, but with regard to the part of the excess VAT that will remain regardless of the outcome of the tax investigation procedure and which, alone, may, ultimately, be regarded as undisputed. In that regard, the Court noted that that undisputed part of the excess VAT may, where appropriate, be less than the part of the excess claimed by the taxable person and relating to the said amounts.
Furthermore, the Court pointed out that national legislation, such as the Czech legislation, which, in the context of measures adopted by a Member State under Article 273 of the VAT Directive, do not authorise a taxable person to provide evidence establishing the existence of an undisputed part of the excess VAT or authorise the tax administration to take a decision in that regard would be contrary to the principle of good administration and would therefore not be compatible with the VAT Directive.
(
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)	Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1). Articles 179, 183 and 273 of that directive relate to the right to deduct VAT and refund of deductions exceeding that of the VAT due for a tax period.