Keywords

Summary



Keywords

Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Obligations of taxpayers

(Art. 10 EC; Council Directive 77/388, Arts 2 and 22)

Summary

A Member State whose legislation provides for a general and indiscriminate waiver of verification of taxable transactions effected in a series of tax years fails to fulfil its obligations under Articles 2 and 22 of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes and under Article 10 EC, where it provides:

– that taxable persons who have not complied with their obligations in respect of the tax periods falling between the first and the fourth years preceding the adoption of that law – in certain cases, only one year before the adoption of that law – may completely escape verification, up to double the amount of the tax as it appears from a supplementary return filed in order to rectify previously-filed returns, and

– that a taxable person who has not filed a return for the tax periods falling between the first and the fourth years preceding the adoption of that law will be able to escape any controls by paying an amount equivalent to 2% of the tax due on supplies of goods or services carried out by that person, plus 2% of the tax deducted during the same period, that percentage being fixed at 1.5% for input or output tax in excess of EUR 200 000 and 1% for amounts over EUR 300 000.

By replacing, shortly after the expiry of the deadlines fixed for the payment of the tax amounts normally payable, the obligations under Articles 2 and 22 of the Sixth Directive for the parties concerned with other obligations which do not require the payment of those amounts, a law such as that at issue renders those articles – which form nevertheless the basis for the common system of value added tax and are thus an intrinsic part of the very structure of that tax – meaningless. The effect of the considerable imbalance between the amounts actually due and the amounts paid by taxable persons wishing to take advantage of the tax amnesty in question is tantamount to a tax exemption.

It follows that such a law seriously disrupts the proper functioning of the common system of value added tax. Its provisions distort the principle of fiscal neutrality by introducing significant variations in the treatment of taxable persons in the Member State in question. For the same reason, those provisions infringe the obligation to ensure that the tax is collected in a uniform manner in all the Member States.

Since, as is stated in the fourth recital in the preamble to the Sixth Directive, the purpose of the principle of fiscal neutrality is to enable the achievement of a common market permitting fair competition, the very functioning of the common market is compromised by that legislation because, in the Member State concerned, it is realistic for taxable persons to hope not to be required to pay a large portion of their tax debt.

The prevention of tax evasion is an objective recognised and encouraged by the Sixth Directive. Thus, Article 22(8) of the Sixth Directive calls on Member States to impose, where appropriate, additional obligations to prevent tax evasion. That legislation has the opposite effect in that taxable persons who are guilty of tax evasion are placed in a more favourable position by the law.

By introducing an amnesty measure very shortly after the expiry of the deadlines by which taxable persons should have paid value added tax and by requiring payment of an amount which is paltry as compared with the tax actually due, that law enables the taxable persons concerned to escape once and for all their value added tax obligations, despite the fact that the national tax authorities would have been able to detect at least some of those taxable persons during the four years preceding the date after which recovery of the tax normally payable would be time-barred. In so doing, that law undermines the responsibility incumbent on each Member State to ensure the correct levying and collection of the tax.

(see paras 9, 40-47, 52-53, operative part)