Keywords

Summary



Keywords

1. Harmonisation of fiscal legislation — Common system of value added tax — Exemptions provided for in the Sixth Directive — Exemption of imported goods which are intended to be placed under warehousing arrangements other than customs — National legislation requiring the physical placing of the goods in the warehouse — Lawfulness

(Council Directive 77/388, as amended by Directive 2006/18, Art. 16(1))

2. Harmonisation of fiscal legislation — Common system of value added tax — Deduction of input tax — Principle of fiscal neutrality — Failure to comply with the obligation to physically place the goods in the warehouse — National legislation requiring the payment of value added tax notwithstanding the fact that it has already been settled under the reverse charge mechanism — Unlawful

(Council Directive 77/388, as amended by Directive 2006/18)

Summary

1. Article 16(1) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 2006/18, in the version resulting from Article 28c of the Sixth Directive, must be interpreted as not precluding national legislation which makes the grant of an exemption from the payment of the value added tax on importation provided for by that legislation subject to the condition that goods which are imported and destined for a tax warehouse for the purposes of value added tax be physically placed in that warehouse.

It should be noted that such an obligation, notwithstanding its formal nature, is likely to be an efficient way to achieve the objectives pursued, namely to ensure correct collection of value added tax and to prevent evasion of that tax, and does not, as such, go beyond what is necessary in order to achieve those objectives.

(see paras 29, 30, operative part 1)

2. 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, must be interpreted, in accordance with the principle of neutrality of value added tax, as precluding national legislation under which a Member State requires the payment of value added tax on importation even though that tax has been settled already under the reverse charge mechanism through self-invoicing and entry in the sales and purchases register of the taxable person.

Clearly, it is legitimate for a Member State, in order to ensure the correct collection of value added tax on importation and to prevent evasion, to provide, in its national legislation, appropriate penalties for failure to observe the obligation to physically place imported goods in the tax warehouse, but such penalties must not go further than is necessary to attain those objectives.

In that regard, since the imported goods were not physically placed in the tax warehouse, the value added tax was due upon importation and, therefore, payment under the reverse charge mechanism constitutes late payment of that value added tax.

However, a belated settlement of value added tax, in the absence of attempted evasion or detriment to the budget of the State, constitutes merely a formal infringement that cannot call into question the taxable person’s right to deduct. In any event, such belated payment cannot be equated with evasion, which presupposes, first, that the transaction concerned, notwithstanding compliance with the conditions laid down by the relevant provisions of the Sixth Directive and the national legislation transposing it, results in the accrual of a tax advantage the grant of which would be contrary to the purpose of those provisions and, secondly, that it is apparent from a number of objective factors that the essential aim of the transaction concerned is to obtain a tax advantage.

Accordingly, in view of the preponderant position which the right to deduct has in the common system of value added tax, which seeks to ensure complete neutrality of taxation of all economic activities, that neutrality presupposes that a taxable person may deduct the value added tax paid or payable in the course of all his economic activities, a penalty consisting of a refusal of the right to deduct is not compatible with the Sixth Directive where no evasion or detriment to the budget of the State is ascertained.

(see paras 33, 34, 38, 39, 41, 49, operative part 2)