Case C‑246/16

Enzo Di Maura

v

Agenzia delle Entrate — Direzione Provinciale di Siracusa

(Request for a preliminary ruling from the Commissione tributaria provinciale di Siracusa)

(Reference for a preliminary ruling — Value added tax (VAT) — Taxable amount — Sixth Directive 77/388/EEC — Second subparagraph of Article 11C(1) — Restriction of the right to reduce the taxable amount in the event of non-payment by the other party to the contract — Scope for implementation by the Member States — Proportionality of the period of pre-financing by the trader)

Summary — Judgment of the Court (First Chamber), 23 November 2017

Harmonisation of fiscal legislation — Common system of value added tax — Taxable amount — Reduction in the case of total or partial non-payment — National measures derogating therefrom — National legislation making the reduction of the taxable amount subject to the condition that insolvency proceedings have been unsuccessful when such proceedings may last longer than ten years — Not permissible

(Council Directive 77/388, Art. 11C(1), second para.)

Article 11C(1) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the law of the Member State relating to turnover taxes — Common system of value added tax: uniform basis of assessment must be interpreted as meaning that a Member State may not make the reduction of the VAT taxable amount in the event of total or partial non-payment subject to the condition that insolvency proceedings have been unsuccessful when such proceedings may last longer than ten years.

If the total or partial non-payment of the purchase price occurs without there being a cancellation or refusal of the contract, the purchaser remains liable for the agreed price and the seller, even though no longer proprietor of the goods, in principle continues to have the right to receive payment, which he can rely on in legal proceedings. Since it is conceivable, however, that such a debt will become definitively irrecoverable, the EU legislature intended to leave it to each Member State to decide whether the situation of non-payment of the purchase price which, of itself, unlike cancellation or refusal of the contract, does not restore the parties to their original situation, leads to an entitlement to have the taxable amount reduced accordingly, under conditions to be determined by the Member State concerned, or whether such a reduction is not to be allowed in that situation (judgment of 15 May 2014, Almos Agrárkülkereskedelmi, C‑337/13, EU:C:2014:328, paragraph 25).

However, as the Court has already held, the power to derogate, which is strictly limited to situations of total or partial non-payment, is based on the notion that in certain circumstances and because of the legal situation prevailing in the Member State concerned, non-payment of consideration may be difficult to establish or may only be temporary (judgment of 3 July 1997, Goldsmiths, C‑330/95, EU:C:1997:339, paragraph 18).

It follows that the exercise of such a power to derogate must be justified, so that the measures taken by the Member States for its implementation do not undermine the objective of fiscal harmonisation pursued by the Sixth Directive (judgment of 3 July 1997, Goldsmiths, C‑330/95, EU:C:1997:339, paragraph 18).

As was stated in paragraph 22 above, the objective of the derogation from the right to reduce the taxable amount laid down by the second subparagraph of Article 11C(1) of the Sixth Directive is to take account of the inherent uncertainty of the definitive non-payment of an invoice.

That uncertainty is plainly taken into account by depriving the taxable person of his right to reduce the taxable amount for as long as the debt is not definitely unrecoverable, as provided for, in essence, by the national legislation at issue in the main proceedings. However, it is clear that the same objective could also be pursued by granting the reduction when the taxable person demonstrates a reasonable probability that the debt will not be honoured, even if the taxable base is re-evaluated upwards in the event that payment nonetheless occurs. It would thus be for the national authorities to determine, with due regard to the principle of proportionality and subject to review by the courts, the evidence for a probable extended period of non-payment to be provided by the taxable person, according to the specific features of the applicable national law. Such a rule would be an equally effective means of attaining the objective pursued, while being less onerous for the taxable person, who pre-finances the VAT by collecting it on behalf of the State, as recalled in paragraph 23 above.

(see paras 16-18, 26, 27, 29, operative part)