Keywords

Summary



Keywords

1. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Transitional arrangements for the taxation of trade between Member States

(Council Directive 77/388, Art. 28c(A)(a), first subpara.)

2. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Transitional arrangements for the taxation of trade between Member States

(Council Directive 77/388, Art. 28c(A)(a), first subpara.)

Summary

1. The first subparagraph of Article 28c(A)(a) of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 91/680, must be interpreted as precluding the refusal by the tax authority of a Member State to allow an intra-Community supply – which actually took place – to be exempt from value added tax solely on the ground that the evidence of such a supply was not produced in good time.

A national measure which, in essence, makes the right of exemption in respect of an intra-Community supply subject to compliance with formal obligations, without any account being taken of the substantive requirements and, in particular, without any consideration being given as to whether those requirements have been satisfied, goes further than is necessary to ensure the correct levying and collection of the tax. Transactions should be taxed taking into account their objective characteristics. As regards determining whether a supply is of an intra-Community nature, if a supply meets the conditions laid down in the first subparagraph of Article 28c(A)(a) of the Sixth Directive, no VAT is payable on such a supply. Therefore, where an intra-Community supply has indisputably taken place, the principle of fiscal neutrality requires that an exemption from VAT be allowed if the substantive requirements are satisfied, even if the taxable persons have failed to comply with some of the formal requirements. The only exception is if non-compliance with such formal requirements would effectively prevent the production of conclusive evidence that the substantive requirements have been satisfied.

Furthermore, a requirement that the prescribed accounts be updated immediately after the transaction has been completed, but without any precise time-limit for doing so being laid down, could undermine the principle of legal certainty. It is important to allow amendments to the categorisation of an intra-Community supply which are made after the transaction has taken place to be reflected in the accounts of the taxable persons. Therefore, the intra-Community nature of a supply must be recognised if the accounts are subsequently adjusted, provided that the objective criteria underlying the terms which define that transaction are satisfied.

(see paras 29-33, 41, operative part)

2. When examining the right of exemption from value added tax in relation to such a supply, the referring court should take into account the fact that the taxable person initially knowingly concealed the fact that an intra-Community supply had occurred only if there is a risk of a loss in tax revenues and that risk has not been wholly eliminated by the taxable person in question.

In order to ensure the neutrality of VAT, it is for the Member States to provide in their internal legal system for the possibility of correcting any tax improperly invoiced where the person who issued the invoice shows that he acted in good faith. However, where the issuer of the invoice has in sufficient time wholly eliminated the risk of any loss in tax revenues, the principle of the neutrality of VAT requires that VAT which has been improperly invoiced can be adjusted without such adjustment being made conditional upon that issuer having acted in good faith. The same rules apply equally to an account adjustment made for the purpose of obtaining an exemption in respect of an intra-Community supply.

Finally, Community law does not prevent Member States – in certain circumstances – from treating the concealment of the existence of an intra-Community transaction as an attempt to evade VAT and from imposing, in such a case, fines or penalty payments prescribed by their domestic law. However, such penalties should be proportionate to the gravity of the abuse.

(see paras 35, 40, operative part)