Keywords

Summary



Keywords

Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Taxable amount – National derogating measures

(Council Directive 77/388, Art. 11.C(1) and 27(1) and (5))

Summary

Articles 11.C(1) and 27(1) and (5) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax, as amended by Directive 2004/7, must be interpreted as not precluding national legislation which, by providing, for the purposes of simplifying the procedure for charging value added tax and of combating tax evasion or avoidance in regard to manufactured tobacco, for the levying of that tax by means of tax labels, in a single charge and at source, from the manufacturer or importer of those products, excludes intermediate suppliers operating at a subsequent stage in the supply chain from the right to obtain reimbursement of value added tax in the event of non-payment by the purchaser of the price for those products.

Article 27(1) of the Sixth Directive precludes only measures that might affect, to a non-negligible extent, the amount of tax due at the final consumption stage. However, even though, in certain circumstances, such as the loss of goods, their sale at a loss or unlawful sale at a price different from the retail price indicated on the tax labels, the manufacturer or importer may, in the context of the abovementioned derogating scheme, be obliged to pay an amount of value added tax higher than that which would have resulted from the application of the ordinary harmonised system for levying value added tax, the mere possibility that such events may take place is not sufficient, however, to justify the conclusion that that scheme might affect, to a non-negligible extent, the amount of tax due at the final consumption stage. Indeed, a simplification measure implies, by definition, a more general approach than that of the rule which it replaces and thus will not necessarily reflect the exact situation of each taxable person.

Furthermore, since intermediate suppliers are not required to pay value added tax on supplies of manufactured tobacco, they cannot seek reimbursement of that tax under Article 11.C(1) of the Sixth Directive in the event of non-payment by the purchaser of the price for those supplies. The fact that the amount of the value added tax paid at source by the manufacturer or importer by way of tax labels is included, from an economic point of view, in the price of the supplies made to those suppliers is irrelevant in that regard. That circumstance does not in any way call into question the fact that those suppliers do not have any tax debt under the value added tax rules.

Furthermore, in the context of such a simplified value added tax collection scheme, in which the amount of the tax paid by the manufacturer or importer by way of tax labels is related, not to the consideration actually received by each supplier but to the price of the products at the stage of final consumption, the loss by an intermediate supplier of its claim to payment against the other contracting party does not reduce the taxable amount.

Lastly, to allow an intermediate supplier, under such a scheme of simplification of value added tax, to obtain reimbursement of an amount, or even the full amount, of that tax in the case where the purchaser fails to pay for supplies, is as likely to complicate significantly the charging of value added tax as it is to encourage avoidance and evasion, whereas the simplification of the charging of that tax and the prevention of such avoidance and evasion are precisely the objectives pursued by that scheme, in accordance with Article 27(1) of the Sixth Directive. It follows that exclusion of the right of an intermediate supplier to reimbursement of value added tax in the case where the purchaser fails to pay the price for manufactured tobacco supplied to it is a consequence inherent in such a scheme, the purpose and effect of which are, pursuant to the criteria defined in Article 27(1) of the Sixth Directive, to simplify the procedure for charging value added tax and to combat tax evasion or avoidance in regard to those products.

(see paras 30-31, 38-40, 43, 45-46, operative part)