Tibor Farkas v Nemzeti Adó- és Vámhivatal Dél-alfödi Regionális Adó Főigazgatósága.
Date: 2017-04-26
24


It follows from recital 42 of Directive 2006/112 that the objective of Article 199(1)(g) is to enable Member States to introduce a reverse charge mechanism in certain sectors or for certain transactions in order to simplify the rules and counter tax evasion and avoidance. That provision thus allows the tax authorities to collect VAT imposed on the transactions at issue in cases where the debtor’s ability to pay that tax is compromised (judgment of 13 June 2013, Promociones y Construcciones BJ 200, C‑125/12, EU:C:2013:392, paragraph 28).
25


The Court has already held that Article 199(1)(g) of Directive 2006/112 constitutes an exception to the principle set out in Article 193 of that directive according to which VAT is payable by any taxable person carrying out a taxable supply of goods or services, and must therefore be interpreted strictly. Article 199 allows Member States to introduce a reverse charge mechanism, in the situations referred to in paragraphs 1(a) to (g) of that article, whereby the person liable for the payment of VAT is the taxable person who is the recipient of the transaction subject to VAT (see, to that effect, judgment of 13 June 2013, Promociones y Construcciones BJ 200, C‑125/12, EU:C:2013:392, paragraphs 23 and 31).
31


In that regard, it should be recalled that, according to the Court’s settled case-law, in the absence of EU rules on a procedural question, it is for the national legal order of each Member State to establish them in accordance with the principle of procedural autonomy, on condition, however, that those rules are not less favourable than those governing similar domestic situations (principle of equivalence) and that they do not make it excessively difficult or impossible in practice to exercise the rights conferred by EU law (principle of effectiveness) (see, to that effect, judgments of 7 June 2007, van der Weerd and Others, C‑222/05 to C‑225/05, EU:C:2007:318, paragraph 28 and the case-law cited, and of 17 March 2016, Bensada Benallal, C‑161/15, EU:C:2016:175, paragraph 24 and the case-law cited).
32


First, it must be recalled that EU law, and in particular the principle of effectiveness, does not, as a rule, require national courts to raise of their own motion an issue concerning the breach of provisions of EU law, where examination of that issue would oblige them to go beyond the ambit of the dispute defined by the parties themselves and rely on facts and circumstances other than those on which the party with an interest in application of those provisions has based his claim (see, to that effect, inter alia, judgments of 14 December 1995, van Schijndel and van Veen, C‑430/93 and C‑431/93, EU:C:1995:441, paragraph 22, and of 7 June 2007, van der Weerd and Others, C‑222/05 to C‑225/05, EU:C:2007:318, paragraph 36).
33


That limitation on the power of the national court is justified by the principle that, in a civil suit, it is for the parties to take the initiative and that, as a result, where national procedural law provides a genuine opportunity for the party concerned to raise a plea based on EU law, the national court is able to act of its own motion only in exceptional cases where the public interest requires its intervention (see, to that effect, judgment of 7 June 2007, van der Weerd and Others, C‑222/05 to C‑225/05, EU:C:2007:318, paragraphs 35 and 41 and the case-law cited).
34


In the present case, it must be pointed out that it is not apparent from the information in the documents before the Court that the applicant in the main proceedings was prevented by national procedural law from raising a plea alleging the possible incompatibility of Paragraph 142(1)(g) of the Law on VAT with Article 199(1)(g) of Directive 2006/112 (see, by analogy, judgment of 7 June 2007, van der Weerd and Others, C‑222/05 to C‑225/05, EU:C:2007:318, paragraph 41).
35


Secondly, it must be pointed out that respect for the principle of equivalence requires that, where the provisions of national law relating to procedural rules confer on a court the obligation to raise of its own motion a plea based on the infringement of national law, such an obligation must prevail in the same way for the same type of plea based on the infringement of EU law (see, to that effect, judgments of 14 December 1995, van Schijndel and van Veen, C‑430/93 and C‑431/93, EU:C:1995:441, paragraph 13, and of 17 March 2016, Bensada Benallal, C‑161/15, EU:C:2016:175, paragraph 30). The same applies if national law confers on the court the power to raise such a plea of its own motion (see, to that effect, judgment of 14 December 1995, van Schijndel and van Veen, C‑430/93 and C‑431/93, EU:C:1995:441, paragraph 14).
37


It should be recalled that, in proceedings under Article 267 TFEU, which are based on a clear separation of functions between the national courts and the Court of Justice, the national court alone has jurisdiction to find and assess the facts in the case before it and to interpret and apply national law (see, inter alia, judgments of 18 July 2007, Lucchini, C‑119/05, EU:C:2007:434, paragraph 43, and of 26 May 2011, Stichting Natuur en Milieu and Others, C‑165/09 to C‑167/09, EU:C:2011:348, paragraph 47).
38


In addition, it is also clear from settled case-law that it is for the Court of Justice to provide the national court with an answer which will be of use and to enable it to determine the case at issue (judgment of 11 September 2014, B., C‑394/13, EU:C:2014:2199, paragraph 21 and the case-law cited).
41


It must be recalled that, under the reverse charge regime, no VAT payment takes place between the seller and the purchaser of the property, the purchaser being liable, in respect of the transactions carried out, for the input VAT, while being able, in principle, to deduct that tax so that no amount is payable to the tax authorities (see, to that effect, judgment of 6 February 2014, Fatorie, C‑424/12, EU:C:2014:50, paragraph 29 and the case-law cited).
42


It must also be pointed out that the right of deduction forms an integral part of the VAT scheme and in principle may not be limited (judgments of 15 July 2010, Pannon Gép Centrum, C‑368/09, EU:C:2010:441, paragraph 37; of 6 February 2014, Fatorie, C‑424/12, EU:C:2014:50, paragraph 30; and of 28 July 2016, Astone, C‑332/15, EU:C:2016:614, paragraph 30).
43


The deduction rules thus established are intended to free the taxable person completely of the burden of the VAT accruing or paid in all its economic activities. The common system of VAT therefore ensures that all economic activities, whatever their purpose or results, provided that they are, in principle, themselves subject to VAT, are taxed in a neutral way (see judgments of 22 February 2001, Abbey National, C‑408/98, EU:C:2001:110, paragraph 24; of 6 February 2014, Fatorie, C‑424/12, EU:C:2014:50, paragraph 31; and of 28 July 2016, Astone, C‑332/15, EU:C:2016:614, paragraph 29).
44


It should also be recalled that, as regards the rules governing the exercise of the right to deduct VAT in the reverse charge procedure under Article 199(1) of Directive 2006/112, a taxable person who is liable as the purchaser of an item of property for the VAT relating thereto is not obliged to hold an invoice drawn up in accordance with the formal requirements of that directive in order to be able to exercise his right to deduct, and only has to fulfil the formalities laid down by the Member State concerned in the exercise of the option conferred by Article 178(f) of that directive (see, to that effect, judgment of 6 February 2014, Fatorie, C‑424/12, EU:C:2014:50, paragraphs 32 and 33).
45


In the present case, it is clear from the request for a preliminary ruling that the invoice at issue in the main proceedings does not contain the words ‘reverse charge’, contrary to the requirements of Paragraph 169(n) of the Law on VAT and that Mr Farkas incorrectly paid the VAT, wrongly referred to in that invoice, to the seller in question in the main proceedings, whereas, under the reverse charge regime, he should, as the recipient of the property, have paid the VAT to the tax authority in accordance with Article 199(1)(g) of Directive 2006/112. Thus, besides the fact that that invoice does not meet the formal requirements provided for by the national legislation, a substantive requirement of that regime has not been satisfied.
46


As the Court found in the judgment of 6 February 2014, Fatorie, (C‑424/12, EU:C:2014:50, paragraph 38), such a situation prevented the Hungarian tax authority from investigating the application of the reverse charge regime and led to a risk of a loss of tax revenue for the Member State concerned.
47


Moreover, it must be stated that the right to deduct can be exercised only in respect of taxes actually due, that is to say, the taxes corresponding to a transaction subject to VAT or paid in so far as they were due (see, to that effect, judgment of 6 February 2014, Fatorie, C‑424/12, EU:C:2014:50, paragraph 39). As it happens, the VAT paid by Mr Farkas to the seller of the mobile hangar at issue in the main proceedings was not due.
49


However, Mr Farkas may claim reimbursement of the tax unduly paid to the seller of the mobile hangar in accordance with national law (see, to that effect, judgment of 6 February 2014, Fatorie, C‑424/12, EU:C:2014:50, paragraph 42).
50


In that regard, the Court has already held that, in the absence of EU rules on applications for the repayment of taxes, it is for the domestic legal system of each Member State to lay down the conditions under which such applications may be made; those conditions must observe the principles of equivalence and effectiveness, that is to say, they must not be less favourable than those relating to similar claims founded on provisions of domestic law or framed so as to render virtually impossible the exercise of rights conferred by the EU legal order (see, to that effect, judgment of 15 March 2007, Reemtsma Cigarettenfabriken, C‑35/05, EU:C:2007:167, paragraph 37).
51


Given that, in principle, it falls to the Member States to determine the conditions in which improperly invoiced VAT may be adjusted, the Court has accepted that a system in which, first, the seller of the property who has paid the VAT to the tax authority in error may seek to be reimbursed and, secondly, the purchaser of that property may bring a civil law action against that seller for recovery of the sums paid but not due, observes the principles of neutrality and effectiveness. Such a system enables the purchaser who bore the tax invoiced in error to obtain reimbursement of the sums unduly paid (see, to that effect, judgment of 15 March 2007, Reemtsma Cigarettenfabriken, C‑35/05, EU:C:2007:167, paragraphs 38 and 39 and the case-law cited).
52


In addition, according to settled case-law, in the absence of relevant EU rules, the detailed procedural rules designed to ensure the protection of the rights which individuals acquire under EU law are a matter for the domestic legal order of each Member State, under the principle of the procedural autonomy of the Member States (see, inter alia, judgments of 16 May 2000, Preston and Others, C‑78/98, EU:C:2000:247, paragraph 31, and of 15 March 2007, Reemtsma Cigarettenfabriken, C‑35/05, EU:C:2007:167, paragraph 40).
53


However, if reimbursement of the VAT becomes impossible or excessively difficult, in particular in the case of the insolvency of the seller, the principle of effectiveness may require that the purchaser of the property concerned be able to address his application for reimbursement to the tax authority directly. Thus, the Member States must provide for the instruments and the detailed procedural rules necessary to enable the purchaser to recover the unduly invoiced tax in order to respect the principle of effectiveness (see, to that effect, judgment of 15 March 2007, Reemtsma Cigarettenfabriken, C‑35/05, EU:C:2007:167, paragraph 41).
59


It is necessary to point out that, in the absence of harmonisation of EU legislation in the field of sanctions applicable where conditions laid down by arrangements under that legislation are not complied with, Member States remain empowered to choose the sanctions which seem to them to be appropriate. Nevertheless, the Member States must exercise that power in accordance with EU law and its general principles and, consequently, in accordance with the principle of proportionality (see, to that effect, inter alia, judgments of 7 December 2000, de Andrade, C‑213/99, EU:C:2000:678, paragraph 20, and of 6 February 2014, Fatorie, C‑424/12, EU:C:2014:50, paragraph 50).
60


Thus, such penalties must not go beyond what is necessary to attain the objectives of ensuring the correct levying and collection of the tax and preventing fraud. In order to assess whether a penalty is consistent with the principle of proportionality, account must be taken inter alia of the nature and the degree of seriousness of the infringement which the penalty seeks to sanction, and of the means of establishing the amount of the penalty (see, to that effect, judgments of 8 May 2008, Ecotrade, C‑95/07 and C‑96/07, EU:C:2008:267, paragraphs 65 to 67, and of 20 June 2013, Rodopi-M 91, C‑259/12, EU:C:2013:414, paragraph 38).
61


Although it falls to the referring court to assess whether the amount of the penalty does not go beyond what is necessary to attain the objectives set out in the previous paragraph (judgment of 20 June 2013, Rodopi-M 91, C‑259/12, EU:C:2013:414, paragraph 39), it is appropriate to inform that court of certain aspects of the main proceedings which would enable it to determine whether the penalty imposed on Mr Farkas, on the basis of the provisions of the Law on the Tax Procedure Code, is compatible with the principle of proportionality.