Terra Baubedarf-Handel GmbH v Finanzamt Osterholz-Scharmbeck.
Date: 2004-04-29
30. It must be noted first that Article 18 of the Sixth Directive relates to the conditions governing the exercise of the right to deduct, whilst the existence of such a right is covered by Article 17 of that directive (see Case C-338/98 Commission v Netherlands [2001] ECR I-8265, paragraph 71).
31. It follows from Article 17(1) of the Sixth Directive that the right to deduct arises at the time when the deductible tax becomes chargeable. In accordance with Article 10(2) of that directive, that is the case as soon as the goods are delivered or the services are performed (see Case C-400/98 Breitsohl [2000] ECR I-4321, paragraph 36).
32. On the other hand, it is apparent from Article 18(1)(a), read in conjunction with Article 22(3) of the Sixth Directive, that the exercise of the right to deduct referred to in Article 17(2)(a) of that directive is normally dependent on possession of the original of the invoice or of the document which, under the criteria determined by the Member State in question, may be considered to serve as an invoice ( Reisdorf , cited above, paragraph 22).
34. However, although the German version of that provision is ambiguous on that point, it is apparent from the French and English versions of the Sixth Directive that the deduction referred to in Article 17(2) thereof must be made in respect of the tax period in which the two conditions required under the first subparagraph of Article 18(2) are satisfied. In other words, the goods must have been delivered or the services performed and the taxable person must be in possession of the invoice or the document which, under the criteria determined by the Member State in question, may be considered to serve as an invoice.
35. That interpretation is consistent with case-law holding that the right to deduct provided for in Article 17 et seq. of the Sixth Directive, which is an integral part of the VAT system and may not in principle be limited, must be exercised immediately in respect of all the taxes charged on transactions relating to inputs (see, inter alia, Case C-97/90 Lennartz [1991] ECR I-3795, paragraph 27, and Case C-409/99 Metropol and Stadler [2002] ECR I-81, paragraph 42). The exercise of that right assumes that, in principle, taxable persons do not make payment and therefore do not pay input VAT until they have received an invoice, or another document which may be considered to serve as an invoice, and that the VAT cannot be regarded as being chargeable on a given transaction before it has been paid.
36. That interpretation is also consistent with the principle of neutrality of VAT which, according to case-law, is maintained, since the system of deduction set out in Title XI of the Sixth Directive enables the intermediate links in the distribution chain to deduct from their own taxable amount the sums paid by each to his own supplier in respect of VAT on the corresponding transaction and thus pass on to the tax authorities the part of the VAT representing the difference between the price paid by each to his supplier and the price at which he supplied the goods to his purchaser (see Case C-317/94 Elida Gibbs [1996] ECR I-5339, paragraph 33, and Case C-427/98 Commission v Germany  [2002] ECR I-8315, paragraph 42).
37. As regards the principle of proportionality, it is not infringed by requiring the taxable person to effect the deduction of input VAT in respect of the tax period in which the condition of possession of the invoice or of a document considered to serve as an invoice and that of the origin of the right to deduct are satisfied. First, that requirement is consistent with one of the aims of the Sixth Directive, that of ensuring that VAT is levied and collected, under the supervision of the tax authorities (see Reisdorf , paragraph 24, and Langhorst , paragraph 17, cited above), and secondly, as stated in paragraph 35 of this judgment, payment for delivery of goods or performance of services, and therefore payment of input VAT, is not normally made until the invoice has been received.