LVK — 56 EOOD v Direktor na Direktsia ‘Obzhalvane i upravlenie na izpalnenieto’ — Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite.
Date: 2013-01-31
33. The Court has held in relation to the provision that was the predecessor of Article 203 of Directive 2006/112, namely Article 21(1)(c) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1), as amended by Council Directive 91/680/EEC of 16 December 1991 (OJ 1991 L 376, p. 1), that, according to that provision, any person who mentions VAT on an invoice or other document serving as invoice is liable to pay that tax. In particular, those persons are liable to pay VAT mentioned on an invoice independently of any obligation to pay it on account of there being a transaction subject to VAT (see Case C-566/07 Stadeco  [2009] ECR I-5295, paragraph 26 and the case-law cited).
34. It is true that, in accordance with Articles 167 and 63 of Directive 2006/112, the right to deduct VAT invoiced is linked, as a general rule, to the actual performance of a taxable transaction (see Case C-536/03 António Jorge  [2005] ECR I-4463, paragraphs 24 and 25) and the exercise of that right does not extend to VAT which is payable, under Article 203 of the directive, solely because it is entered on the invoice (see, inter alia, Case C-342/87 Genius  [1989] ECR 4227, paragraphs 13 and 19, and Case C-35/05 Reemtsma Cigarettenfabriken  [2007] ECR I-2425, paragraph 23).
35. However, the risk of loss of tax revenue is not in principle completely eliminated as long as the recipient of an invoice incorrectly showing VAT could still use it for the purposes of such deduction under Article 178(a) of Directive 2006/112 (see, to that effect, Stadeco , paragraph 29).
36. Accordingly, the obligation under Article 203 of that directive seeks to eliminate the risk of loss of tax revenue which the right of deduction provided for in Article 167 et seq. of the directive might entail (see Stadeco , paragraph 28).
37. Having regard to that objective, the aforesaid obligation is limited by the possibility, to be provided for by the Member States in their national legal systems, of correcting any tax improperly invoiced where the issuer of the invoice shows that he acted in good faith or where he has, in sufficient time, wholly eliminated the risk of any loss of tax revenue (see, to that effect, Genius , paragraph 18; Case C-454/98 Schmeink & Cofreth and Strobel  [2000] ECR I-6973, paragraphs 56 to 61 and 63; and Joined Cases C-78/02 to C-80/02 Karageorgou and Others  [2003] ECR I-13295, paragraph 50).
46. So far as concerns the treatment of VAT that has been improperly invoiced because there is no taxable transaction, it follows from Directive 2006/112 that the two traders involved are not necessarily treated identically in so far as the issuer of the invoice has not corrected it, as is apparent from paragraphs 33 to 37 above.
47. On the one hand, the issuer of an invoice is liable to pay the VAT entered on that invoice even if there is no taxable transaction, in accordance with Article 203 of Directive 2006/112. On the other hand, exercise of the right of deduction by the recipient of an invoice is limited solely to tax corresponding to a transaction subject to VAT, in accordance with Articles 63 and 167 of that directive.
48. In such a situation, compliance with the principle of fiscal neutrality is ensured by the possibility, to be provided for by the Member States and noted in paragraph 37 above, of correcting any tax improperly invoiced where the issuer of the invoice shows that he acted in good faith or where he has, in sufficient time, wholly eliminated the risk of any loss of tax revenue.
51. As regards the principle of legal certainty, that principle, which is one of the general principles of European Union law, requires that rules of law be clear and precise and predictable in their effect, so that interested parties can ascertain their position in situations and legal relationships governed by European Union law (see Case C-81/10 P France Télécom  v Commission  [2011] ECR I-12899, paragraph 100 and the case-law cited).
55. The general principle of equal treatment, of which the principle of fiscal neutrality is the reflection in matters relating to VAT (see Case C-309/06 Marks & Spencer  [2008] ECR I-2283, paragraph 49; Case C-174/08 NCC Construction Danmark  [2009] ECR I-10567, paragraphs 41 and 44; and Joined Cases C-259/10 and C-260/10 The Rank Group  [2011] I-10947, paragraph 61), requires similar situations not to be treated differently unless differentiation is objectively justified (see Marks & Spencer , paragraph 51; NCC Construction Danmark , paragraph 44; and Case C-285/10 Campsa Estaciones de Servicio  [2011] ECR I-5059, paragraph 29).
57. So far as concerns the main proceedings, it is apparent from the order for reference that the tax authorities inferred that there was no taxable supply from, in particular, the fact that the supplier did not submit the documents required during a tax audit. Since that conclusion is contested by the claimant, it is for the national court to verify it, by carrying out, in accordance with the rules of evidence of national law, an overall assessment of all the facts and circumstances of the case (see, by analogy, Case C-273/11 Mecsek-Gabona  [2012] ECR, paragraph 53, and Case C-285/11 Bonik  [2012] ECR, paragraph 32)
58. In this connection, it is true that preventing possible tax evasion, avoidance and abuse is an objective recognised and encouraged by Directive 2006/112 and European Union law cannot be relied on for fraudulent or abusive ends (see, inter alia, Case C-255/02 Halifax and Others  [2006] ECR I-1609, paragraphs 68 and 71; Joined Cases C-80/11 and C-142/11 Mahagében and Dávid  [2012] ECR, paragraph 41; and Bonik , paragraphs 35 and 36).
59. It is therefore incumbent upon the national authorities and courts to refuse the right of deduction where it is established, on the basis of objective evidence, that that right is being relied on for fraudulent or abusive ends (see, to that effect, Joined Cases C-439/04 and C-440/04 Kittel and Recolta Recycling  [2006] ECR I-6161, paragraph 55; Mahagében and Dávid , paragraph 42; and Bonik , paragraph 37).
60. Nevertheless, according to case-law that is also well-established, it is incompatible with the rules governing the right of deduction under Directive 2006/112 to impose a penalty, in the form of refusal of that right, on a taxable person who did not know, and could not have known, that the transaction concerned was connected with fraud committed by the supplier, or that another transaction forming part of the chain of supply prior or subsequent to the transaction carried out by the taxable person was vitiated by VAT fraud (see, inter alia, Joined Cases C-354/03, C-355/03 and C-484/03 Optigen and Others  [2006] ECR I-483, paragraphs 52 and 55; Kittel and Recolta Recycling , paragraphs 45, 46 and 60; Mahagében and Dávid , paragraph 47; and Bonik , paragraph 41).
61. Furthermore, the Court held in Mahagében and Dávid , paragraphs 61 to 65, that the tax authorities cannot, as a general rule, require the taxable person wishing to exercise the right to deduct VAT, first, to ensure that the issuer of the invoice relating to the goods and services in respect of which the exercise of that right is sought has the capacity of a taxable person, that he was in possession of the goods at issue and was in a position to supply them and that he has satisfied his obligations as regards declaration and payment of VAT, in order to be satisfied that there are no irregularities or fraud at the level of the traders upstream, or, second, to be in possession of documents in that regard.
64. In the light of the foregoing, the answer to the second part of the third question and the fourth, fifth and sixth questions is that European Union law must be interpreted as meaning that Articles 167 and 168(a) of Directive 2006/112 and the principles of fiscal neutrality, legal certainty and equal treatment do not preclude the recipient of an invoice from being refused the right to deduct input VAT because there is no actual taxable transaction even though, in the tax adjustment notice addressed to the issuer of that invoice, the VAT declared by the latter was not adjusted. However, if, in the light of fraud or irregularities, committed by the issuer of the invoice or upstream of the transaction relied upon as the basis for the right of deduction, that transaction is considered not to have been actually carried out, it must be established, on the basis of objective factors and without requiring of the recipient of the invoice checks which are not his responsibility, that he knew or should have known that that transaction was connected with VAT fraud, a matter which it is for the referring court to determine.
Costs