Finanzamt Gummersbach v Gerhard Bockemühl.
Date: 2004-04-01
37. As the Advocate General has observed in point 37 of his Opinion, a taxable person liable for VAT as the recipient of goods or services is able to rely on the right to deduct contained in Article 17(2)(a) of the Sixth Directive. That position is confirmed by the amendments subsequently made to that provision by Council Directive 95/7/EC of 10 April 1995 amending Directive 77/388 and introducing new simplification measures with regard to value added tax – scope of certain exemptions and practical arrangements for implementing them (OJ 1995 L 102, p. 18), which eliminated divergences in that respect between various language versions.
38. According to consistent case-law, the right to deduct laid down in Article 17 of the Sixth Directive forms an integral part of the VAT mechanism and in principle cannot be limited. It may be exercised immediately in respect of all taxes affecting earlier transactions in the chain (see, in particular, the judgments in Case C-62/93 BP Soupergaz [1995] ECR I-1883, paragraph 18, and Joined Cases C-110/98 to C‑147/98 Gabalfrisa and Others [2000] ECR I-1577, paragraph 43).
39. The system of deductions is intended entirely to relieve an undertaking of the burden of VAT due or paid in the context of all its economic activities. The common system of VAT therefore guarantees neutrality in relation to the tax burden of all economic activities whatever their aim or result, provided those activities are themselves subject to VAT (see, in particular, Case 268/83 Rompelman [1985] ECR 655, paragraph 19; Case C-37/95 Ghent Coal Terminal [1998] ECR I-1, paragraph 15; and Gabalfrisa , cited above, paragraph 44).
47. The Court therefore finds that, on a proper interpretation of Article 18(1)(a) and (d) of the Sixth Directive, only Article 18(1)(d) applies to the reverse charge procedure such as that in this case. Therefore, a taxable person who is liable as the recipient of services for the VAT relating thereto is not obliged to hold an invoice drawn up in accordance with Article 22(3) of the Sixth 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 18(1)(d) of the Sixth Directive.
49. Concerning the exercise of the option given by Article 18(1)(d) of the Sixth Directive, whilst that provision allows Member States to establish formalities concerning the exercise of the right to deduct in cases where the reverse charge procedure applies, the fact remains that that power must be exercised in conformity with one of the aims pursued by the Sixth Directive, which is to ensure the collection of VAT and its verification by the tax administration (see, as regards Article 22(3)(c) of the Sixth Directive, the judgment in Langhorst,  cited above, paragraph 17). Moreover, that power may be exercised only in so far as, by the number or the technical nature of such formalities, their imposition does not make it practically impossible or excessively difficult to exercise the right to deduct (see, in relation to Article 22(3)(b) of the Sixth Directive, in conjunction with Article 18(1)(a) thereof, the judgment in Jeunehomme , cited above, paragraph 17).
50. Therefore, as regards Article 18(1)(d) of the Sixth Directive, the imposition and extent of formalities to be complied with in order to be able to exercise the right to deduct should not exceed what is strictly necessary for the purposes of verifying the correct application of the reverse charge procedure concerned.
51. In that context, it is true that an invoice has an important documentary function because it may contain verifiable data.  In a reverse charge situation, however, it is precisely on the strength of such verifiable information that the recipient of goods or services will have been held liable for the VAT, and in what amount.  Where the tax administration has the information necessary to establish that the taxable person is, as the recipient of the supply in question, liable to VAT, it cannot, in relation to the right of that taxable person to deduct that VAT, impose additional conditions which may have the effect of rendering that right ineffective for practical purposes.
52. Therefore, where a taxable person, as the recipient of services, is designated as liable for the VAT relating thereto, the tax administration cannot require as an additional condition for the right to deduct that that person be in possession of an invoice drawn up in conformity with Article 22(3) of the Sixth Directive. Such a requirement would result in a taxable person being, on the one hand, liable as the recipient of services for the VAT in question, but, on the other hand, risking not being able to deduct that tax.