Grupa Lotos S.A. v Minister Finansów.
Date: 2019-05-02
22


The referring court does indeed state that it is familiar, in particular, with the judgment of 19 September 2000, Ampafrance and Sanofi (C‑177/99 and C‑181/99, EU:C:2000:470, paragraphs 56 and 61), from which, in its view, it can be seen that a measure which consists in excluding as a matter of principle all expenditure in respect of accommodation, hospitality and food from the right to deduct VAT does not appear to be necessary in order to combat tax evasion and avoidance, in particular, if there is objective evidence that that expenditure was incurred for strictly business purposes. However, the referring court is uncertain as to whether that judgment, delivered in the context of a decision of the Council, may be applicable to an exclusion provided for by national law pursuant to the standstill clause, laid down in the second paragraph of Article 176 of the VAT Directive, and whether that exclusion must be consistent with the principle of proportionality.
25


In that regard, it should be recalled, first, that, in accordance with settled case-law, the right of deduction provided for in Article 168(a) of the VAT Directive is an integral part of the VAT scheme and in principle may not be limited. The right to deduct must be exercised immediately in respect of all the VAT charged on transactions relating to inputs (see, in particular, judgments of 18 July 2013, AES-3C Maritza East 1, C‑124/12, EU:C:2013:488, paragraph 25, and of 14 September 2017, Iberdrola Inmobiliaria Real Estate Investments, C‑132/16, EU:C:2017:683, paragraph 25).
26


The deduction system is intended to relieve the trader entirely of the burden of the VAT payable or paid in the course of all his economic activities. The common system of VAT consequently ensures neutrality of taxation of all economic activities, whatever their purpose or results, provided that they are themselves subject in principle to VAT (see judgment of 14 September 2017, Iberdrola Inmobiliaria Real Estate Investments, C‑132/16, EU:C:2017:683, paragraph 26 and the case-law cited).
27


It follows from this that, in so far as the taxable person, acting as such at the time when he acquires goods or receives services, uses those goods or services for the purposes of his taxed transactions, he is entitled to deduct the VAT paid or payable in respect of those goods or services (see, to that effect, judgment of 14 September 2017, Iberdrola Inmobiliaria Real Estate Investments, C‑132/16, EU:C:2017:683, paragraph 27 and the case-law cited).
28


Secondly, it is also apparent from the case-law that derogations from the right to deduct VAT are permitted only in the cases expressly provided for by the provisions of the directives governing that tax (see, to that effect, judgments of 19 September 2000, Ampafrance and Sanofi, C‑177/99 and C‑181/99, EU:C:2000:470, paragraph 34, and of 8 January 2002, Metropol and Stadler, C‑409/99, EU:C:2002:2, paragraphs 42, 44 and 58) and are to be interpreted strictly (judgment of 22 December 2008, Magoora, C‑414/07, EU:C:2008:766, paragraph 28).
29


Those derogations include the second paragraph of Article 176 of the VAT Directive — which is in essence identical to the second subparagraph of Article 17(6) of the Sixth Directive — the adoption of which did not affect the case-law relating to the interpretation of the second subparagraph of Article 17(6) of the Sixth Directive (see, to that effect, judgment of 30 September 2010, Oasis East, C‑395/09, EU:C:2010:570, paragraphs 17 and 27).
30


Just as the second subparagraph of Article 17(6) of the Sixth Directive which preceded it, the second paragraph of Article 176 of the VAT Directive contains a standstill clause, which provides, in particular, for the retention by States acceding to the European Union, of national exclusions from the right to deduct VAT which were applicable before the date of their accession, until such time as the Council has adopted the provisions envisaged by the first paragraph of Article 176, which it has failed to do (see, to that effect, judgments of 15 April 2010, X Holding and Oracle Nederland, C‑538/08 and C‑33/09, EU:C:2010:192, paragraph 38 and the case-law cited, and of 18 July 2013, AES-3C Maritza East 1, C‑124/12, EU:C:2013:488, paragraphs 43 and 44).
31


Thirdly, the Member States’ residual power to retain national exclusions from the right to deduct VAT, pursuant to the second paragraph of Article 176 of the VAT Directive, is not, however, absolute. The Court has thus held that the standstill clause is not intended to allow a new Member State to amend its domestic legislation on its accession to the European Union, the effect of which would be to extend the scope of existing exclusions, in a way which diverts that legislation from the objectives of the VAT directive, which would be contrary to the very spirit of that clause (see, to that effect, judgment of 22 December 2008, Magoora, C‑414/07, EU:C:2008:766, paragraphs 37 and 39).
32


Such an extension of the scope of the existing exclusions would indeed fail to have regard to the Member States’ obligation to ensure collection of all the VAT due on their territory, by depriving the European Union of a part of VAT revenue, that is, part of its own resources, in breach, in particular, of Article 4(3) TEU (see, to that effect, judgment of 2 May 2018, Scialdone, C‑574/15, EU:C:2018:295, paragraphs 26 and 27 and the case-law cited).
33


The Court has also pointed out that it is for the national courts to determine the content of the national legislation at the date of accession of a new Member State to the European Union and to establish whether the effect of that legislation was to extend, after that accession, the scope of existing exclusions (see, to that effect, judgment of 18 July 2013, AES-3C Maritza East 1, C‑124/12, EU:C:2013:488, paragraph 41 and the case-law cited).
37


Nonetheless, as the Court has held, account must be taken of the actual application of the national provisions on exclusions from the right to deduct VAT and the effects which follow for the taxable persons (see, to that effect, judgment of 18 July 2013, AES-3C Maritza East 1, C‑124/12, EU:C:2013:488, paragraph 51).
40


In that case, first of all, it must further be assessed, in accordance with the case-law, whether the exclusion from the right to deduct in question concerns a category of expenditure that has been adequately defined, or, in other words, whether the national legislation at issue adequately defines the nature or the purpose of the goods and services in respect of which the right to deduct VAT is excluded in order to ensure that that option granted to the Member States is not used to authorise general exclusions from that system (see, to that effect, judgment of 15 April 2010, X Holding and Oracle Nederland, C‑538/08 and C‑33/09, EU:C:2010:192, paragraphs 44 and 45 and the case-law cited).
41


In that regard, it must be pointed out that, in the judgment of 15 April 2010, X Holding and Oracle Nederland (C‑538/08 and C‑33/09, EU:C:2010:192, paragraphs 50 and 51), the Court accepted that categories of expenditure relating to the provision of food and drink to the members of a taxable person’s staff, as well as to the provision of accommodation, were adequately defined so that the exclusion from the right to deduct, provided for in the national law at issue in that case, fell within the scope of the standstill clause laid down in the second subparagraph of Article 17(6) of the Sixth Directive.
47


Secondly, the second paragraph of Article 176 of the VAT Directive seeks to maintain ‘all the exclusions’ prior to 1 January 1979 or, in the case of the Member States which acceded to the European Union after that date, on the date of their accession. It must be borne in mind that the Court expressly stated in the judgment of 5 October 1999, Royscot and Others (C‑305/97, EU:C:1999:481, paragraph 20), regarding an exclusion from the right to deduct VAT paid on the purchase of motor cars, that the expression ‘all the exclusions’, set out in the second subparagraph of Article 17(6) of the Sixth Directive, comprises, in the light of the wording and origin of that article, also expenditure which is strictly business expenditure.