Albert Collée v Finanzamt Limburg an der Lahn.
Date: 2007-09-27
22. As a derogation from the fundamental principle which underlies the common system of VAT, according to which VAT applies to each transaction by way of production or distribution (see, in particular, Case C‑62/93 BP Supergas  [1995] ECR I‑1883, paragraph 16; Joined Cases C‑354/03, C‑355/03 and C‑484/03 Optigen and Others  [2006] ECR I‑483, paragraph 54; and Joined Cases C‑439/04 and C‑440/04 Kittel and Recolta Recycling  [2006] ECR I‑6161, paragraph 49), that exemption is based on the transitional VAT regime applicable to intra-Community trade, under which the taxation of trade between the Member States is based on the principle that tax revenues should accrue to the Member State in which the final consumption takes place (see Case C‑184/05 Twoh International  [2007] ECR I‑0000, paragraph 22).
23. Thus, the exemption of an intra-Community supply in the Member State of departure of the intra-Community dispatch or transport of goods, which has, as its corollary, an intra-Community acquisition that is taxed in the Member State of arrival of the goods dispatched or transported, enables double taxation and, therefore, infringement of the principle of fiscal neutrality inherent in the common system of VAT to be avoided (see, to that effect, Case C‑409/04 Teleos and Others  [2007] ECR I‑0000, paragraphs 24 and 25).
24. As regards the evidence required to be furnished by taxable persons in order for them to benefit from the exemption from VAT, clearly none of the provisions of the Sixth Directive relates directly to that issue. The first part of the first sentence of Article 28c(A) of the Sixth Directive merely provides that it is for the Member States to lay down the conditions subject to which they will exempt intra-Community supplies of goods ( Twoh International , paragraph 25).
26. However, it is apparent from settled case-law that the measures which the Member States may adopt under Article 2 2(8) of the Sixth Directive in order to ensure the correct levying and collection of the tax and for the prevention of fraud must not go further than is necessary to attain such objectives (see Joined Cases C‑110/98 to C‑147/98 Gabalfrisa and Others [2000] ECR I‑1577, paragraph 52, and the order of 3 March 2004 in Case C‑395/02 Transport Service  [2004] ECR I‑1991, paragraph 29). Those measures may not therefore be used in such a way as to have the effect of undermining the neutrality of VAT, which is a fundamental principle of the common system of VAT established by the relevant Community legislation (see Case C‑454/98 Schmeink & Cofreth and Strobel  [2000] ECR I‑6973, paragraph 59, and Case C‑255/02 Halifax and Others  [2006] ECR I‑1609, paragraph 92).
29. As regards, first, the question whether the tax authority can refuse to allow an intra-Community supply to be exempt from VAT solely on the ground that the accounting evidence of that supply was belatedly produced, it should be noted that a national measure which, in essence, makes the right of exemption in respect of an intra-Community supply subject to compliance with formal obligations, without any account being taken of the substantive requirements and, in particular, without any consideration being given as to whether those requirements have been satisfied, goes further than is necessary to ensure the correct levying and collection of the tax.
30. Transactions should be taxed taking into account their objective characteristics (see, in particular, Optigen and Others , paragraph 44, and Kittel and Recolta Recycling , paragraph 41). However, as regards determining whether a supply is of an intra-Community nature, it follows from the case-law of the Court that if a supply meets the conditions laid down in the first subparagraph of Article 28c(A)(a) of the Sixth Directive, no VAT is payable on such a supply (order in Transport Service , paragraphs 18 and 19).
31. In the main case, therefore, since it is apparent from the order for reference that there is no dispute about the fact that an intra-Community supply was made, the principle of fiscal neutrality requires – as the Commission of the European Communities also correctly submits – that an exemption from VAT be allowed if the substantive requirements are satisfied, even if the taxable person has failed to comply with some of the formal requirements. The only exception is if non-compliance with such formal requirements would effectively prevent the production of conclusive evidence that the substantive requirements have been satisfied. However, that does not appear to be so in the main case.
32. Furthermore, the requirement that the prescribed accounts be updated immediately after the transaction has been completed, but without any precise time-limit for doing so being laid down, could undermine the principle of legal certainty which forms part of the Community legal order and with which the Member States must comply when they exercise the powers conferred on them by Community directives (see Case C‑384/04 Federation of Technological Industries and Others  [2006] ECR I‑4191, paragraph 29).
35. In paragraph 18 of its judgment in Case C‑342/87 Genius Holding  [1989] ECR 4227, the Court held that, in order to ensure the neutrality of VAT, it is for the Member States to provide in their internal legal system for the possibility of correcting any tax improperly invoiced where the person who issued the invoice shows that he acted in good faith. However, in paragraphs 60 and 63 of its judgment in Schmeink & Cofreth and Strobel , it stated that where the issuer of the invoice has in sufficient time wholly eliminated the risk of any loss in tax revenues, the principle of the neutrality of VAT requires that VAT which has been improperly invoiced can be adjusted without such adjustment being made conditional upon that issuer having acted in good faith (see Joined Cases C‑78/02 to C‑80/02 Karageorgou and Others  [2003] ECR I‑13295, paragraph 50). The same rules apply equally to an account adjustment made for the purpose of obtaining an exemption in respect of an intra-Community supply.
36. It is therefore for the national court to verify, taking into account all the relevant circumstances of the case which has been brought before it, whether the delay in the production of the accounting evidence could lead to a loss in tax revenues or jeopardise the levying of VAT.
38. Furthermore, it is for the national court to verify whether the concealment of an intra-Community transaction and the resulting delay in the adjustment of the relevant accounts are tainted by the evasion of VAT. It is settled case-law that Community law cannot be relied on for abusive or fraudulent ends (see, in particular, Kittel and Recolta Recycling , paragraph 54). Similarly, the application of Community legislation cannot be extended to cover transactions carried out for the purpose of wrongfully obtaining advantages provided for by Community law (see, to that effect, Halifax and Others , paragraph 69).
39. However, in circumstances such as those of the main action, the use of an intermediary for the collection of a contractual commission cannot be likened to a transaction that is tainted by tax evasion or to the use of Community law for abusive ends if it is established that the transaction was not carried out for the purpose of obtaining a tax advantage to which there was no entitlement.
40. Finally, it should be noted that Community law does not prevent Member States – in certain circumstances – from treating the concealment of the existence of an intra-Community transaction as an attempt to evade VAT and from imposing, in such a case, fines or penalty payments prescribed by their domestic law (see, to that effect, Schmeink & Cofreth and Strobel , paragraph 62). However, as the Commission rightly submits, such penalties should always be proportionate to the gravity of the abuse.