Dyrektor Izby Skarbowej w Białymstoku v Profaktor Kulesza, Frankowski, Jóźwiak, Orłowski sp. j.
Date: 2010-07-29
19. It should be recalled that the right to deduct provided for in Articles 17 to 20 of the Sixth VAT Directive is an integral part of the VAT scheme and in principle may not be limited. The right to deduct is exercisable immediately in respect of all the taxes charged on input transactions (see, inter alia, Case C‑437/06 Securenta  [2008] ECR I‑1597, paragraph 24; Case C‑102/08 SALIX Grundstücks-Vermietungsgesellschaft  [2009] ECR I‑4629, paragraph 70; and Case C‑29/08 SKF  [2009] ECR I-0000, paragraph 55).
20. 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, inter alia, Case C‑137/02 Faxworld  [2004] ECR I‑5547, paragraph 37, and SKF , paragraph 56).
21. The normal functioning of the common system of VAT, which must thereby ensure the neutrality of taxation of all economic activities, requires that the tax be collected accurately. It follows from Articles 2 and 22 of the Sixth VAT Directive, and from Article 10 EC, that every Member State is under an obligation to take all legislative and administrative measures appropriate for ensuring collection of all the VAT due on its territory. In that regard, Member States are required to check taxable persons’ returns, accounts and other relevant documents, and to calculate and collect the tax due (Case C-132/06 Commission  v Italy  [2008] ECR I-5457, paragraph 37).
22. Under the common system of VAT, Member States are required to ensure compliance with the obligations to which taxable persons are subject and they enjoy in that respect a certain measure of latitude, inter alia, as to how they use the means at their disposal ( Commission  v Italy , paragraph 38).
23. Among those obligations, Article 22(2) of the Sixth VAT Directive provides, inter alia, that every taxable person is to keep accounts in sufficient detail to permit application of the VAT and inspection by the tax authority.
25. It must be pointed out in this connection that the prevention of potential tax evasion, avoidance and abuse is an objective which is recognised and encouraged by the Sixth VAT Directive (see Joined Cases C-487/01 and C‑7/02 Gemeente Leusden and Holin Groep  [2004] ECR I-5337, paragraph 76; Case C-255/02 Halifax and Others  [2006] ECR I-1609, paragraph 71; and Commission  v Italy , paragraph 46).
26. However, the measures which the Member States may thus adopt must not go further than is necessary to attain the objectives of ensuring the correct levying and collection of the tax and the prevention of tax evasion. Such measures may not therefore be used in such a way that they would have the effect of undermining the neutrality of VAT, which is a fundamental principle of the common system of VAT (see, to that effect, inter alia, Joined Cases C‑286/94, C‑340/95, C‑401/95 and C‑47/96 Molenheide and Others  [1997] ECR I‑7281, paragraph 47; Case C‑25/03 HE  [2005] ECR I‑3123, paragraph 80; and Joined Cases C‑95/07 and C-96/07 Ecotrade  [2008] ECR I-3457, paragraph 66).
29. It is necessary to point out in this connection that, in the absence of harmonisation of European Union legislation in the field of sanctions applicable where conditions laid down by arrangements under that legislation are not complied with, Member States are empowered to choose the sanctions which seem to them to be appropriate. They must, however, exercise that power in accordance with European Union law and its general principles, and consequently in accordance with the principle of proportionality (Case C-262/99 Louloudakis  [2001] ECR I‑5547, paragraph 67).
30. As regards the specific application of that principle of proportionality, it is for the national court to determine whether the national measures are compatible with European Union law, the competence of the Court of Justice being limited to providing the national court with all the criteria for the interpretation of European Union law which may enable it to make such a determination as to compatibility (see, inter alia, Case C‑55/94 Gebhard  [1995] ECR I‑4165 and Molenheide and Others , paragraph 49).
41. Suffice it, in that regard, to note that the measure at issue in the main proceedings, as set out in Article 111(1) and (2) of the 2004 Law on VAT, is an administrative sanction imposed where it is found that the taxable person has not complied with the obligation to keep accounting records of turnover and the amount of tax due through the use of a cash register. Such a measure, which is of the type envisaged in Article 22(8) of the Sixth VAT Directive, cannot therefore constitute a special measure for derogation within the meaning of Article 27(1) of that directive (see, to that effect, Joined Cases 123/87 and 330/87 Jeunehomme and EGI  [1988] ECR 4517, paragraph 15, and Case C‑502/07 K-1  [2009] ECR I-161, paragraph 23).
45. Article 33 of the Sixth VAT Directive permits a Member State to maintain or introduce duties or charges on the supply of goods, the provision of services or imports only if they cannot be characterised as turnover taxes (see Case C-475/03 Banca popolare di Cremona  [2006] ECR I-9373, paragraph 24, and K-1 , paragraph 27).
46. In order to decide whether a tax, duty or charge can be characterised as a turnover tax within the meaning of Article 33 of the Sixth VAT Directive, it is necessary, in particular, to determine whether it has the effect of jeopardising the functioning of the common system of VAT by being levied on the movement of goods and services and on commercial transactions in a manner comparable to VAT (Joined Cases C‑283/06 and C‑312/06 KÖGÁZ and Others  [2007] ECR I‑8463, paragraph 34).
47. It is settled case-law that VAT has four essential characteristics: VAT applies generally to transactions relating to goods or services; it is proportional to the price charged by the taxable person in return for the goods and services which he has supplied; that tax is charged at each stage of the production and distribution process, including that of retail sale, irrespective of the number of transactions which have previously taken place; and the amounts paid during the preceding stages of the production and distribution process are deducted from the VAT payable by a taxable person, with the result that that tax applies, at any given stage, only to the value added at that stage and the final burden of that tax rests ultimately on the consumer ( Banca popolare di Cremona , paragraph 28; KÖGÁZ and Others , paragraph 37; and K-1 , paragraph 17).