Criminal proceedings against Giuseppe Astone.
Date: 2016-07-28
24


However, according to settled case-law, in proceedings under Article 267 TFEU, it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation of EU law, the Court is in principle bound to give a ruling (judgment of 8 September 2010 in Stoß and Others, C‑316/07, C‑358/07 to C‑360/07, C‑409/07 and C‑410/07, EU:C:2010:504, paragraph 51 and the case-law cited). Similarly, in that procedure, it falls exclusively to the referring court to interpret national legislation (see, to that effect, judgment of 15 January 2013 in Križan and Others, C‑416/10, EU:C:2013:8, paragraph 58 and the case-law cited).
27


According to recitals 1 and 3 of the VAT Directive, the recasting of the Sixth Directive 77/388 was necessary in order to present all the applicable provisions in a clear and rational manner and in an improved structure and drafting which would not, in principle, bring about material change. The provisions of the VAT Directive which are relevant in the context of the main proceedings are, in essence, identical to the equivalent provisions of the Sixth Directive 77/388. In those circumstances, the case-law relating to those provisions of the Sixth Directive 77/388 is still relevant in interpreting the equivalent provisions of the VAT Directive (see, by analogy, judgment of 21 June 2012 in Mahagében and Dávid, C‑80/11 and C‑142/11, EU:C:2012:373, paragraph 35).
29


In that regard, it should be recalled that the deduction system established by the VAT Directive is meant to relieve the operator entirely of the burden of the VAT paid or payable in the course of all his economic activities. The common system of VAT thereby seeks to ensure complete 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 12 July 2012 in EMS-Bulgaria Transport, C‑284/11, EU:C:2012:458, paragraph 43 and the case-law cited).
30


According to settled case-law, the right to deduct laid down in Articles 167 and 168 of the VAT Directive forms an integral part of the VAT mechanism and in principle cannot be limited (see, in particular, judgments of 8 May 2008 in Ecotrade, C‑95/07 and C‑96/07, EU:C:2008:267, paragraph 39 and the case-law cited, and 12 July 2012 in EMS-Bulgaria Transport, C‑284/11, EU:C:2012:458, paragraph 44).
32


Nevertheless, pursuant to Articles 180 and 182 of the VAT Directive, a taxable person may be authorised to make a deduction even if he did not exercise his right during the period in which the right arose, subject, however, to compliance with certain conditions and procedures determined by national legislation (judgment of 12 July 2012 in EMS-Bulgaria Transport, C‑284/11, EU:C:2012:458, paragraph 46 and the case-law cited).
33


However, the possibility of exercising the right to deduct without any temporal limit would be contrary to the principle of legal certainty, which requires the tax position of the taxable person, having regard to his rights and obligations vis-à-vis the tax authority, not to be open to challenge indefinitely (judgments of 8 May 2008 in Ecotrade, C‑95/07 and C‑96/07, EU:C:2008:267, paragraph 44, and 12 July 2012 in EMS-Bulgaria Transport, C‑284/11, EU:C:2012:458, paragraph 48).
34


The Court has already held, in connection with the reverse charge procedure, that a limitation period the expiry of which has the effect of penalising a taxable person who has not been sufficiently diligent and has failed to claim deduction of input tax, by making him forfeit his right to deduct, cannot be regarded as incompatible with the regime established by the VAT Directive, in so far as, first, that limitation period applies in the same way to analogous rights in tax matters founded on domestic law and to those founded on EU law (principle of equivalence) and, second, that it does not in practice render impossible or excessively difficult the exercise of the right to deduct (principle of effectiveness) (judgments of 8 May 2008 in Ecotrade, C‑95/07 and C‑96/07, EU:C:2008:267, paragraph 46 and the case-law cited, and 12 July 2012 in EMS-Bulgaria Transport, C‑284/11, EU:C:2012:458, paragraph 49).
35


In the present case, it is not apparent from the order for reference whether or not, in the main proceedings, the reverse charge procedure is applicable. That is, however, irrelevant for the purposes of answering the first question raised, since the provisions of the VAT Directive referred to in paragraphs 31 and 32 above do not establish, as regards the limitation period for exercising the right to deduct which could be set by the Member States pursuant to those provisions, that a distinction must be drawn between the situations where the reverse charge procedure is applicable and those where it is not.
36


As to whether a two-year limitation period, such as that at issue in the main proceedings, fulfils the conditions set out in paragraph 34 above, it must be recalled that, according to the case-law of the Court, it is for the national court to determine whether national measures are compatible with EU law. The Court may, however, provide it with any helpful guidance to resolve the dispute before it (see, to that effect, judgment of 12 July 2012 in EMS-Bulgaria Transport, C‑284/11, EU:C:2012:458, paragraph 51 and the case-law cited).
37


In the present case, as regards the principle of equivalence, as the Court found in the case giving rise to the judgment of 8 May 2008 in Ecotrade (C‑95/07 and C‑96/07, EU:C:2008:267, paragraph 47), which concerned in particular the same limitation period as that at issue in the main proceedings, it does not appear from the file, nor has it been argued before the Court, that the limitation period provided for in Article 19(1) of Decree No 633 does not comply with that principle.
38


With respect to the principle of effectiveness, the Court has also held that a two-year time limit, such as that provided for in Article 19(1) of Decree No 633, at issue in the main proceedings, cannot, in itself, render the exercise of the right to deduct virtually impossible or excessively difficult, since Article 167 and the first paragraph of Article 179 of the VAT Directive allow Member States to require that the taxable person exercise his right to deduct during the same period as that in which it arose (see, to that effect, judgment of 8 May 2008 in Ecotrade, C‑95/07 and C‑96/07, EU:C:2008:267, paragraph 48).
43


In that regard, it should be noted that the right of taxable persons to deduct VAT due or already paid on goods purchased and services received as inputs from the VAT which they are liable to pay is a fundamental principle of the common system of VAT established by the relevant EU legislation (judgments of 6 December 2012 in Bonik, C‑285/11, EU:C:2012:774, paragraph 25 and case-law cited, and 13 February 2014 in Maks Pen, C‑18/13, EU:C:2014:69, paragraph 23).
45


Consequently, according to settled case-law, the fundamental principle of VAT neutrality requires deduction of input tax to be allowed if the substantive requirements are satisfied, even if the taxable person has failed to comply with some of the formal requirements (judgments of 12 July 2012 in EMS-Bulgaria Transport, C‑284/11, EU:C:2012:458, paragraph 62 and the case-law cited, and 9 July 2015 in Salomie and Oltean, C‑183/14, EU:C:2015:454, paragraph 58 and the case-law cited).
46


The case may be different if non-compliance with such formal requirements effectively prevents the production of conclusive evidence that the substantive requirements have been satisfied (judgments of 12 July 2012 in EMS-Bulgaria Transport, C‑284/11, EU:C:2012:458, paragraph 71 and 11 December 2014 in Idexx Laboratories Italia, C‑590/13, EU:C:2014:2429, paragraph 39 and the case-law cited).
47


In that regard, it must be stated that the substantive requirements for the right to deduct are those which govern the actual substance and scope of that right, such as those provided for in Chapter 1 of Title 10 of the VAT Directive, entitled ‘Origin and scope of the right to deduct’, whereas the formal requirements for that right regulate the rules governing its exercise and monitoring thereof and the smooth functioning of the VAT system, such as the obligations relating to accounts, invoicing and filing returns (see, to that effect, judgment of 11 December 2014 in Idexx Laboratories Italia, C‑590/13, EU:C:2014:2429, paragraphs 40 and 41 and the case-law cited).
49


In addition, under Article 273 of the VAT Directive, the Member States may impose other obligations which they deem necessary for the correct collection of the tax and for the prevention of evasion. However, the measures which the Member States may adopt under that provision must not go further than is necessary to attain such objectives. Therefore, they cannot be used in such a way that they would have the effect of systematically undermining the right to deduct VAT and, consequently, the neutrality of VAT (see, to that effect, judgments of 8 May 2008 in Ecotrade, C‑95/07 and C‑96/07, EU:C:2008:267, paragraph 66, and 21 June 2012 in Mahagében and Dávid, C‑80/11 and C‑142/11, EU:C:2012:373, paragraph 57 and the case-law cited).
50


That being so, the prevention of tax evasion, avoidance and abuse is an objective recognised and encouraged by the VAT Directive and the Court has repeatedly held that EU law cannot be relied on for abusive or fraudulent ends. It is, therefore, for the national courts and judicial authorities to refuse the right of deduction, if it is shown, in the light of objective factors, that that right is being relied on for fraudulent or abusive ends (judgments of 6 December 2012 in Bonik, C‑285/11, EU:C:2012:774, paragraphs 35 to 37 and the case-law cited, and 18 December 2014 in Schoenimport ‘Italmoda’ Mariano Previti and Others, C‑131/13, C‑163/13 and C‑164/13, EU:C:2014:2455, paragraphs 42 to 44 and case-law cited).
51


That is the position where tax evasion is committed by the taxable person himself (judgments of 6 December 2012 in Bonik, C‑285/11, EU:C:2012:774, paragraph 38 and case-law cited, and judgment of 13 February 2014 in Maks Pen, C‑18/13, EU:C:2014:69, paragraph 27).
52


Since the refusal of the right of deduction is an exception to the application of the fundamental principle constituted by that right, it is incumbent upon the competent tax authorities to establish, to the requisite legal standard, that the objective evidence establishing the existence of a fraud or abuse is present. It is for the national courts subsequently to determine whether the tax authorities concerned have established the existence of such objective evidence (judgment of 13 February 2014 in Maks Pen, C‑18/13, EU:C:2014:69, paragraph 29 and the case-law cited).
53


In proceedings brought under Article 267 TFEU, the Court has no jurisdiction to check or to assess the factual circumstances of the case in the main proceedings. It is therefore for the referring court to carry out, in accordance with the rules of evidence under national law, an overall assessment of all the evidence and factual circumstances of those proceedings in order to determine, in the light of the objective evidence provided to it, whether the defendant in the main proceedings has committed such an evasion or abuse (see, by analogy, judgment of 13 February 2014 in Maks Pen, C‑18/13, EU:C:2014:69, paragraph 30). However, in order to give the national court a useful answer, the Court may, in a spirit of cooperation with national courts, provide it with all the guidance that it deems necessary (see, to that effect, judgments of 18 July 2013 in AES-3C Maritza East 1, C‑124/12, EU:C:2013:488, paragraph 42, and 3 September 2014 in GMAC UK, C‑589/12, EU:C:2014:2131, paragraph 46).
55


Even if those infringements of those formal obligations which were incumbent upon the defendant in the main proceedings, in his capacity as the authorised representative of the Del Ferro, for the purposes of the application of the VAT and its monitoring by the tax authorities do not prevent the production of conclusive evidence that the substantive requirements giving rise to the right to deduct input VAT are satisfied, it must be found that, as the European Commission noted in its written observations, such circumstances may establish the simplest case of tax evasion, in which the taxable person deliberately fails to fulfil the formal obligations incumbent upon him with the aim of evading payment of the tax.
56


In particular, the failure to file a VAT return, like to failure to keep accounting records, which would allow VAT to be applied and monitored by the tax authorities, and the failure to record the invoices issued and paid are liable to prevent the correct collection of the tax and, therefore, to compromise the proper functioning of the common system of VAT. Therefore, EU law does not prevent Member States from treating such infringements as amounting to tax evasion and from refusing to grant the right to deduct in such cases (see, by analogy, judgment of 7 December 2010 in R., C‑285/09, EU:C:2010:742, paragraphs 48 and 49).
58


Lastly, it must be emphasised that a refusal of the right to deduct in circumstances characterising the existence of tax evasion on the part of the taxable person seeking to benefit from that right cannot be considered contrary to the principle of fiscal neutrality, since that principle cannot legitimately be invoked by a taxable person who has intentionally participated in tax evasion and who has jeopardised the operation of the common system of VAT (see, by analogy, judgment of 7 December 2010 in R., C‑285/09, EU:C:2010:742, paragraphs 51 and 54 and, to that effect, judgment of 18 December 2014 in Schoenimport ‘Italmoda’ Mariano Previti and Others, C‑131/13, C‑163/13 and C‑164/13, EU:C:2014:2455, paragraph 48).