SIA‘E LATS’ v Valsts ieņēmumu dienests.
Date: 2018-07-11
18


In accordance with the settled case-law of the Court, in interpreting a provision of EU law it is necessary to consider not only its wording but also its context and the objectives of the legislation of which it forms part, and in particular the origin of that legislation (judgment of 17 April 2018, Egenberger, C‑414/16, EU:C:2018:257, paragraph 44).
21


As regards the first and second of those conditions, it must be noted that the Court has already ruled that the concept of ‘second-hand goods’, within the meaning of Article 311(1)(1) of the VAT Directive, does not exclude movable tangible property that is suitable for further use, as it is or after repair, coming from other property in which it was incorporated as a component, and that, in order to be characterised as ‘second-hand goods’, it is necessary only that the used property has maintained the functionalities it possessed when new and that it may, therefore, be reused as it is or after repair (see, to that effect, judgment of 18 January 2017, Sjelle Autogenbrug, C‑471/15, EU:C:2017:20, paragraphs 31 and 32).
22


As regards the third condition, it should be noted that, whilst, under Article 311(1)(1) of the VAT Directive, works of art, collectors’ items and antiques cannot be classified as ‘second-hand goods’, those items, unlike precious metals and precious stones, may nevertheless qualify for the scheme for taxation of the profit margin made by the taxable dealer, which constitutes a scheme derogating from the general scheme of the VAT Directive (see, to that effect, judgment of 18 May 2017, Litdana, C‑624/15, EU:C:2017:389, paragraph 24).
24


Regarding, in the second place, the context of Article 311(1)(1) of the VAT Directive, it is to be noted that Article 311 is the only article in Section 1, entitled ‘Definitions’, of Chapter 4 of the VAT Directive, a chapter dedicated to special arrangements for second-hand goods, works of art, collectors’ items and antiques. Those special arrangements derogate from the general scheme of the VAT Directive and must therefore be applied only to the extent necessary to achieve their objective (see, to that effect, judgment of 8 December 2005, Jyske Finans, C‑280/04, EU:C:2005:753, paragraph 35).
27


In that regard, first, it should be noted that that provision contains the definitions applicable to the margin scheme and that it is clear from recital 51 of the VAT Directive that the objective of that scheme is to avoid double taxation and distortions of competition between taxable persons in the area of second-hand goods, works of art, collectors’ items or antiques (judgment of 18 May 2017, Litdana, C‑624/15, EU:C:2017:389, paragraph 25).
32


Although the EU legislature thus accorded the Member States the power to define ‘precious metals or precious stones’, according to the case-law of the Court such a power to define is limited by the prohibition on undermining not only the very terms of the derogation established by the EU legislature, by adopting a definition so wide that it would deprive the concept of ‘second-hand goods’ of its content (see, to that effect, judgments of 28 June 2007, JP Morgan Fleming Claverhouse Investment Trust and The Association of Investment Trust Companies, C‑363/05, EU:C:2007:391, paragraph 21, and of 13 March 2014, ATP PensionService, C‑464/12, EU:C:2014:139, paragraph 41), but also the objectives pursued by the VAT Directive and the principle of fiscal neutrality inherent in the common system of VAT (see, to that effect, judgment of 13 March 2014, ATP PensionService, C‑464/12, EU:C:2014:139, paragraph 42).
35


The factors which must be taken into account in order to establish, in a particular case, whether a resold item falls within the category of ‘second-hand goods’ or that of ‘precious metals and precious stones’ include all the objective circumstances in which the resale has taken place. As is clear from the Court’s case-law, the terms contained in the VAT Directive are objective in nature and apply without regard to the purpose or results of the transactions concerned (see, to that effect, judgment of 6 July 2006, Kittel and Recolta Recycling, C‑439/04 and C‑440/04, EU:C:2006:446, paragraph 41).
36


Consequently, taking into consideration factors such as the intention of a taxable person participating in the transaction is, save in exceptional cases, contrary to the objectives of the common system of VAT of ensuring legal certainty and facilitating the measures necessary for the application of VAT by having regard to the objective character of the transaction concerned (judgment of 6 July 2006, Kittel and Recolta Recycling, C‑439/04 and C‑440/04, EU:C:2006:446, paragraph 42 and the case-law cited).
38


In that regard, it should be added that, since the taxable amount determined in accordance with the margin scheme must result from accounts from which it may be ascertained that all the conditions for applying that scheme have been fulfilled (judgment of 18 January 2017, Sjelle Autogenbrug, C‑471/15, EU:C:2017:20, paragraph 43), the accounts of the taxable dealer and the connected invoices may, save in exceptional cases, provide objective information on the transaction in question and the items sold.