WebMindLicenses kft v Nemzeti Adó- és Vámhivatal Kiemelt Adó- és Vám Főigazgatóság.
Date: 2015-12-17
20. WML is a commercial company registered in Hungary which was set up in 2009 and whose entire capital is held by its manager. By a contract of 1 September 2009, it acquired free of charge from Hypodest Patent Development Company, an undertaking established in Portugal, know-how enabling a website to be operated through which erotic interactive audiovisual services in which individuals throughout the world took part in real time were supplied (‘WML’s know-how’). On the same day it made that know-how available, by a licensing agreement, to Lalib — Gestão e Investimentos Lda (‘Lalib’), a company established in Madeira (Portugal).
25. Making reference to the judgments in Cadbury Schweppes and Cadbury Schweppes Overseas (C‑196/04, EU:C:2006:544) and Newey (C‑653/11, EU:C:2013:409), the referring court states that it is unsure, in the light of the particular nature of the services at issue offered on the internet, as to the circumstances which should be taken into account in assessing, for the purpose of determining the place of supply of services, whether the contractual construction used arises from an abusive practice.
26. The referring court is also uncertain whether it is to be inferred from the objectives of the VAT Directive that the tax authorities may gather evidence obtained in the context of a criminal procedure, including by secret means, and use it as the basis for an administrative decision. In this connection, referring to the judgment in Åkerberg Fransson  (C‑617/10, EU:C:2013:105), it raises the question of what limits the Charter places on the institutional and procedural autonomy of the Member States.
31. WML took part in the hearing and had the opportunity to reply orally to the observations of the National Tax and Customs Authority. Also, the Court considers that it has sufficient information regarding the circumstances of the dispute in the main proceedings to give a useful answer to the questions asked by the referring court, to which it in any event falls to assess those circumstances in order to decide the case before it (see inter alia, to this effect, judgment in Gauweiler and Others , C‑62/14, EU:C:2015:400, paragraph 15).
34. As the referring court points out, it is for it to assess the facts which are placed before it and to determine whether action constituting an abusive practice has taken place in the case before it. The Court, when giving a preliminary ruling, may however provide clarification designed to give the referring court guidance in its interpretation (see inter alia, to this effect, judgments in Halifax and Others , C‑255/02, EU:C:2006:121, paragraphs 76 and 77, and Part Service , C‑425/06, EU:C:2008:108, paragraphs 54 to 56).
35. In that regard, it should be pointed out that preventing possible tax evasion, avoidance and abuse is an objective recognised and encouraged by the VAT Directive and that the effect of the principle that abusive practices are prohibited, which applies to the field of VAT, is to bar wholly artificial arrangements which do not reflect economic reality and are set up with the sole aim of obtaining a tax advantage (see, to this effect, judgments in Halifax and Others , C‑255/02, EU:C:2006:121, paragraph 70, and Newey , C‑653/11, EU:C:2013:409, paragraph 46 and the case-law cited).
36. In paragraphs 74 and 75 of the judgment in Halifax and Others  (C‑255/02, EU:C:2006:121), the Court held that, in the sphere of VAT, an abusive practice can be found to exist only if, first, the transactions concerned, notwithstanding formal application of the conditions laid down by the relevant provisions of the VAT Directive and the national legislation transposing it, result in the accrual of a tax advantage the grant of which would be contrary to the purpose of those provisions and, secondly, it is apparent from a number of objective factors that the essential aim of the transactions concerned is solely to obtain that tax advantage.
37. As regards, in the first place, whether a transaction such as the conclusion of the licensing agreement at issue in the main proceedings results in the accrual of a tax advantage contrary to the objectives of the VAT Directive, it is to be pointed out, first, that the term ‘place of supply of services’, which determines the place where the supply is taxed, is — like the terms ‘taxable person’, ‘supply of services’ and ‘economic activity’ — objective in nature and applies without regard to the purpose or results of the transactions concerned and without it being necessary for the tax authorities to examine the intention of the taxable person (see, to this effect, judgments in Halifax and Others , C‑255/02, EU:C:2006:121, paragraphs 56 and 57, and Newey , C‑653/11, EU:C:2013:409, paragraph 41).
39. Secondly, the differences between the standard rates of VAT applied by the Member States result from the absence of full harmonisation by the VAT Directive, which sets only the minimum rate.
40. Accordingly, enjoyment in a Member State of a standard rate of VAT lower than the standard rate in force in another Member State cannot be regarded in itself as a tax advantage the grant of which is contrary to the objectives of the VAT Directive.
41. On the other hand, the position is different if the services are in fact supplied in that other Member State. Such a situation is contrary to the objective of the provisions of the VAT Directive determining the place where supplies of services are taxed, which is to avoid, first, conflicts of jurisdiction which may result in double taxation and, secondly, non-taxation (see, to this effect, judgment in Welmory , C‑605/12, EU:C:2014:2298, paragraph 42). Furthermore, such a situation, in that it results in VAT due in a Member State being avoided, is contrary both to the obligation of the Member States, which stems from Article 4(3) TEU, Article 325 TFEU and Articles 2, 250(1) and 273 of the VAT Directive, to take all legislative and administrative measures appropriate for ensuring collection of all the VAT due on their territory and for preventing evasion and to the principle of fiscal neutrality inherent in the common system of VAT, according to which economic operators carrying out the same transactions must not be treated differently in relation to the levying of VAT (see, to this effect, judgments in Commission  v Italy , C‑132/06, EU:C:2008:412, paragraphs 37, 39 and 46; Belvedere Costruzioni , C‑500/10, EU:C:2012:186, paragraphs 20 to 22; and Åkerberg Fransson , C‑617/10, EU:C:2013:105, paragraphs 25 and 26).
42. As regards, in the second place, whether the essential aim of a transaction is solely to obtain that tax advantage, the Court has already held in the sphere of VAT that, where the taxable person has a choice between two transactions, he is not obliged to choose the one which involves paying the higher amount of VAT but, on the contrary, may choose to structure his business so as to limit his tax liability (see, inter alia, judgments in Halifax and Others , C‑255/02, EU:C:2006:121, paragraph 73; Part Service , C‑425/06, EU:C:2008:108, paragraph 47; and Weald Leasing , C‑103/09, EU:C:2010:804, paragraph 27). Taxable persons are thus generally free to choose the organisational structures and the form of transactions which they consider to be most appropriate for their economic activities and for the purpose of limiting their tax burdens (judgment in RBS Deutschland Holdings , C‑277/09, EU:C:2010:810, paragraph 53).
43. So far as concerns the main proceedings, it is apparent from the documents submitted to the Court that Lalib is a company separate from WML, as it is not a branch, subsidiary or agency of the latter, and that it paid VAT in Portugal.
44. In those circumstances, in order to find that the licensing agreement in question arose from an abusive practice designed to benefit from a lower rate of VAT in Madeira, it is necessary to establish that that agreement constituted a wholly artificial arrangement concealing the fact that the services concerned, that is to say, operation of the website using WML’s know-how, were not actually supplied in Madeira by Lalib, but were in fact supplied in Hungary by WML. As regards determining the actual place of that supply, such a finding must be based on objective factors which are ascertainable by third parties, such as the physical existence of Lalib in terms of premises, staff and equipment (see, by analogy, judgment in Cadbury Schweppes and Cadbury Schweppes Overseas , C‑196/04, EU:C:2006:544, paragraph 67).
45. In order to determine whether that agreement constituted such an arrangement, it is incumbent upon the referring court to analyse all the facts placed before it, examining, in particular, whether the establishment of Lalib’s place of business or fixed establishment in Madeira was not genuine, whether that company, for the purpose of engaging in the economic activity concerned, did not possess an appropriate structure in terms of premises and human and technical resources and whether it did not engage in that economic activity in its own name and on its own behalf, under its own responsibility and at its own risk.
52. It need merely be recalled that, where an abusive practice has been found to exist, the transactions involved must be redefined so as to re-establish the situation that would have prevailed in the absence of the transactions constituting that practice (judgments in Halifax and Others , C‑255/02, EU:C:2006:121, paragraph 98, and Newey , C‑653/11, EU:C:2013:409, paragraph 50).
57. However, having regard to the duty, set out in recital 7 in the preamble to that regulation, to cooperate to help ensure that VAT is correctly assessed, such a request may prove expedient, or even necessary.
58. That may be so, in particular, where the tax authorities of a Member State know or should reasonably know that the tax authorities of another Member State have information which is useful, or even essential, for determining whether VAT is chargeable in the first Member State.
65. It should be noted, first, that the question whether action constituting an abusive practice has taken place must be examined in accordance with the rules of evidence of national law. Those rules must not, however, undermine the effectiveness of EU law (see, to this effect, judgment in Halifax and Others , C‑255/02, EU:C:2006:121, paragraph 76).
66. Secondly, in accordance with settled case-law, the fundamental rights guaranteed in the legal order of the European Union are applicable in all situations governed by EU law (see, to this effect, judgment in Åkerberg Fransson , C‑617/10, EU:C:2013:105, paragraph 19 and the case-law cited).
67. Thirdly, an adjustment of VAT after an abusive practice has been found, such as the adjustment which is the subject-matter of the main proceedings, constitutes implementation of Articles 2, 250(1) and 273 of the VAT Directive and Article 325 TFEU and, therefore, of EU law, for the purposes of Article 51(1) of the Charter (see, to this effect, judgment in Åkerberg Fransson , C‑617/10, EU:C:2013:105, paragraphs 25 to 27).
68. It follows that EU law does not preclude the tax authorities from being able in the context of an administrative procedure, in order to establish the existence of an abusive practice concerning VAT, to use evidence obtained in the context of a parallel criminal procedure that has not yet been concluded, provided that the rights guaranteed by EU law, especially by the Charter, are observed.
70. In this instance, as regards, in the first place, the obtaining of the evidence in the context of the criminal procedure, it should be noted that Article 7 of the Charter, concerning the right to respect for private and family life, contains rights which correspond to those guaranteed by Article 8(1) of the ECHR and that, in accordance with Article 52(3) of the Charter, Article 7 thereof is thus to be given the same meaning and the same scope as Article 8(1) of the ECHR, as interpreted by the case-law of the European Court of Human Rights (judgments in McB. , C‑400/10 PPU, EU:C:2010:582, paragraph 53, and Dereci and Others , C‑256/11, EU:C:2011:734, paragraph 70).
71. Thus, since interception of telecommunications constitutes interference with the exercise of the right guaranteed by Article 8(1) of the ECHR (see, inter alia, European Court of Human Rights, Klass and Others v. Germany , 6 September 1978, § 41, Series A no. 28; Malone v. the United Kingdom , 2 August 1984, § 64, Series A no. 82; Kruslin v. France  and Huvig v. France , 24 April 1990, § 26 and § 25, Series A nos. 176-A and 176-B; and Weber and Saravia v. Germany  (dec.), no. 54934/00, § 79, ECHR 2006-XI), it also constitutes a limitation on the exercise of the corresponding right laid down in Article 7 of the Charter.
73. Such limitations are accordingly possible only if they are provided for by law and if, in observance of the principle of proportionality, they are necessary and genuinely meet objectives of general interest recognised by the European Union.
74. As regards the principle of proportionality, the Court has already held that, in accordance with that principle, the measures which the Member States may adopt must not go further than is necessary to attain the objectives of ensuring the correct levying and collection of VAT and the prevention of tax evasion (judgment in R. , C‑285/09, EU:C:2010:742, paragraph 45).
76. In that regard, since, as has been pointed out in paragraph 35 of the present judgment, preventing possible tax evasion, avoidance and abuse is an objective recognised and encouraged by the VAT Directive (see inter alia, to this effect, judgment in Halifax and Others , C‑255/02, EU:C:2006:121, paragraph 71), investigative measures carried out in the context of a criminal procedure with a view, in particular, to prosecuting offences in that sphere have an aim which meets an objective of general interest recognised by the European Union.
79. So far as concerns, in the second place, the gathering and use of the evidence by the tax authorities, there is no need in this instance to examine whether transmission of the evidence by the department responsible for the criminal investigation and the gathering thereof by the department conducting the administrative procedure with a view to its use interfere with the right, guaranteed by Article 8 of the Charter, to the protection of personal data. WML is not a natural person and therefore cannot invoke that protection as its official title does not identify any natural person (see, to this effect, judgment in Volker und Markus Schecke and Eifert , C‑92/09 and C‑93/09, EU:C:2010:662, paragraphs 52 and 53).
81. In that regard, the requirement that any limitation on the exercise of that right must be provided for by law implies that the legal basis which permits the tax authorities to use the evidence referred to in the preceding paragraph must be sufficiently clear and precise and that, by defining itself the scope of the limitation on the exercise of the right guaranteed by Article 7 of the Charter, it affords a measure of legal protection against any arbitrary interferences by those authorities (see, inter alia, European Court of Human Rights, Malone v. the United Kingdom , 2 August 1984, § 67, Series A no. 82, and Gillan and Quinton v. the United Kingdom , 12 January 2010, no. 4158/05, § 77, ECHR 2010).
83. In addition, with regard to observance of the rights of the defence and of the principle of good administration, it is to be observed that Articles 41 and 48 of the Charter, which are mentioned by the referring court, are not relevant in the main proceedings. First, it is clear from the wording of Article 41 of the Charter that it is addressed not to the Member States but solely to the institutions, bodies, offices and agencies of the European Union (judgments in YS and Others , C‑141/12 and C‑372/12, EU:C:2014:2081, paragraph 67, and Mukarubega , C‑166/13, EU:C:2014:2336, paragraph 44). Secondly, Article 48 of the Charter protects the presumption of innocence and rights of the defence of which must be enjoyed by a person ‘who has been charged’ and is therefore not applicable in the main proceedings.
84. Nevertheless, observance of the rights of the defence is a general principle of EU law which applies where the authorities are minded to adopt in respect of a person a measure which will adversely affect him. In accordance with that principle, the addressees of decisions which significantly affect their interests must be placed in a position in which they can effectively make known their views as regards the information on which the authorities intend to base their decision. The authorities of the Member States are subject to that obligation when they take decisions which come within the scope of EU law, even if the EU legislation applicable does not expressly provide for such a procedural requirement (judgment in Sabou , C‑276/12, EU:C:2013:678, paragraph 38 and the case-law cited).
89. If that requirement is not satisfied and, therefore, the right to a judicial remedy is not effective, or if another right guaranteed by EU law is infringed, the evidence obtained in the context of the criminal procedure and used in the administrative tax procedure must be disregarded and the contested decision which is founded on that evidence must be annulled if, as a result, the decision has no basis.
91. In circumstances such as those of the main proceedings, by virtue of Articles 7, 47 and 52(1) of the Charter it is incumbent upon the national court which reviews the legality of the decision founded on such evidence adjusting VAT to verify, first, whether the interception of telecommunications and seizure of emails were means of investigation provided for by law and were necessary in the context of the criminal procedure and, secondly, whether the use by the tax authorities of the evidence obtained by those means was also authorised by law and necessary. It is incumbent upon that court, furthermore, to verify whether, in accordance with the general principle of observance of the rights of the defence, the taxable person had the opportunity, in the context of the administrative procedure, of gaining access to that evidence and of being heard concerning it. If the national court finds that the taxable person did not have that opportunity or that that evidence was obtained in the context of the criminal procedure, or used in the context of the administrative procedure, in breach of Article 7 of the Charter, it must disregard that evidence and annul that decision if, as a result, the latter has no basis. That evidence must also be disregarded if the national court is not empowered to check that it was obtained in the context of the criminal procedure in accordance with EU law or cannot at least satisfy itself, on the basis of a review already carried out by a criminal court in an inter partes  procedure, that it was obtained in accordance with EU law.
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