UAB „Litdana“ v Valstybinė mokesčių inspekcija prie Lietuvos Respublikos finansų ministerijos.
Date: 2017-05-18
23


As a preliminary point, it should be noted that the scheme for the taxation of the profit margin made by the taxable dealer on the supply of second-hand goods, such as those at issue in the main proceedings, constitutes a special arrangement for VAT, derogating from the general scheme of the VAT Directive. Consequently, Article 314 of that directive, which identifies the cases in which this special arrangement is to be applied, must be construed narrowly (see judgment of 19 July 2012, Bawaria Motors, C‑160/11, EU:C:2012:492, paragraphs 28 and 29 and the case-law cited).
24


As is apparent from Articles 314 and 315 of the VAT Directive, the margin scheme enables a taxable dealer to charge VAT only on the profit margin made on the resale of second-hand goods, works of art, collectors’ items or antiques acquired from a person referred to in Article 314(a) to (d) of the VAT Directive, the profit margin corresponding to the difference between the selling price charged by the taxable dealer for the goods and the purchase price.
25


The objective of the margin scheme, as is clear from recital 51 of the VAT Directive, 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 (see, to that effect, judgment of 3 March 2011, Auto Nikolovi, C‑203/10, EU:C:2011:118, paragraph 47 and the case-law cited).
26


To tax, on its overall price, the supply by a taxable dealer of second-hand goods, works of art, collectors’ items or antiques where the price at which that dealer purchased those goods includes a sum of input VAT which was paid by a person falling within one of the categories identified in Article 314(a) to (d) of that directive and which neither that person nor the taxable dealer was able to deduct, would lead to such double taxation (see, to that effect, judgment of 3 March 2011, Auto Nikolovi, C‑203/10, EU:C:2011:118, paragraph 48 and the case-law cited).
27


The conditions that must be fulfilled for the purpose of enabling a taxable person to apply the margin scheme are set out in Article 314 of the VAT Directive. That article, in addition to specifying the types of goods that a taxable dealer may supply under the margin scheme, lists in points (a) to (d) the persons from one of whom the taxable dealer must acquire those goods, thus enabling him to apply that special arrangement. Those different persons have in common that they could not deduct any of the input tax paid on the purchase of those goods and therefore bore that tax in its entirety (see, to that effect, judgment of 19 July 2012, Bawaria Motors, C‑160/11, EU:C:2012:492, paragraph 37).
31


It should be recalled, in that context, that the Court has repeatedly held that EU law cannot be relied on by individuals for abusive or fraudulent ends (judgment of 18 December 2014, Schoenimport Italmoda Mariano Previti and Others, C‑131/13, C‑163/13 and C‑164/13, EU:C:2014:2455, paragraph 43).
32


The Court has concluded from this, first of all, in the context of settled case-law on the right to deduct VAT laid down by the VAT Directive, that it is for the national authorities and courts to refuse the right of deduction if it is shown, in the light of objective evidence, that that right is being relied on for fraudulent or abusive ends. It has held, next, that the consequence of an abuse or fraud also applies, in principle, to the right to an exemption for intra-Community supplies (see, to that effect, judgment of 6 September 2012, Mecsek-Gabona, C‑273/11, EU:C:2012:547, paragraph 54). Finally, the Court has held that, in so far as any refusal of a right under the VAT Directive reflects the general principle that no one may benefit from the rights stemming from the legal system of the European Union for abusive or fraudulent ends, such a refusal is incumbent, in general, on the national authorities and courts, irrespective of the VAT right affected by the fraud, including therefore the right to a VAT refund (see, to that effect, judgment of 18 December 2014, Schoenimport Italmoda Mariano Previti and Others, C‑131/13, C‑163/13 and C‑164/13, EU:C:2014:2455, paragraph 46).
33


According to settled case-law, that is the position not only where tax evasion has been carried out by the taxable person himself but also where a taxable person knew, or should have known, that, by the transaction concerned, he was participating in a transaction involving evasion of VAT carried out by the supplier or by another trader acting upstream or downstream in the supply chain (see, regarding the right of deduction, judgment of 6 December 2012, Bonik, C‑285/11, EU:C:2012:774, paragraphs 38 to 40, regarding the right of exemption for an intra-Community supply, judgment of 6 September 2012, Mecsek-Gabona, C‑273/11, EU:C:2012:547, paragraph 54, and, regarding VAT reimbursement, judgment of 18 December 2014, Schoenimport Italmoda Mariano Previti and Others, C‑131/13, C‑163/13 and C‑164/13, EU:C:2014:2455, paragraphs 49 and 50).
34


Accordingly, it is not contrary to EU law to require a trader to act in good faith and to take every step which could reasonably be asked of him to satisfy himself that the transaction which he is carrying out does not result in his participation in tax evasion (judgment of 6 September 2012, Mecsek-Gabona, C‑273/11, EU:C:2012:547, paragraph 48 and the case-law cited).
35


On the other hand, it is incompatible with the rules governing the right of deduction under the VAT Directive to impose a penalty, in the form of refusal of that right, on a taxable person who did not know, and could not have known, that the transaction concerned was connected with fraud committed by the supplier or that another transaction forming part of the chain of supply, downstream or upstream of the transaction carried out by the taxable person, was vitiated by VAT fraud. The establishment of a system of strict liability would go beyond what is necessary to preserve the public exchequer’s rights (judgment of 6 December 2012, Bonik, C‑285/11, EU:C:2012:774, paragraphs 41 and 42 and the case-law cited).
36


It follows that, even if all the substantive conditions giving rise to the right to the exemption of an intra-Community supply from VAT or to deduct VAT were not met, the Court has held that a taxable person who has acted in good faith and taken every step which could reasonably be required of him to satisfy himself that the transaction which he is effecting does not result in his participation in tax evasion cannot be refused that right (see, to that effect, judgments of 27 September 2007, Teleos and Others, C‑409/04, EU:C:2007:548, paragraph 68, and of 6 September 2012, Mecsek-Gabona, C‑273/11, EU:C:2012:547, paragraphs 47 to 50 and 55).
38


According to the case-law of the Court, determination of the measures which may, in a particular case, reasonably be required of a taxable person wishing to exercise a right conferred by the VAT Directive in order to satisfy himself that his transactions are not connected with fraud committed by a trader at an earlier stage of a transaction depends essentially on the circumstances of that particular case (see, by analogy, judgments of 21 June 2012, Mahagében and Dávid, C‑80/11 and C‑142/11, EU:C:2012:373, paragraphs 53, 54 and 59, and of 6 September 2012, Mecsek-Gabona, C‑273/11, EU:C:2012:547, paragraph 53).
39


When there are indications giving grounds for suspecting an infringement or fraud, a prudent trader could, depending on the circumstances of the case, be obliged to make enquiries about another trader from whom he intends to purchase goods or services in order to ascertain the latter’s trustworthiness (see, by analogy, judgment of 21 June 2012, Mahagében and Dávid, C‑80/11 and C‑142/11, EU:C:2012:373, paragraph 60).
40


However, the tax authority cannot, as a general rule, require the taxable person wishing to exercise the right to apply the margin scheme, first, to verify, inter alia, that the issuer of the invoice relating to the goods in respect of which the exercise of that right is sought has satisfied his obligations as regards declaration and payment of VAT, in order to be satisfied that there are no irregularities or fraud at the level of the traders operating at an earlier stage of the transaction or, secondly, to be in possession of documents in that regard (see, by analogy, judgment of 21 June 2012, Mahagében and Dávid, C‑80/11 and C‑142/11, EU:C:2012:373, paragraph 61).
41


It is, in principle, for the tax authorities to carry out the necessary inspections of traders in order to detect irregularities and VAT fraud as well as to impose penalties on the trader who has committed those irregularities or that fraud (see, by analogy, judgment of 21 June 2012, Mahagében and Dávid, C‑80/11 and C‑142/11, EU:C:2012:373, paragraph 62).