Valstybinė mokesčių inspekcija prie Lietuvos Respublikos finansų ministerijos v AB SEB bankas.
Date: 2018-04-11
25


As a preliminary point, it should be recalled that Article 184 of the VAT Directive sets out the obligation to adjust the initial deduction where it is higher or lower than that to which the taxable person was entitled. Article 185(1) of the VAT Directive further provides that that obligation applies, in particular, when, after the VAT return is made, some change occurs in the factors used to determine the amount to be deducted. Paragraph 2 of that article lists the situations in which, by way of derogation, no adjustment is to be made. Under Article 186 of that directive, Member States are required to lay down the detailed rules for applying Articles 184 and 185 of the VAT Directive.
26


Thus, the provisions of Articles 184 and 185, to which the first question referred for a preliminary ruling refers, set down an obligation to adjust unauthorised VAT deductions. Whilst illustrating and delimiting that obligation, they do not, however, provide for the manner in which such adjustments are to be made.
27


By contrast, Article 186 of the VAT Directive expressly makes Member States responsible for defining the conditions for such adjustments. It is only so far as concerns capital goods and, consequently, in a particular situation, that Articles 187 to 189 of the VAT Directive provide for certain detailed rules for the adjustment of VAT deductions.
28


Consequently, a distinction must be made between the extent of the obligation to adjust as set down in Article 184 of the VAT Directive and the scope of the adjustment mechanism described in Articles 187 to 189 of that directive.
36


On the one hand, that obligation is, in fact, inextricably linked to that, incumbent on each Member State, to take all legislative and administrative measures appropriate for ensuring collection of all the VAT due on its territory. To that end, the Member States are required to check taxable persons’ returns, their accounts and other relevant documents, and to calculate and collect the tax due (judgment of 17 July 2008, Commission v Italy, C‑132/06, EU:C:2008:412, paragraph 37). Those checks would lack substance if no provision were made for the adjustment of unjustified deductions.
37


On the other hand, the general obligation to adjust unjustified VAT deductions also derives from the fiscal neutrality of VAT, which is a fundamental principle of the common system of VAT put in place by the EU legislature in the matter (judgment of 21 February 2006, Halifax, C‑255/02, EU:C:2006:121, paragraph 92 and the case-law cited).
38


Under that system, only the input taxes on goods or services used by a taxable person for its taxable transactions may be deducted. The deduction of input taxes is linked to the collection of output taxes. Where goods or services acquired by a taxable person are used for purposes of transactions that are exempt or do not fall within the scope of VAT, no output tax can be collected or input tax deducted (judgment of 30 March 2006, Uudenkaupungin kaupunki, C‑184/04, EU:C:2006:214, paragraph 24). The principle of the fiscal neutrality of VAT therefore also requires that undue deductions be adjusted in any case.
42


Furthermore, the Court has held, with regard to the provisions of the Sixth Directive, which are substantively identical to those of the VAT Directive (judgment of 30 September 2010, Uszodaépítő, C‑392/09, EU:C:2010:569, paragraph 31), that the adjustment mechanism provided for by the Sixth Directive is applicable only where there is a right of deduction (see, to that effect, judgment of 30 March 2006, Uudenkaupungin kaupunki, C‑184/04, EU:C:2006:214, paragraph 37).
48


However, the Member States must comply with EU law when adopting national legislation establishing those detailed rules. Accordingly, the Court, when requested to give a preliminary ruling, must provide all the guidance as to interpretation needed in order for the national court to determine whether that legislation is compatible with EU law, the observance of which the Court ensures, in particular with its fundamental principles (see, to that effect, judgment of 29 May 1997, Kremzow, C‑299/95, EU:C:1997:254, paragraph 15, and order of 26 March 2009, Pignataro, C‑535/08, not published, EU:C:2009:204, paragraph 22).
50


However, it should be recalled, first, that legitimate expectations cannot be founded on an unlawful practice of the authorities (see, to that effect, judgment of 6 February 1986, Vlachou v Court of Auditors, 162/84, EU:C:1986:56, paragraph 6). According to the order for reference, the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania) censured, as based on a misinterpretation of national law, the administrative practice whereby the transaction at issue had initially been classified as ‘a transaction subject to VAT’, such that the initial VAT deduction was unlawful.
51


Secondly, it should be stated that the principle of legal certainty does not preclude an administrative practice on the part of national tax authorities consisting in revoking, within a mandatory time limit, a decision in which they acknowledged that the taxable person had a right to a VAT deduction, by demanding that he pay that tax (see, to that effect, judgment of 12 October 2016, Nigl and Others, C‑340/15, EU:C:2016:764, paragraph 48 and the case-law cited).
52


However, that principle requires the tax position of the taxable person, having regard to his rights and obligations vis-à-vis the tax authorities, not to be open to challenge indefinitely (see, to that effect, judgment of 6 February 2014, Fatorie, C‑424/12, EU:C:2014:50, paragraph 46 and the case-law cited). For that reason, the fact that the starting point of the mandatory time limit depends on the fortuitous circumstances in which the unlawfulness of the deduction came to light, and, in particular, that it should be set, as the Lithuanian Government claims, at the date of receipt by the purchaser of the credit note whereby the vendor unilaterally adjusted the price, net of VAT, of the land by including the VAT several years after the sale, is likely to breach the principle of legal certainty, a matter which it is for the national court to assess.
53


The answer to the third and fourth questions is that Article 186 of the VAT Directive must be interpreted as meaning that, in cases where the initial deduction of VAT could not be made lawfully, it is for the Member States to determine the date on which the obligation to adjust the undue VAT deduction arises and the time period for which that adjustment must be made, in accordance with the principles of EU law, in particular the principles of legal certainty and legitimate expectations. It is for the national court to determine whether, in cases such as that at issue in the main proceedings, those principles have been respected.