C-244/08 Commission v Italy

Judgment · Court of Justice · Italy · 16 July 2009

A fixed establishment does not force a non-resident into the refund procedure

What is the case?

Italian law required a taxable person established in another Member State or in a non-member country, but having a fixed establishment in Italy and making supplies of goods and services there, to recover Italian input VAT through the refund mechanism of the Eighth and Thirteenth Directives rather than by deduction, in cases where the purchase in question had been made not through that fixed establishment but directly by the principal establishment. The Commission brought infringement proceedings, arguing that the refund procedure is reserved for those with no establishment in the country.

What is the Court asked?

Whether Italy failed to fulfil its obligations under Article 1 of the Eighth Directive and Article 1 of the Thirteenth Directive by requiring such a taxable person to claim a refund under those directives instead of deducting the input VAT in the ordinary way.

The Court’s decision

The Court finds the infringement established. A taxable person with a fixed establishment in the Member State concerned, which makes supplies there, is not a person not established in that State for the purposes of those directives. It must therefore recover the input tax by deduction through its Italian return, and it cannot be pushed into the refund procedure merely because the purchase was made directly by the principal establishment. A practically important judgment for groups with branches.

AI-generated and factual. Not an official document: verify against the text below.

Legislation interpreted

Subject matter

Sixth VAT Directive · Article 17 · Eighth Directive 79/1072/EEC · Article 1 · Thirteenth Directive 86/560/EEC · Article 1 · Refund or deduction of VAT · Taxable person established in another Member State or in a non-Member State, but having a fixed establishment in the Member State concerned

Topics

Refund or deduction of VAT

Record

Court: Court of Justice
Case number: C-244/08
ECLI: ECLI:EU:C:2009:478
Official texts: Judgment of 16 July 2009 (62008CJ0244)
Cite as: Judgment of 16 July 2009, Commission v Italy, C-244/08, EU:C:2009:478

Judgment of 16 July 2009

Text as published by the Court on EUR-Lex, CELEX 62008CJ0244.

Judgment of the Court (Eighth Chamber) of 16 July 2009 – Commission v Italy

(Case C‑244/08)

Failure of a Member State to fulfil obligations – Infringement of Article 1 of Eighth Council Directive 79/1072/EEC of 6 December 1979 on the harmonisation of the laws of the Member States relating to turnover taxes – Arrangements for the refund of value added tax to taxable persons not established in the territory of the country (OJ 1979 L 331, p. 11) and Article 1 of Thirteenth Council Directive 86/560/EEC of 17 November 1986 on the harmonisation of the laws of the Member States relating to turnover taxes – Arrangements for the refund of value added tax to taxable persons not established in Community territory – Refund of VAT to a taxable person established in another Member State or in a non-member country but having a fixed establishment in Italy.

Operative part

The Court:

1. Declares that the Italian Republic has failed, in relation to the refund of value added tax to a taxable person residing in another Member State or in a non-Member State, but having a fixed establishment in the Member State concerned, to fulfil its obligations under Article 1 of the Eighth Council Directive 79/1072/EEC of 6 December 1979 on the harmonisation of the laws of the Member States relating to turnover taxes – Arrangements for the refund of value added tax to taxable persons not established in the territory of the country, and Article 1 of the Thirteenth Council Directive 86/560/EEC of 17 November 1986 on the harmonisation of the laws of the Member States relating to turnover taxes – Arrangements for the refund of value added tax to taxable persons not established in Community territory, by requiring a taxable person established in another Member State or in a non-member State, but having a fixed establishment in Italy and who, during the period at issue, supplied goods and services in Italy, to apply for a refund of input value added tax according to the mechanism provided by those directives rather than deduct it when the purchase in respect of which repayment of that tax is sought is made not through that fixed establishment, but directly by the principal establishment of that taxable person;

Declares that the Italian Republic has failed, in relation to the refund of value added tax to a taxable person residing in another Member State or in a non-Member State, but having a fixed establishment in the Member State concerned, to fulfil its obligations under Article 1 of the Eighth Council Directive 79/1072/EEC of 6 December 1979 on the harmonisation of the laws of the Member States relating to turnover taxes – Arrangements for the refund of value added tax to taxable persons not established in the territory of the country, and Article 1 of the Thirteenth Council Directive 86/560/EEC of 17 November 1986 on the harmonisation of the laws of the Member States relating to turnover taxes – Arrangements for the refund of value added tax to taxable persons not established in Community territory, by requiring a taxable person established in another Member State or in a non-member State, but having a fixed establishment in Italy and who, during the period at issue, supplied goods and services in Italy, to apply for a refund of input value added tax according to the mechanism provided by those directives rather than deduct it when the purchase in respect of which repayment of that tax is sought is made not through that fixed establishment, but directly by the principal establishment of that taxable person;

2. Orders the Italian Republic to pay the costs.

Orders the Italian Republic to pay the costs.