C-307/16 Pieńkowski

JUDGMENT OF THE COURT (Fifth Chamber)

28 February 2018 ( *1 )

(Reference for a preliminary ruling — Directive 2006/112/EC — Value added tax (VAT) — Article 131 — Article 146(1)(b) — Article 147 — Exemptions on exportation — Article 273 — Legislation of a Member State making the benefit of the exemption subject to the attainment of a minimum level of turnover or the conclusion of an agreement with a person authorised to make VAT refunds to travellers)

In Case C‑307/16,

REQUEST for a preliminary ruling under Article 267 TFEU from the Naczelny Sąd Administracyjny (Supreme Administrative Court, Poland), made by decision of 27 January 2016, received at the Court on 30 May 2016, in the proceedings

Stanisław Pieńkowski

v

Dyrektor Izby Skarbowej w Lublinie,

THE COURT (Fifth Chamber),

composed of J.L. da Cruz Vilaça, President of the Chamber, E. Levits, A. Borg Barthet (Rapporteur), M. Berger and F. Biltgen, Judges,

Advocate General: Y. Bot

Registrar: A. Calot Escobar

having regard to the written procedure,

after considering the observations submitted on behalf of:

the Polish Government, by B. Majczyna, acting as Agent,

the European Commission, by K. Herrmann and M. Owsiany-Hornung, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 7 September 2017,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of Article 131, Article 146(1)(b) and Articles 147 and 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1) (‘the VAT Directive’).

2The request has been made in proceedings between Mr Stanisław Pieńkowski and the Dyrektor Izby Skarbowej w Lublinie (Director of the Tax Chamber, Lublin, Poland), concerning the exemption from value added tax (VAT) of the supply of goods dispatched outside the European Union in the personal luggage of travellers.

Legal context

EU law

3Under Article 14(1) of the VAT Directive:

‘“Supply of goods” shall mean the transfer of the right to dispose of tangible property as owner.’

4Article 131 of the VAT Directive provides:

‘The exemptions provided for in Chapters 2 to 9 [of Title IX of the VAT Directive] shall apply without prejudice to other Community provisions and in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse.’

5Article 146(1)(b), which is in Chapter 6 (entitled ‘Exemptions on exportation’) of Title IX of that directive, provides:

‘Member States shall exempt the following transactions:

…

the supply of goods dispatched or transported to a destination outside the Community by or on behalf of a customer not established within their respective territory, with the exception of goods transported by the customer himself for the equipping, fuelling and provisioning of pleasure boats and private aircraft or any other means of transport for private use.’

6Article 147 of the directive provides:

‘1. Where the supply of goods referred to in point (b) of Article 146(1) relates to goods to be carried in the personal luggage of travellers, the exemption shall apply only if the following conditions are met:

the traveller is not established within the Community;

the goods are transported out of the Community before the end of the third month following that in which the supply takes place;

the total value of the supply, including VAT, is more than EUR 175 or the equivalent in national currency, fixed annually by applying the conversion rate obtaining on the first working day of October with effect from 1 January of the following year.

However, Member States may exempt a supply with a total value of less than the amount specified in point (c) of the first subparagraph.

2. For the purposes of paragraph 1, “a traveller who is not established within the Community” shall mean a traveller whose permanent address or habitual residence is not located within the Community. In that case “permanent address or habitual residence” means the place entered as such in a passport, identity card or other document recognised as an identity document by the Member State within whose territory the supply takes place.

Proof of exportation shall be furnished by means of the invoice or other document in lieu thereof, endorsed by the customs office of exit from the Community.

Each Member State shall send to the Commission specimens of the stamps it uses for the endorsement referred to in the second subparagraph. The Commission shall transmit that information to the tax authorities of the other Member States.’

7Article 273 of the VAT Directive provides:

‘Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirement of equal treatment as between domestic transactions and transactions carried out between Member States by taxable persons and provided that such obligations do not, in trade between Member States, give rise to formalities connected with the crossing of frontiers.

The option under the first paragraph may not be relied upon in order to impose additional invoicing obligations over and above those laid down in Chapter 3.’

Polish law

8The ustawa o podatku od towarów i usług (Law on the tax on goods and services) of 11 March 2004 (Dz. U. of 2011, No 177, heading 1054), in the version applicable at the material time (‘the Law on VAT’), provides in Article 126(1):

‘Natural persons not permanently resident in the territory of the European Union, hereinafter referred to as “travellers”, shall be entitled to a refund of the tax paid on the acquisition of goods in the territory of Poland which they have exported intact from the European Union in their personal luggage, subject to paragraph 3 and Articles 127 and 128.’

9Article 127 of the Law on VAT states:

‘1. There shall be a right to a tax refund as referred to in Article 126(1) in the case of the purchase of goods from taxable persons, hereinafter referred to as “vendors”, who:

are registered as taxable persons and

keep records of turnover and amounts of input tax using cash registers, and

have concluded tax refund agreements with at least one of the persons referred to in paragraph 8.

…

5. The tax refund to travellers shall be made in Polish zloty (PLN) by the vendor or at VAT refund points by persons whose object is to make refunds as referred to in Article 126(1).

6. Vendors as referred to in paragraph 5 may make a tax refund as referred to in Article 126(1), provided that their turnover for the previous tax year was greater than PLN 400000 and that they refund the tax solely in relation to goods acquired by a traveller from the relevant vendor.

…

8. Persons referred to in paragraph 5 who are not vendors may make a refund as referred to in Article 126(1), provided that they have:

been registered taxable persons for at least 12 months prior to the submission of an application for a certificate as referred to in paragraph 6;

notified in writing the head of a tax office of their intention to commence activity relating to the refunding of tax to travellers;

not had tax arrears constituting State budget revenue or arrears by virtue of contributions to the Social Security Institution for at least 12 months prior to submission of an application for a certificate as referred to in paragraph 6;

concluded tax refund agreements with the vendors as referred to in paragraph 1;

deposited with the tax office a guarantee security deposit in the amount of PLN 5000000 in the form of:

a cash deposit;

bank guarantees;

State Treasury bonds maturing in at least three years;

obtained, from the minister competent for public finances, a certificate confirming that all the conditions laid down in paragraphs 1 to 5 have been satisfied cumulatively.’

The dispute in the main proceedings and the question referred for a preliminary ruling

10Mr Pieńkowski, a trader subject to VAT, is engaged in the business of selling, inter alia, telecommunications equipment and uses a cash register to register turnover and the amount of tax payable. In the course of his economic activity, Mr Pieńkowski sells goods to, amongst others, travellers resident outside the territory of the European Union.

11The Urzędu Skarbowego w Białej Podlaskiej (Tax Authorities of Biała Podlaska, Poland) notified Mr Pieńkowski that he qualified as a ‘vendor’ for the purposes of Article 127(1) of the Law on VAT. The same authorities also found Mr Pieńkowski’s VAT returns to show his turnover as PLN 283695 (approximately EUR 68288) for the tax year 2009 and PLN 238429 (approximately EUR 57392) for the tax year 2010. Furthermore, the tax authorities found that Mr Pieńkowski had not supplied any information to show that he had concluded a VAT refund agreement with an authorised person but that he had made tax refunds to travellers personally, or through an employee.

12In those circumstances, the tax authorities of Biała Podlaska found that the level of Mr Pieńkowski’s turnover meant that he was not permitted to make VAT refunds to travellers personally or through an employee, or to apply a zero VAT rate to them for the tax years 2010 and 2011.

13Mr Pieńkowski challenged that decision before the Wojewódzki Sąd Administracyjny w Lublinie (Regional Administrative Court, Lublin, Poland).

14Relying on the provisions governing the procedure for refunding tax to travellers, contained in Articles 126 to 129 of the Law on VAT and in Article 131, Article 146(1) and Articles 147 and 273 of the VAT Directive, the Wojewódzki Sąd Administracyjny w Lublinie (Regional Administrative Court, Lublin) found that, in the light of those provisions, Mr Pieńkowski was wrong to claim that the provisions of the Law on VAT were incompatible with the VAT Directive in so far as they made the option for a vendor to refund tax to travellers subject to fulfilment of the requirement that it attain a turnover greater than PLN 400000 (approximately EUR 96284) for the preceding tax year.

15The Wojewódzki Sąd Administracyjny w Lublinie (Regional Administrative Court, Lublin) found that the minimum level of turnover thus set was not merely informational or formal in nature, but rather that it constituted a substantive condition on which the option for the vendor to refund the tax directly depended in principle. That court therefore held, contrary to Mr Pieńkowski’s argument, that the threshold of PLN 400000 (approximately EUR 96284) could not be described as an ‘administrative barrier’ to the application of a zero VAT rate.

16Mr Pieńkowski appealed on a point of law to the Naczelny Sąd Administracyjny (Supreme Administrative Court, Poland) submitting, in particular, that the provisions of the Law on VAT were incompatible with the provisions of the VAT Directive and with the principles of proportionality and fiscal neutrality.

17The referring court points out that, unlike Article 127(6) of the Law on VAT, the provisions of the VAT Directive do not require a taxable person to have attained a certain turnover threshold during the preceding tax year in order to apply the VAT exemption to goods carried in the personal luggage of travellers.

18In particular, it would not appear that Article 131 of the VAT Directive can form the basis for the imposition of the condition laid down in Article 127(6) of the Law on VAT.

19The referring court also notes that the conditions for applying the exemption, as laid down in Articles 146 and 147 of the VAT Directive, relate to consumers and not to vendors, contrary to the situation provided for in Article 127(6) of the Law on VAT.

20Furthermore, the referring court considers that, contrary to the view of the Wojewódzki Sąd Administracyjny w Lublinie (Regional Administrative Court, Lublin), the condition that a minimum level of turnover be attained in the preceding tax year cannot, in the light of the VAT Directive, be regarded as a substantive condition for the exemption, in the absence of any legal basis in the wording of Articles 146 and 147 of the VAT Directive justifying the establishment of such a condition.

21The referring court recalls, in addition, that, pursuant to Article 273 of the VAT Directive, Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion. The referring court is uncertain, however, as to whether a Member State imposing a requirement that a minimum level of turnover of PLN 400000 (approximately EUR 96284) be attained achieves the aims of that article.

22In those circumstances, the Naczelny Sąd Administracyjny (Supreme Administrative Court) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Must Article 146(1)(b) and Articles 147, 131 and 273 of the [VAT] Directive be interpreted as precluding national legislation which excludes application of the exemption to a taxable person who does not satisfy the condition relating to attainment of the relevant turnover threshold for the previous tax year and who also has not concluded an agreement with a person authorised to refund tax to travellers?’

Consideration of the question referred

23By its question, the referring court asks, in essence, whether Article 131, Article 146(1)(b) and Articles 147 and 273 of the VAT Directive must be interpreted as precluding national legislation under which, in the context of a supply of goods for export to be carried in the personal luggage of travellers, the vendor, a taxable person, must have attained a minimum level of turnover in the preceding tax year, or have concluded an agreement with a person authorised to refund VAT to travellers, where the mere failure to meet those conditions results in the definitive loss for the vendor of the exemption in relation to that supply.

24It should be noted that, under Article 146(1)(b) of the VAT Directive, the Member States are to exempt the supply of goods dispatched or transported to a destination outside the European Union by or on behalf of a customer. That provision must be read in conjunction with Article 14(1) of that directive, according to which ‘supply of goods’ means the transfer of the right to dispose of tangible property as owner.

25It follows from those provisions and, in particular, from the term ‘dispatched’ in Article 146(1)(b) that the export of goods is effected and the exemption of the supply of goods for export becomes applicable when the right to dispose of the goods as owner has been transferred to the purchaser and the supplier establishes that those goods have been dispatched or transported outside the European Union and that, as a result of that dispatch or that transport, they have physically left the territory of the European Union (judgment of 19 December 2013, BDV Hungary Trading, C‑563/12, EU:C:2013:854, paragraph 24 and the case-law cited).

26In the main proceedings, it is not disputed that supplies of goods within the meaning of Article 14 of the VAT Directive have taken place and that the goods concerned by the transactions at issue in the main proceedings have physically left the territory of the European Union carried in the personal luggage of travellers.

27However, where the supply of goods referred to in point (b) of Article 146(1) of the VAT Directive relates to goods to be carried in the personal luggage of travellers, the exemption is to apply only when certain additional conditions, laid down in Article 147 of that directive, are met.

28In that respect, it follows from the order for reference that, in the main proceedings, the conditions provided for in Article 146(1)(b) and Article 147 of the VAT Directive have in fact been met.

29The Court notes that neither Article 146(1)(b) nor Article 147 of the VAT Directive provides for a condition that the taxable person must have attained a minimum level of turnover during the preceding tax year or, if that condition is not met, concluded an agreement with a person authorised to refund VAT in order for the export exemption provided for in Article 146(1)(b) to be applicable.

30Moreover, the conditions laid down in Article 147 of the VAT Directive concern only the purchasers of the goods at issue and do not refer to the vendors of those goods.

31It follows that the application of Article 146(1)(b) and Article 147 of the VAT Directive cannot depend on meeting the conditions set by the national legislation at issue in the main proceedings, a failure to comply with which would result in the definitive loss for the taxable person of the export exemption.

32Admittedly, as is apparent from Article 131 of the VAT Directive, the exemptions provided for in Chapters 2 to 9 of Title IX of that directive, in which Articles 146 and 147 are found, apply in accordance with conditions which the Member States are to lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse. In addition, Article 273 of the VAT Directive provides that Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion.

33In that regard, the Court has already ruled that in the exercise of the powers conferred on them by Articles 131 and 273 of the VAT Directive, the Member States must respect the general principles of law that form part of the legal order of the European Union, including, in particular, the principles of legal certainty and proportionality and the principle of protection of legitimate expectations (judgment of 19 December 2013, BDV Hungary Trading, C‑563/12, EU:C:2013:854, paragraph 29 and the case-law cited).

34In particular, as regards the principle of proportionality, the Court has already held that, in accordance with that principle, the Member States must employ means which, whilst enabling them effectively to achieve the objectives pursued by their domestic laws, cause the least possible detriment to the objectives and principles laid down by the relevant EU legislation (judgment of 19 December 2013, BDV Hungary Trading, C‑563/12, EU:C:2013:854, paragraph 30 and the case-law cited).

35In the present case, on the one hand, according to the Polish Government, the primary objective of the national legislation at issue in the main proceedings is to minimise the risk of tax avoidance and evasion linked to an incorrect application of the exemption provided for in Article 146(1)(b) of the VAT Directive.

36On the other hand, according to the information provided by the referring court, the condition concerning the obligation for the taxable person to have attained a minimum level of turnover during the preceding tax year is not absolute in so far as the taxable person has the possibility of benefiting from the exemption, if the minimum level of turnover is not attained, by concluding an agreement with a person authorised to refund VAT to travellers.

37However, it should be noted in that regard that a failure to meet that condition leads to the refusal of the export exemption even though the conditions for benefiting from it laid down in Article 146(1)(b) and Article 147 of the VAT Directive have been met.

38However, the Court has held that, in circumstances where the conditions for export exemption laid down in Article 146(1)(b) of the VAT Directive, in particular the requirement that the goods concerned leave the customs territory of the European Union, are satisfied, no liability to pay VAT arises in respect of such a supply. In those circumstances, there is no longer, in principle, any risk of tax evasion or loss of tax which could justify the transaction concerned being taxed (judgment of 19 December 2013, BDV Hungary Trading, C‑563/12, EU:C:2013:854, paragraph 40).

39Consequently, it must be held that legislation such as that at issue in the main proceedings is not necessary in order to attain the objective of preventing tax avoidance and evasion.

40In the light of the considerations above, the answer to the question referred is that Article 131, Article 146(1)(b) and Articles 147 and 273 of the VAT Directive must be interpreted as precluding national legislation under which, in the context of a supply of goods for export to be carried in the personal luggage of travellers, the vendor, a taxable person, must have attained a minimum level of turnover in the preceding tax year, or have concluded an agreement with a person authorised to refund VAT to travellers, where the mere failure to meet those conditions results in the definitive loss for the vendor of the exemption in relation to that supply.

Costs

41Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (Fifth Chamber) hereby rules:

Article 131, Article 146(1)(b) and Articles 147 and 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as precluding national legislation under which, in the context of a supply of goods for export to be carried in the personal luggage of travellers, the vendor, a taxable person, must have attained a minimum level of turnover in the preceding tax year, or have concluded an agreement with a person authorised to refund VAT to travellers, where the mere failure to meet those conditions results in the definitive loss for the vendor of the exemption in relation to that supply.

Signatures

[Signatures]

( *1 ) Language of the case: Polish.

OPINION OF ADVOCATE GENERAL

BOT

delivered on 7 September 2017 ¹

(Reference for a preliminary ruling — Taxation — Value added tax (VAT) — Export exemptions — Legislation of a Member State making the benefit of the exemption subject to the attainment of a certain turnover or the conclusion of an agreement with a person authorised to make VAT refunds to travellers — Principles of fiscal neutrality and proportionality)

I. Introduction

1In this case, the Court is asked to interpret Articles 146(1)(b), 147, 131 and 273 of Directive 2006/112/EC, ² in the context of proceedings between Mr Stanisław Pieńkowski, a vendor of telecommunications equipment, and the Urzędu Skarbowego w Białej Podlaskiej (tax authority for Biała Podlaska, Poland), in relation to the exemption from value added tax (VAT) on the supply of goods dispatched outside the European Community in the personal luggage of travellers.

2This case gives the Court the opportunity to rule on the question of whether the VAT Directive precludes national legislation which provides that, in the context of a supply of goods for export, a taxable person must have attained a minimum turnover during the preceding tax year, or have concluded an agreement with a person authorised to make VAT refunds to travellers, in order for the exemption to apply. It is also an opportunity for the Court to interpret, for the first time, the provisions of Article 147 of the VAT Directive and to provide guidance on the application of the principle of proportionality in an unprecedented specific situation, even though existing case-law does assist significantly, as is rightly noted by the Naczelny Sąd Administracyjny (Supreme Administrative Court, Poland) in its order for reference.

3At the end of my analysis, I will propose that the Court should rule that the provisions of Articles 146(1)(b), 147, 131 and 273 of the VAT Directive, together with the principle of fiscal neutrality, preclude national legislation such as that at issue in the main proceedings.

II. Legal context

A. EU law

4Recitals 5, 35 and 49 in the preamble to the VAT Directive are worded as follows:

A VAT system achieves the highest degree of simplicity and of neutrality when the tax is levied in as general a manner as possible and when its scope covers all stages of production and distribution, as well as the supply of services. It is therefore in the interests of the internal market and of Member States to adopt a common system which also applies to the retail trade.

…

A common list of exemptions should be drawn up so that the Communities’ own resources may be collected in a uniform manner in all the Member States.

…

Member States should be allowed to continue to apply their special schemes for small enterprises, in accordance with common provisions, and with a view to closer harmonisation.’

5Article 131 of the VAT Directive provides:

‘The exemptions provided for in Chapters 2 to 9 shall apply without prejudice to other Community provisions and in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse.’

6Article 146(1) of the same directive reads as follows:

‘1. Member States shall exempt the following transactions:

…

the supply of goods dispatched or transported to a destination outside the Community by or on behalf of a customer not established within their respective territory, with the exception of goods transported by the customer himself for the equipping, fuelling and provisioning of pleasure boats and private aircraft or any other means of transport for private use …’.

7Article 147 of the VAT Directive provides:

‘1. Where the supply of goods referred to in point (b) of Article 146(1) relates to goods to be carried in the personal luggage of travellers, the exemption shall apply only if the following conditions are met:

the traveller is not established within the Community;

the goods are transported out of the Community before the end of the third month following that in which the supply takes place;

the total value of the supply, including VAT, is more than EUR 175 or the equivalent in national currency, fixed annually by applying the conversion rate obtaining on the first working day of October with effect from 1 January of the following year.

However, Member States may exempt a supply with a total value of less than the amount specified in point (c) of the first subparagraph.

2. For the purposes of paragraph 1, “a traveller who is not established within the Community” shall mean a traveller whose permanent address or habitual residence is not located within the Community. In that case “permanent address or habitual residence” means the place entered as such in a passport, identity card or other document recognised as an identity document by the Member State within whose territory the supply takes place.’

8Article 273 of that directive is worded as follows:

‘Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirement of equal treatment as between domestic transactions and transactions carried out between Member States by taxable persons and provided that such obligations do not, in trade between Member States, give rise to formalities connected with the crossing of frontiers.

The option under the first paragraph may not be relied upon in order to impose additional invoicing obligations over and above those laid down in Chapter 3.’

B. Polish law

9Article 126(1) of the Ustawa o podatku od towarów i usług (Law on tax on goods and services, consolidated text, as amended), of 11 March 2004, ³ provides:

‘Natural persons not permanently resident in the territory of the European Union, hereinafter referred to as “travellers”, shall be entitled to a refund of the tax paid on the acquisition of goods in the territory of Poland which they have exported intact from the European Union in their personal luggage, subject to paragraph 3 and Articles 127 and 128.’

10Article 127 of the Law on VAT provides:

‘1. There shall be a right to a tax refund as referred to in Article 126(1) in the case of the purchase of goods from taxable persons, hereinafter referred to as “vendors”, who:

are registered as taxable persons, and

keep records of turnover and amounts of input tax using cash registers, and

have concluded tax refund agreements with at least one of the persons referred to in paragraph 8.

…

5. The tax refund to travellers shall be made in zlotys [Polish zloty, (‘PLN’)] by the vendor or at VAT refund points by persons whose object is to make refunds as referred to in Article 126(1).

6. Vendors as referred to in paragraph 5 may make a tax refund as referred to in Article 126(1), provided that their turnover for the previous tax year was greater than PLN 400000 [approximately EUR 94531] and they refund the tax solely in relation to goods acquired by a traveller from the relevant vendor.’

III. Facts leading to the dispute and the question submitted for a preliminary ruling

11Mr Pieńkowski, a trader subject to VAT, is engaged in the business of selling telecommunications equipment to travellers resident outside the territory of EU Member States. The goods therefore leave EU territory once they are in the customers’ possession.

12In 2006 the Polish tax authorities notified Mr Pieńkowski that he qualified as a ‘vendor’ for the purposes of Article 127(1) of the Law on VAT. The same authorities also found Mr Pieńkowski’s VAT returns to show his turnover as PLN 283695 (approximately EUR 67045) for the tax year 2009 and PLN 238429 (approximately EUR 56347) for the tax year 2010. Furthermore, the tax authorities found that Mr Pieńkowski had not supplied any information to show that he had concluded a VAT refund agreement with an authorised person but that he had made tax refunds to travellers personally, or through an employee.

13In those circumstances, the tax authorities found that the level of Mr Pieńkowski’s turnover meant that he was not permitted to make VAT refunds to travellers personally or to apply a 0% rate to them for the tax years 2010 and 2011.

14Mr Pieńkowski challenged that decision before the Wojewódzki Sąd Administracyjny w Lublinie (Regional Administrative Court, Lublin, Poland). Relying on the provisions relating to VAT refunds to travellers contained in Articles 126 to 129 of the Law on VAT, and on Articles 146(1)(b), 147, 131 and 273 of the VAT Directive, that court held that the provisions of the Law on VAT were compatible with the provisions of the VAT Directive in so far as they made the option to refund VAT to travellers conditional on the taxable person attaining a turnover greater than PLN 400000 (approximately EUR 94531) in the preceding tax year. According to the Wojewódzki Sąd Administracyjny w Lublinie (Regional Administrative Court, Lublin), the threshold fixed for the turnover was not merely a formality but was a substantive condition on which the option for the vendor to refund the tax directly depended in principle.

15Mr Pieńkowski, who considered that threshold to be an ‘administrative barrier’ to the application of the preferential 0% VAT rate, appealed on a point of law to the Naczelny Sąd Administracyjny (Supreme Administrative Court), again submitting that the provisions of the Law on VAT were incompatible with the provisions of the VAT Directive and with the principles of proportionality and fiscal neutrality.

16The referring court points out that, unlike Article 127(6) of the Law on VAT, the provisions of the VAT Directive do not require a taxable person to have attained a certain turnover during the preceding tax year in order to apply the VAT exemption to goods carried in the personal luggage of travellers.

17The referring court notes that the conditions for applying the exemption laid down in Articles 146 and 147 of the VAT Directive relate to consumers and not to vendors, as is the case with Article 127(6) of the Law on VAT.

18In addition, the referring court, in contrast to the Wojewódzki Sąd Administracyjny w Lublinie (Regional Administrative Court, Lublin), considered that the condition that a specified turnover be attained in the preceding tax year cannot be regarded as a substantive condition, in the light of the provisions of the VAT Directive since there is no legal basis for it.

19Moreover, the referring court also states that the conditions laid down in the VAT Directive do not appear to permit the national legislature to make the application of the said exemption conditional on the attainment of a minimum turnover during the preceding tax year.

20The referring court recalls, in addition, that, pursuant to Article 273 of the VAT Directive, Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion. However, the referring court questions whether the establishment by a Member State of a minimum threshold requirement fulfils the objectives of that provision.

21In those circumstances, the Naczelny Sąd Administracyjny (Supreme Administrative Court) decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:

‘Must Articles 146(1)(b), 147, 131 and 273 of the VAT Directive be interpreted as precluding national legislation which excludes application of the exemption to a taxable person who does not satisfy the condition relating to attainment of the relevant turnover threshold for the previous tax year and who also has not concluded an agreement with a person authorised to refund tax to travellers?’

IV. My analysis

22The referring court is asking the Court of Justice to rule, in essence, on the question of whether the provisions of Articles 146(1)(b), 147, 131 and 273 of the VAT Directive preclude national legislation which provides that a taxable person may apply a VAT exemption to the export of goods by travellers only if his turnover reached a certain threshold during the preceding tax year, or if he has concluded a tax refund agreement with an authorised person.

23It is not disputed, in the present case, that the goods supplied by Mr Pieńkowski physically left EU territory by being carried in travellers’ personal luggage. Therefore, the provisions of Article 146(1)(b) of the VAT Directive apply to supplies of the goods concerned, which effectively meet the definition in Article 14(1) of that directive. ⁴

24Article 146(1)(b) of the same directive provides that Member States shall exempt from VAT supplies of goods dispatched or transported by, or on behalf of, the customer, outside the EU. However, given that, in the present case, the goods are carried outside the EU in travellers’ personal luggage, that exemption may apply only if certain conditions, set out in Article 147 of the VAT Directive, are met, which is not disputed either in the present case. ⁵

25It is clear from the terms of Articles 146(1)(b) and 147 of the VAT Directive that there is no obligation imposed by that directive on the taxable person to have attained a certain turnover during the preceding financial year, or to have concluded an agreement with a person authorised to refund VAT, in order for the export exemption to apply.

26Taking those provisions literally would therefore suggest that the national legislation at issue in the main proceedings should be regarded as incompatible with that directive since the exemption requirements are set out exhaustively in the directive, leaving Member States with only limited leeway in relation to the matter.

27However, a reading of Articles 131 and 273 of the VAT Directive qualifies that interpretation by providing that the exemptions in question apply in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse. ⁶

28Even though the purpose of the conditions laid down by the Polish legislation does not, a priori, appear to be ensuring straightforwardness, Member States do, under the provisions, have some discretion in determining the VAT exemption conditions. Indeed, in order to prevent tax evasion and ensure compliance with the objectives laid down by the EU legislature, Member States may provide that taxable persons must fulfil conditions in addition to those laid down in the VAT Directive, as they shall deem necessary.

29Nevertheless, Member States must exercise this discretion in compliance with the general principles of EU law. ⁷

30The Court has already held that, when exercising their discretion, Member States must employ means which, whilst enabling them effectively to attain the objectives pursued by their domestic laws, cause the least possible detriment to the objectives and principles laid down by the relevant EU legislation. ⁸ In the present case, there is reason to question the compatibility of the domestic laws at issue in the main proceedings with the principles of fiscal neutrality and of proportionality, which are enshrined in EU law.

31In relation to the principle of fiscal neutrality, the Court has held that a national measure goes further than is necessary to ensure the correct collection of the tax if, in essence, it makes the right of exemption from VAT subject to compliance with formal obligations, without any account being taken of the substantive requirements and, in particular, without any consideration being given as to whether those requirements have been satisfied. Indeed, the Court has held that transactions should be taxed taking into account their objective characteristics. Accordingly, the principle of fiscal neutrality requires that an exemption from VAT be allowed if the substantive conditions are satisfied, even if the taxable person has failed to comply with some of the formal requirements. ⁹

32The distinction between formal and substantive requirements has been the subject of debate in the observations submitted to the Court. However, the Court has already had to categorise certain additional requirements in national legislation as either ‘formal requirements’ or ‘substantive requirements’. I will cite certain examples here, in order to compare the present case with the existing case-law.

33In the judgment of 9 February 2017, Euro Tyre, ¹⁰ the Court categorised a requirement for the purchaser to either be registered in the VAT Information Exchange System or come under a system of taxation on intra-Community acquisitions of goods as a ‘formal requirement’. In the judgment of 20 October 2016, Plöckl, ¹¹ the same decision was reached in the case of an obligation for the customer to provide a VAT identification number issued by the Member State of destination. In the judgments of 27 September 2007, Collée, ¹² and of 12 July 2012, EMS-Bulgaria Transport, ¹³ the Court held that a requirement to prove the supply within a certain limitation period was a formal one. In judgments of 21 October 2010, Nidera Handelscompagnie; ¹⁴ of 27 September 2012, VSTR; ¹⁵ and of 14 March 2013, Ablessio, ¹⁶the Court found a requirement for the prior identification of the taxable person in a VAT register to be a formal requirement.

34Taking into account this helpful case-law, together with the information submitted to the Court by the referring court, it seems fairly clear that the two alternative requirements laid down by Polish law are also formal in nature. It should be recalled, in this context, that it is not disputed that the substantive requirements under the VAT Directive have been satisfied in the present case.

35Therefore, the fact that the additional formal requirements under national law have not been satisfied should not affect the vendor’s right to the VAT exemption. ¹⁷

36The only exception would be if non-compliance with such formal requirements would effectively prevent the production of conclusive evidence that the substantive requirements had been satisfied or if the taxable person had intentionally participated in tax evasion. ¹⁸

37Consequently, once the administration has the information necessary to establish that the substantive requirements have been satisfied and that the tax authority does not suspect any intentional fraud on the part of the taxable person, the tax authority cannot, in relation to the taxable person’s right to a VAT exemption, impose additional conditions which may have the effect of rendering that right ineffective for practical purposes. ¹⁹ Thus, the refusal to grant the taxable person the benefit of the exemption cannot be justified on the sole ground that additional formal requirements laid down by domestic law, adopted pursuant to Articles 131 and 273 of the VAT Directive, have not been fulfilled. ²⁰

38As a result of the foregoing, it must be held that the principle of fiscal neutrality precludes national legislation such as that at issue in the main proceedings.

39Incidentally, even if the Court takes a different view from that which I have taken above, the Court should still rule on the principle of proportionality. In this respect, it is settled case-law that such national measures must not go further than is necessary to protect the interests of the Treasury and may not be used in such a way that they would have the effect of undermining the principles behind the common system of VAT. ²¹

40In its observations, the Republic of Poland submits that the aim of the national legislation at issue in the main proceedings is to reduce the risk of disruption to the functioning of the system for refunding VAT to travellers. According to the Polish government, that disruption could result, in particular, from an increased risk of cashflow imbalance for small operators and liquidation of their economic activity, or deliberate non-compliance with the obligation to refund VAT, particularly in relation to tax evasion.

41It should be recalled that the prevention of tax evasion, avoidance or abuse are the main objectives of the VAT Directive. The Court has already had occasion to hold that the pursuit of those objectives can justify requirements on suppliers. ²²

42As to the practical application of the principle of proportionality in the present case, that will come down to the referring court. ²³ It should nonetheless be noted here that the national legislation cannot be considered as proportional if it renders the VAT exemption impossible on the pretext that the formal requirements have not been satisfied, even though, according to the referring court and the Republic of Poland, the requirement to attain a certain turnover is not absolute in nature since the taxable person has the ability to benefit from the exemption by concluding an agreement with a person authorised to make VAT refunds to travellers.

43In addition, it must be held that such national legislation cannot have the effect of limiting the number of taxable persons able to directly apply the exemption, without this being a breach of the principle of equal treatment, laid down in Article 273 of the VAT Directive. The effect of that mechanism is to favour the largest undertakings, whereas the risk of tax evasion is necessarily proportional to the volume of business and therefore to the turnover. The Republic of Poland’s argument that the risk of error and fraud is inversely proportional to the level of turnover does not seem to me to be in the least convincing. Moreover, the Court has held that, in circumstances where the conditions for export exemption laid down in Article 146(1)(b) of the VAT Directive, in particular, the requirement that the goods concerned leave the customs territory of the European Union, are satisfied, no liability to pay VAT arises in respect of such a supply and there no longer exists, in principle, a risk of tax evasion or loss of tax which could justify the transaction concerned being taxed. ²⁴

44In view of all of the foregoing, it is proposed that the Court should hold that the provisions of Articles 146(1)(b), 147, 131 and 273 of the VAT Directive, together with the principle of neutrality, should be interpreted as precluding national legislation such as that at issue in the main proceedings that prevents taxable persons from personally applying the travellers’ VAT exemption unless they have attained a certain turnover during the preceding tax year or have concluded a VAT refund agreement with an authorised person.

V. Conclusion

Conclusion

45In the light of the foregoing, I propose that the Court should respond to the question referred by the Naczelny Sąd Administracyjny (Supreme Administrative Court, Poland) for a preliminary ruling in the following way:

The provisions of Articles 146(1)(b), 147, 131 and 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, together with the principle of fiscal neutrality, should be interpreted as precluding national legislation which excludes application of the exemption to a taxable person who does not satisfy the condition relating to attainment of a minimum turnover during the preceding tax year and who has not concluded an agreement with a person authorised to refund tax to travellers.

¹ Original language: French.

² Council Directive of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1, ‘the VAT Directive’).

³ Dz. U. of 2011, No 177, item 1054, ‘the Law on VAT’.

⁴ See, by analogy, judgments of 6 September 2012, Mecsek-Gabona (C‑273/11, EU:C:2012:547, paragraph 31), and of 19 December 2013, BDV Hungary Trading (C‑563/12, EU:C:2013:854, paragraph 24).

⁵ For that reason, no comment will be made on the Republic of Poland’s observations about the conditions in Article 147 of the VAT Directive relating exclusively to customers and affecting the vendor’s ability to apply the exemption.

⁶ See, by analogy, judgment of 26 March 2015, Macikowski (C‑499/13, EU:C:2015:201, paragraphs 36 and 37).

⁷ Judgments of 21 February 2008, Netto Supermarkt (C‑271/06, EU:C:2008:105, paragraph 18 et seq.), and of 19 December 2013, BDV Hungary Trading (C‑563/12, EU:C:2013:854, paragraph 29 et seq.).

⁸ See, to that effect, in relation to the principle of proportionality, judgment of 19 December 2013, BDV Hungary Trading (C‑563/12, EU:C:2013:854, paragraph 31), together with, by analogy, judgments of 18 December 1997, Molenheide and Others (C‑286/94, C‑340/95, C‑401/95 and C‑47/96, EU:C:1997:623, paragraphs 45 to 48), or of 11 May 2006, Federation of Technological Industries and Others (C‑384/04, EU:C:2006:309, paragraph 30), and, in relation to the principle of neutrality, judgments of 19 September 2000, Schmeink & Cofreth and Strobel (C‑454/98, EU:C:2000:469, paragraph 59), or of 21 February 2006, Halifax and Others (C‑255/02, EU:C:2006:121, paragraph 92); of 26 January 2012, Kraft Foods Polska (C‑588/10, EU:C:2012:40, paragraph 28); and of 14 March 2013, Ablessio (C‑527/11, EU:C:2013:168, paragraph 30).

⁹ See, in particular, judgment of 20 October 2016, Plöckl (C‑24/15, EU:C:2016:791, paragraphs 36 to 39).

¹⁰ C‑21/16, EU:C:2017:106, paragraph 32.

¹¹ C‑24/15, EU:C:2016:791, paragraphs 40 and 41.

¹² C‑146/05, EU:C:2007:549, paragraph 29.

¹³ C‑284/11, EU:C:2012:458, paragraph 60.

¹⁴ C‑385/09, EU:C:2010:627, paragraph 50.

¹⁵ C‑587/10, EU:C:2012:592, paragraph 51.

¹⁶ C‑527/11, EU:C:2013:168, paragraph 32.

¹⁷ See, by analogy, judgments of 6 September 2012, Mecsek-Gabona (C‑273/11, EU:C:2012:547, paragraph 60); of 27 September 2012, VSTR (C‑587/10, EU:C:2012:592, paragraph 51); of 20 October 2016, Plöckl (C‑24/15, EU:C:2016:791, paragraph 40); and of 9 February 2017, Euro Tyre (C‑21/16, EU:C:2017:106, paragraph 32).

¹⁸ See, by analogy, judgments of 27 September 2007, Collée (C‑146/05, EU:C:2007:549, paragraph 31); of 12 July 2012, EMS-Bulgaria Transport (C‑284/11, EU:C:2012:458, paragraph 71); of 27 September 2012, VSTR (C‑587/10, EU:C:2012:592, paragraph 46); of 14 March 2013, Ablessio (C‑527/11, EU:C:2013:168, paragraph 32); of 11 December 2014, Idexx Laboratories Italia (C‑590/13, EU:C:2014:2429, paragraphs 39 and 40); and of 20 October 2016, Plöckl (C‑24/15, EU:C:2016:791, paragraphs 44 and 46).

¹⁹ See, to that effect, judgment of 20 October 2016, Plöckl (C‑24/15, EU:C:2016:791, paragraph 47 and the case-law cited).

²⁰ See, by analogy, judgment of 11 December 2014, Idexx Laboratories Italia (C‑590/13, EU:C:2014:2429, paragraph 40).

²¹ See, by analogy, judgments of 7 December 2010, R. (C‑285/09, EU:C:2010:742, paragraphs 44 and 45), and of 22 December 2010, Dankowski (C‑438/09, EU:C:2010:818, paragraph 37).

²² See by analogy, judgments of 7 December 2010, R. (C‑285/09, EU:C:2010:742, paragraph 36), and of 19 December 2013, BDV Hungary Trading (C‑563/12, EU:C:2013:854, paragraph 33).

²³ See, to that effect, judgments of 12 July 2012, EMS-Bulgaria Transport (C‑284/11, EU:C:2012:458, paragraph 77); of 14 March 2013, Ablessio (C‑527/11, EU:C:2013:168, paragraph 35); and of 26 March 2015, Macikowski (C‑499/13, EU:C:2015:201, paragraph 53).

²⁴ See, to that effect, judgment of 19 December 2013, BDV Hungary Trading (C‑563/12, EU:C:2013:854, paragraph 40).