C-518/14 Senatex

JUDGMENT OF THE COURT (Fourth Chamber)

15 September 2016 ( *1 )

‛Reference for a preliminary ruling — Common system of value added tax — Directive 2006/112/EC — Article 167, Article 178(a), Article 179 and Article 226(3) — Deduction of input tax — Invoices not showing a tax number or VAT identification number — Legislation of a Member State excluding the ex tunc correction of an invoice’

In Case C‑518/14,

REQUEST for a preliminary ruling under Article 267 TFEU from the Niedersächsisches Finanzgericht (Finance Court of Lower Saxony, Germany), made by decision of 3 July 2014, received at the Court on 18 November 2014, in the proceedings

Senatex GmbH

v

Finanzamt Hannover-Nord,

THE COURT (Fourth Chamber),

composed of T. von Danwitz, President of the Chamber, C. Lycourgos, E. Juhász, C. Vajda (Rapporteur) and K. Jürimäe, Judges,

Advocate General: Y. Bot,

Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 14 January 2016,

after considering the observations submitted on behalf of:

Senatex GmbH, by D. Hippke, Prozessbevollmächtigter, and A. Hüttl, Rechtsanwalt,

the German Government, by T. Henze and K. Petersen, acting as Agents,

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

after hearing the Opinion of the Advocate General at the sitting on 17 February 2016,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).

2The request has been made in proceedings between Senatex GmbH and the Finanzamt Hannover-Nord (Hannover-Nord Tax Office, Germany, ‘the tax office’) concerning the tax office’s refusal to allow the deduction of input value added tax (VAT) paid by Senatex for the years in which the invoices held by Senatex were issued, on the ground that in their original form they did not satisfy the requirements of national tax legislation.

Legal context

EU law

3Under Article 63 of Directive 2006/112:

‘The chargeable event shall occur and VAT shall become chargeable when the goods or the services are supplied.’

4Article 167 of Directive 2006/112 provides:

‘A right of deduction shall arise at the time the deductible tax becomes chargeable.’

5Under Article 168 of Directive 2006/112:

‘In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay:

the VAT due or paid in that Member State in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person;

…’

6Article 178 of Directive 2006/112 provides:

‘In order to exercise the right of deduction, a taxable person must meet the following conditions:

for the purposes of deductions pursuant to Article 168(a), in respect of the supply of goods or services, he must hold an invoice drawn up in accordance with Articles 220 to 236 and Articles 238, 239 and 240;

…’

7Article 179 of Directive 2006/112 reads as follows:

‘The taxable person shall make the deduction by subtracting from the total amount of VAT due for a given tax period the total amount of VAT in respect of which, during the same period, the right of deduction has arisen and is exercised in accordance with Article 178.

However, Member States may require that taxable persons who carry out occasional transactions, as defined in Article 12, exercise their right of deduction only at the time of supply.’

8Article 219 of Directive 2006/112 provides:

‘Any document or message that amends and refers specifically and unambiguously to the initial invoice shall be treated as an invoice.’

9Under Article 226 of Directive 2006/112:

‘Without prejudice to the particular provisions laid down in this Directive, only the following details are required for VAT purposes on invoices issued pursuant to Articles 220 and 221:

…

the VAT identification number referred to in Article 214 under which the taxable person supplied the goods or services;

…’

10Article 273 of Directive 2006/112 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.’

German law

11In accordance with the first sentence of Paragraph 15(1)(1) of the Umsatzsteuergesetz (Law on turnover tax, ‘the UStG’), an operator may deduct as input tax the tax lawfully due in respect of supplies of goods and services effected by another operator in the course of his business (input supplies).

12The second sentence of Paragraph 15(1)(1) of the UStG provides that the exercise of the right to deduct VAT is subject to the operator holding an invoice drawn up in accordance with Paragraphs 14 and 14a of the UStG. Such an invoice must in particular include all the details listed in Paragraph 14(4)(1) to (9) of the UStG.

13According to the settled case-law of the Bundesfinanzhof (Federal Finance Court, Germany), amounts of input tax paid may be deducted only in the tax period in which all the substantive conditions for the exercise of that right within the meaning of the first sentence of Paragraph 15(1) of the UStG are satisfied.

14Paragraph 31(5) of the Umsatzsteuer-Durchführungsverordnung (Regulation implementing turnover tax) provides generally that an invoice may be corrected if it does not contain all the information required by Paragraph 14(4) or Paragraph 14a UStG or if information in the invoice is inaccurate. For that purpose, it suffices to communicate the missing or inaccurate information by a document which specifically and clearly refers to the invoice. The correction is subject to the same formal and substantial requirements as those provided for in Paragraph 14 of the UStG.

15In the particular cases of the incorrect or unfounded mention of VAT, Paragraph 14c(1) and (2) of the UStG provides that Paragraph 17(1) of the UStG is to apply by analogy. Under that provision, corrections to invoices take effect not retrospectively but for the period in which the corrected invoice is transmitted to its addressee or in which the application for correction is granted after any risk to the collection of tax has been eliminated.

16If the deduction is refused because of missing or incorrect details in the invoice, the right to deduction of VAT may, in German law, arise as a result of the correction of the invoice at the time of correction. In that event, while the tax authorities’ receipts from VAT remain the same, the application of the interest for late payment provided for by Paragraph 233a of the Abgabenordnung (Tax Code) entails an additional financial burden.

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

17Senatex operates a wholesale textile business. In each of its tax returns for 2008 to 2011 it included deductions of input VAT in respect of commission statements issued to its commercial agents and the invoices of an advertising designer.

18On 21 January 2013 the tax office decided to carry out between 11 February and 17 May 2013 an on-the-spot check to ascertain the correctness of Senatex’s tax returns for 2008 to 2011. In that check, the tax office found that the deduction of input tax in respect of commission statements issued by Senatex to its commercial agents was not possible, since those statements did not constitute regular invoices within the meaning of Paragraph 15(1) in conjunction with Paragraph 14(4) of the UStG. According to the tax office, the documents did not contain, either in the commission statements or in their annexes, the addressee’s tax number or VAT registration number. In addition, they did not refer to any other document from which those details could be deduced. For the same reasons, the tax office found that the deduction on the basis of the invoices issued by the advertising designer was also not allowed.

19On 2 May 2013, while the on-the-spot check was still in progress, Senatex corrected the commission statements for 2009 to 2011 issued to its commercial agents, so that the tax number or VAT identification number of each commercial agent was added to those documents. The advertising designer’s invoices for 2009 to 2011 were also corrected in like manner on that date, that is, during the on-the-spot check.

20Nonetheless, the tax office on 2 July 2013 issued amended tax notices for 2008 to 2011 in which, on the basis of the findings made in its on-the-spot check, they reduced the sums which Senatex was entitled to deduct as VAT, on the ground that the conditions for deduction had not been satisfied for those years, but were met only from the time of correction of the invoices in 2013.

21By letter of 19 July 2013, Senatex brought an objection against the tax notices. In the objection procedure it turned out that Senatex had not corrected the commission statements issued in 2008 to which the tax notices referred. Consequently, it was only on 11 February 2014 that Senatex corrected, for 2008, the commission statements issued to its commercial agents and the invoices of the advertising designer by adding their tax number or VAT identification number.

22By decision of 3 March 2014, the tax office dismissed Senatex’s objection and maintained its view that, since the conditions for the deduction of VAT were satisfied only from the time of correction of the invoices, in other words in 2013 and 2014, the correction of an invoice could not have retroactive effect from the date of supply of the service to which the invoice related.

23That decision was the subject of the action brought on 5 March 2014 by Senatex before the referring court, the Niedersächsisches Finanzgericht (Finance Court of Lower Saxony, Germany). Senatex submits that the corrections it carried out have retroactive effect, as they were carried out before the final administrative decision, namely the decision of the tax office of 3 March 2014 dismissing its objection. By its action, Senatex therefore asks the referring court to annul the amended tax notices issued by the tax office for 2008 to 2011.

24In those circumstances, the Niedersächsisches Finanzgericht (Finance Court of Lower Saxony) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

Is the ex nunc effect of the first issue of an invoice, as established by the Court of Justice in the judgment of 29 April 2004, Terra Baubedarf-Handel (C‑152/02, [EU:C:2004:268]), qualified by the judgments of the Court of Justice of 15 July 2010, Pannon Gép Centrum (C‑368/09, [EU:C:2010:441]), and of 8 May 2013, Petroma Transports and Others (C‑271/12, [EU:C:2013:297]), as regards cases, such as the present, in which an incomplete invoice is completed, in so far as the Court of Justice ultimately intended to permit retrospective effect in such cases?

What are the minimum requirements for an invoice to be capable of correction with retrospective effect? Is it necessary that the original invoice bears a tax number or a VAT identification number, or can these be added later with the consequence that the right to deduct input tax on the basis of the original invoice is retained?

Is a correction to an invoice in time if it is only made in the course of objection proceedings against the decision (amended tax notice) of the tax authority?’

Consideration of the questions referred

Questions 1 and 2

25By its first and second questions, which should be considered together, the referring court asks in substance whether Article 167, Article 178(a), Article 179 and Article 226(3) of Directive 2006/112 must be interpreted as precluding national legislation, such as that at issue in the main proceedings, under which the correction of an invoice in relation to a detail which must be mentioned, namely the VAT identification number, does not have retroactive effect, so that the right to deduct VAT exercised on the basis of the corrected invoice relates not to the year in which the invoice was originally drawn up but to the year in which it was corrected.

26It should be recalled that, according to settled case-law of the Court, the right of taxable persons to deduct from the VAT which they are liable to pay the VAT due or paid on goods purchased and services received by them as inputs is a fundamental principle of the common system of VAT established by EU legislation (judgment of 13 February 2014, Maks Pen, C‑18/13, EU:C:2014:69, paragraph 23 and the case-law cited).

27The deduction system is intended to relieve the operator entirely of the burden of the VAT due or paid in the course of all his economic activities. The common system of VAT therefore ensures that all economic activities, whatever their purpose or results, provided that they are in principle themselves subject to VAT, are taxed in a neutral way (judgment of 22 October 2015, PPUH Stehcemp, C‑277/14, EU:C:2015:719, paragraph 27 and the case-law cited).

28Under Article 167 of Directive 2006/112, the right to deduct arises at the time when the deductible tax becomes chargeable. The substantive conditions which must be met in order for the right to arise are set out in Article 168(a) of that directive. Thus, for that right to be available, first, the person concerned must be a taxable person within the meaning of that directive and, secondly, the goods or services relied on to give entitlement to the right of deduction must be used by the taxable person for the purposes of his own taxed output transactions and those goods or services must be supplied by another taxable person as inputs (see, to that effect, judgment of 22 October 2015, PPUH Stehcemp, C‑277/14, EU:C:2015:719, paragraph 28 and the case-law cited).

29As regards the formal conditions for the right of deduction, in accordance with Article 178(a) of Directive 2006/112, the exercise of that right is subject to holding an invoice drawn up in accordance with Article 226 of that directive (see, to that effect, judgments of 1 March 2012, Kopalnia Odkrywkowa Polski Trawertyn P. Granatowicz, M. Wąsiewicz, C‑280/10, EU:C:2012:107, paragraph 41, and of 22 October 2015, PPUH Stehcemp, C‑277/14, EU:C:2015:719, paragraph 29). Under Article 226(3) of that directive, the invoice must mention inter alia the VAT identification number under which the taxable person made the supply of goods or services.

30In the present case, according to the order for reference, the VAT identification number provided for in Article 226(3) of Directive 2006/112 was originally missing from the invoices and statements at issue in the main proceedings, that number not being added by Senatex until several years after the date of issue of those documents. It is not contested that the invoices and statements contained the other information required by that article.

31The referring court asks whether Directive 2006/112 precludes national legislation, such as that at issue in the main proceedings, under which the right to deduct VAT may in such circumstances be exercised only for the year in which the original invoice was corrected, and not for the year in which the invoice was drawn up.

32It should be noted, to begin with, that Directive 2006/112 provides for the possibility of correcting an invoice from which certain mandatory details have been omitted. That is apparent from Article 219 of the directive, which indicates that ‘any document or message that amends and refers specifically and unambiguously to the initial invoice shall be treated as an invoice’.

33It is common ground that the invoices at issue in the main proceedings were properly corrected.

34Next, the Court has indeed confirmed, in paragraph 43 of the judgment of 15 July 2010, Pannon Gép Centrum (C‑368/09, EU:C:2010:441), and paragraph 34 of the judgment of 8 May 2013, Petroma Transports and Others (C‑271/12, EU:C:2013:297), that Directive 2006/112 does not prohibit the correction of incorrect invoices. However, as the Advocate General observes in points 36 and 37 of his Opinion, the Court did not address in those judgments the question of the temporal effect of such a correction on the exercise of the right to deduct VAT.

35On this point, it must be recalled that, in accordance with the first paragraph of Article 179 of Directive 2006/112, the deduction is to be made by subtracting from the total amount of VAT due for a given tax period the total amount of VAT ‘in respect of which, during the same period, the right of deduction has arisen and is exercised in accordance with Article 178’. It follows that the right to deduct VAT must in principle be exercised in respect of the period during which, first, the right has arisen and, secondly, the taxable person is in possession of an invoice (see, to that effect, judgment of 29 April 2004, Terra Baubedarf-Handel, C‑152/02, EU:C:2004:268, paragraph 34).

36According to the German Government, when an invoice is corrected by adding a VAT identification number that was missing from the invoice originally drawn up, the requirement for an invoice mentioning the VAT identification number is not satisfied until the time of that correction, so that, by virtue of Articles 178 and 179 of Directive 2006/112, the right to deduct VAT can be exercised only at the time of the correction.

37It should be recalled here, first, that the Court has repeatedly held that the right to deduction of VAT provided for in Article 167 et seq. of Directive 2006/112 is an integral part of the VAT scheme and in principle may not be limited, and that the right is exercisable immediately in respect of all the taxes charged on transactions relating to inputs (see, to that effect, judgment of 13 February 2014, Maks Pen, C‑18/13, EU:C:2014:69, paragraph 24 and the case-law cited). The deduction system, as pointed out in paragraph 27 above, is meant to relieve the operator entirely of the burden of the VAT due or paid in the course of all his economic activities. However, national legislation, such as that at issue in the main proceedings, which applies interest for late payment on the amounts of VAT it considers to be due before correction of the invoice originally drawn up imposes a tax burden deriving from VAT on those economic activities, even though the common system of VAT guarantees the neutrality of that tax.

38Secondly, the Court has held that the fundamental principle of the neutrality of VAT requires deduction of input VAT to be allowed if the substantive requirements are satisfied, even if the taxable persons have failed to comply with some formal conditions (see, to that effect, judgments of 21 October 2010, Nidera Handelscompagnie, C‑385/09, EU:C:2010:627, paragraph 42 and the case-law cited, and of 1 March 2012, Kopalnia Odkrywkowa Polski Trawertyn P. Granatowicz, M. Wąsiewicz, C‑280/10, EU:C:2012:107, paragraph 43). As noted in paragraph 29 above, holding an invoice showing the details mentioned in Article 226 of Directive 2006/112 is a formal condition, not a substantive condition, of the right to deduct VAT.

39Thirdly, while the Court held, in paragraph 38 of the judgment of 29 April 2004, Terra Baubedarf-Handel (C‑152/02, EU:C:2004:268), that the right of deduction must be exercised in respect of the tax period in which the goods or services are supplied and in which the taxable person is in possession of the invoice, it must be noted that that case concerned an undertaking which did not hold an invoice at the time when it exercised the right of deduction, and that the Court did not therefore rule on the temporal effect of a correction of the original invoice. As the Advocate General observes in point 39 of his Opinion, that case may be distinguished from the case at issue in the main proceedings, in which Senatex held invoices at the time of exercising its right to deduct VAT and had paid input VAT.

40Fourthly, the German Government itself acknowledged at the hearing that in certain circumstances the subsequent correction of an invoice, for example with the aim of correcting a mistake in the VAT identification number in the invoice, does not prevent the right of deduction from being exercised for the year in which the invoice was drawn up. However, the government did not put forward convincing reasons for distinguishing such circumstances from those of the main proceedings.

41Finally, it must be stated that the Member States have power to lay down penalties for failure to comply with the formal conditions for the exercise of the right to deduct VAT. In accordance with Article 273 of Directive 2006/112, the Member States can adopt measures to ensure the correct collection of VAT and to prevent evasion, provided that those measures do not go further than is necessary to attain those objectives and do not undermine the neutrality of VAT (see, to that effect, judgment of 9 July 2015, Salomie and Oltean, C‑183/14, EU:C:2015:454, paragraph 62).

42At the hearing, the German Government submitted that the postponement of the right to deduct VAT until the year in which the invoice is corrected was the equivalent of a penalty. However, to penalise the failure to comply with formal requirements, penalties other than the refusal of the right to deduct tax in respect of the year in which the invoice was drawn up might be considered, such as the infliction of a fine or financial penalty proportionate to the seriousness of the offence (see, to that effect, judgment of 9 July 2015, Salomie and Oltean, C‑183/14, EU:C:2015:454, paragraph 63). Moreover, under the legislation at issue in the main proceedings, the postponement of that right, entailing the application of interest for late payment, occurs in any event without account being taken of the circumstances necessitating the correction of the invoice originally drawn up, which goes further than is necessary to attain the objectives referred to in the preceding paragraph of this judgment.

43Having regard to the above considerations, the answer to Questions 1 and 2 is that Article 167, Article 178(a), Article 179 and Article 226(3) of Directive 2006/112 must be interpreted as precluding national legislation, such as that at issue in the main proceedings, under which the correction of an invoice in relation to a detail which must be mentioned, namely the VAT identification number, does not have retroactive effect, so that the right to deduct VAT exercised on the basis of the corrected invoice relates not to the year in which the invoice was originally drawn up but to the year in which it was corrected.

Question 3

44By its third question, the referring court asks whether Directive 2006/112 must be interpreted as precluding national legislation or a national practice under which a taxable person is refused the right to deduct VAT where the correction of an invoice takes place after the tax authorities have adopted a decision refusing the deduction of VAT.

45This question seeks essentially to determine whether the tax authorities are allowed to consider that a correction to an invoice relating to a detail that must be mentioned, namely the VAT identification number, has taken place belatedly if it occurs only after those authorities have adopted a decision refusing the deduction of VAT.

46It is clear from the observations of the German Government and Senatex that in the case in the main proceedings the tax office stated that it intended to accept the corrected invoices submitted by Senatex, and does not thus consider that the corrections made by Senatex were made belatedly.

47In those circumstances, there is no need to answer Question 3.

Costs

48Since 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 (Fourth Chamber) hereby rules:

Article 167, Article 178(a), Article 179 and Article 226(3) 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, such as that at issue in the main proceedings, under which the correction of an invoice in relation to a detail which must be mentioned, namely the value added tax identification number, does not have retroactive effect, so that the right to deduct value added tax exercised on the basis of the corrected invoice relates not to the year in which the invoice was originally drawn up but to the year in which it was corrected.

Signatures

[Signatures]

( *1 ) Language of the case: German.

OPINION OF ADVOCATE GENERAL

BOT

delivered on 17 February 2016 ( *1 )

‛Reference for a preliminary ruling — Taxation — Value added tax — Deduction of input tax — Issue of invoices without a tax number or without a VAT identification number — Legislation of a Member State precluding ex tunc correction of an invoice)’

1The legal framework of the present case is Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax. ( *2 ) In particular, the questions raised concern, first, the effect which should be given to the correction of an incorrect or incomplete invoice in respect of the time when the right to deduct value added tax (VAT) may be exercised and, second, whether such correction may be limited in time.

2In this Opinion I will explain why I think that the VAT directive must be interpreted as precluding national legislation such as that at issue in the main proceedings under which the correction of an invoice in relation to required details, namely the VAT identification number, does not have retroactive effect, with the result that the right to deduct VAT may be exercised only for the year when the initial invoice was corrected and not for the year when that invoice was drawn up.

3In this regard, I will explain why I think that the Member States may adopt measures to penalise failure to provide the required details, as long as they comply with the principle of proportionality, and measures placing a temporal restriction on the possibility of correcting an incorrect or incomplete invoice, provided they apply in the same way to similar rights in tax matters based on domestic law and to such rights based on EU law (principle of equivalence) and do not render impossible in practice or excessively difficult the exercise of the right of deduction (principle of effectiveness).

I – Legal framework

A – EU law

4Article 63 of the VAT directive states:

‘The chargeable event shall occur and VAT shall become chargeable when the goods or the services are supplied’.

5Under Article 167 of that directive:

‘A right of deduction shall arise at the time the deductible tax becomes chargeable.’

6Article 168(a) of the directive reads as follow:

‘In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay:

the VAT due or paid in that Member State in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person’.

7Article 178(a) of the VAT directive provides:

‘In order to exercise the right of deduction, a taxable person must meet the following conditions:

for the purposes of deductions pursuant to Article 168(a), in respect of the supply of goods or services, he must hold an invoice drawn up in accordance with Articles 220 to 236 and Articles 238, 239 and 240’.

8Under Article 179 of the directive:

‘The taxable person shall make the deduction by subtracting from the total amount of VAT due for a given tax period the total amount of VAT in respect of which, during the same period, the right of deduction has arisen and is exercised in accordance with Article 178.

However, Member States may require that taxable persons who carry out occasional transactions, as defined in Article 12, exercise their right of deduction only at the time of supply.’

9Under Article 219 of the directive:

‘Any document or message that amends and refers specifically and unambiguously to the initial invoice shall be treated as an invoice.’

10Article 226 of the VAT directive reads as follows:

‘Without prejudice to the particular provisions laid down in this Directive, only the following details are required for VAT purposes on invoices issued pursuant to Articles 220 and 221:

...

the VAT identification number referred to in Article 214 under which the taxable person supplied the goods or services;

...’

11Article 239 of the directive is worded as follows:

‘In cases where Member States make use of the option under point (b) of the first subparagraph of Article 272(1) of not allocating a VAT identification number to taxable persons who do not carry out any of the transactions referred to in Articles 20, 21, 22, 33, 36, 138 and 141, and where the supplier or the customer has not been allocated an identification number of that type, another number called the tax reference number, as defined by the Member States concerned, shall be entered on the invoice instead.’

B – German law

12Paragraph 15(1), first sentence, (1) of the 2005 Law on turnover tax (Umsatzsteuergesetz 2005), ( *3 ) in its version applicable to the main proceedings (UStG), provides that a trader may deduct as input tax the tax lawfully due in respect of supplies of goods or services effected by another trader for the purposes of his business. That provision also states that the exercise of the right of deduction requires that the trader holds an invoice drawn up in accordance with Paragraphs 14 and 14a of the UStG. Such an invoice must, inter alia, contain all the details listed in Paragraph 14(4) of the UStG.

13Input tax may be deducted only in the tax period in which all the substantive requirements for the exercise of that right under Paragraph 15(1) of the UStG are met.

14Under Paragraph 31(5) of the Turnover Tax Implementing Regulation (Umsatzsteuer-Durchführungsverordnung), in its version applicable to the main proceedings, an invoice may be corrected if it does not contain all the details required by Paragraphs 14(4) and 14a of the UStG or if details contained therein are inaccurate. To that end, it is sufficient to communicate the missing or corrected details by a document which refers specifically and unambiguously to the invoice. Such correction is subject to the same formal and substantive requirements as are laid down in Paragraph 14 of the UStG.

15In specific cases of inaccurate or wrongful VAT details, Paragraph 17(1) of the UStG applies by analogy. Under that provision, the correction of an invoice does not have retroactive effect, but takes effect for the period in which the corrected invoice is communicated to the customer or in which the request for correction is granted after any potential detriment to tax revenue has been ruled out.

16The referring court also explains that if the deduction is refused because parts of the invoice are missing or incorrect, the right of deduction can be obtained at the time of correction by correcting the invoice. In that case, the VAT receipts obtained by the tax authorities remain the same. However, this may result in an increased tax liability for the trader. If the deduction is refused only a number of years later, for example in connection with an on-the-spot inspection, interest for late payment under Paragraph 233a of the Tax Code (Abgabenordnung), as it applies in the period at issue in the main proceedings, gives rise to significant financial burdens.

II – The facts in the main proceedings

17Senatex GmbH (‘Senatex’) carries on a wholesale textile business. For the years 2008-2011 it showed in its tax returns an input tax deduction on the basis of commission statements issued by it to its sales representatives and on the basis of invoices from a commercial designer (together ‘the invoices at issue’).

18Between 11 February and 17 May 2013, Senatex was subject to an inspection by the Finanzamt Hannover-Nord (Hannover-Nord Tax Office) in relation to the years 2008-2011. In the course of the inspection, it was found that the invoices at issue submitted for the purposes of input tax deduction were not proper invoices within the meaning of Paragraphs 15(1) and 14(4) of the UStG. Neither the invoices themselves nor the annexed documents contained the tax number or the VAT identification number of the sales representatives concerned or commercial designer.

19On 2 May 2013, during the inspection period, Senatex corrected the commission statements, for the years 2009-2011 only, by adding the details of the tax number or the VAT identification number of each sales representative concerned. The invoices of the commercial designer were similarly rectified for the years 2009-2011.

20Notwithstanding those corrections, on 2 July 2013 the Finanzamt Hannover-Nord issued amended notices of tax assessment for the years 2008-2011 in which it stated that the input tax deductions in respect of the invoices at issue could not be made for the years 2009-2011 on the ground that the requirements for those deductions were met only when the corrections were made, namely in 2013, and not in the years 2009-2011.

21Senatex therefore lodged an objection against those amended notices of tax assessment. In addition, during those objection proceedings, it discovered that it had not issued corrections for the invoices at issue for 2008. On 11 February 2014, it accordingly corrected the commission statements for 2008 by adding the details of the tax number or the VAT identification number of the sales representatives concerned. The invoices of the commercial designer were similarly rectified for the year 2008.

22By decision of 3 March 2014, the Finanzamt Hannover-Nord maintained its view that the requirements for input tax deductions in respect of the invoices at issue were not met until those invoices had been corrected in 2013 and 2014. In its view, it is not possible for the correction of an invoice to be given retroactive effect to the time the supply was made, thus conferring an ex tunc effect.

23On 5 March 2014, Senatex brought an action against that decision at the referring court. It takes the view that the corrections made to the invoices have retroactive effect, namely for the years 2008-2011, as those corrections were made before the final administrative decision, namely the decision of 3 March 2014. It thus claims that the referring court should annul the amended notices of tax assessment issued by the Finanzamt Hannover-Nord for the years 2008-2011.

III – The questions referred for a preliminary ruling

24As the Niedersächsisches Finanzgericht (Finance Court of Lower Saxony) has doubts as to the interpretation of the Court’s judgments and of the provisions of the VAT directive, it decided to stay its proceedings and to refer the following questions for a preliminary ruling:

Is the ex nunc effect of the first issue of an invoice, as established by the Court of Justice in the judgment in Terra Baubedarf-Handel (C‑152/02, EU:C:2004:268), qualified by the judgments of the Court of Justice in Pannon Gép Centrum (C‑368/09, EU:C:2010:441) and Petroma Transports and Others (C‑271/12, EU:C:2013:297) as regards cases, such as the present, in which an incomplete invoice is completed, so that the Court of Justice ultimately intended to permit retrospective effect in such cases?

What are the minimum requirements for an invoice to be capable of correction with retrospective effect? Is it necessary that the original invoice bears a tax number or a VAT identification number, or can these be added later with the consequence that the right of deduction is retained on the basis of the original invoice?

Is a correction to an invoice timely if it is only made in the course of objection proceedings against the decision (amendment notice) of the tax authority?’

IV – My analysis

25By its first and second questions, the referring court is actually seeking to ascertain whether Articles 167, 178(a), 179 and 226(3) of the VAT directive must be interpreted as precluding national legislation such as that at issue in the main proceedings under which the correction of an invoice in relation to certain required details, namely the VAT identification number, does not have retroactive effect, with the result that the right to deduct VAT may be exercised only for the year when the initial invoice was corrected and not for the year when that invoice was drawn up.

26By its third question, the referring court asks whether the VAT directive must be interpreted as precluding national legislation or practice under which a taxable person is refused the right to deduct VAT where the correction of an invoice in relation to required details is made after the adoption of a decision refusing VAT deduction on the ground that those details had initially been omitted.

27The first and second questions raise issues regarding the consequences of the correction of an invoice for the time when the right of deduction may be exercised. Under the German legislation, the correction of the invoice gives rise to the exercise of the right to deduct VAT only for the year when the initial invoice was corrected, and not for the year when that invoice was drawn up.

28According to the German Government, under the provisions of the VAT directive, the right of deduction may be exercised only where two conditions are met at the same time. First, the right of deduction must arise in accordance with Article 167 of that directive and, second, the taxable person must meet the conditions laid down in Article 178 of the directive, which include holding an invoice drawn up in accordance with Articles 220 to 236 and 238 to 240 of the directive. When an invoice is corrected, those two conditions are met only when that correction is made and not when the initial invoice was drawn up. It follows that the right of deduction may not be exercised until the correction is made.

29I do not share that view for the following reasons.

30According to settled case-law, the right of deduction is a fundamental principle of the common system of VAT, which in principle may not be limited, and which is exercisable immediately in respect of all the taxes charged on transactions relating to inputs. ( *4 ) The right of deduction is therefore immediate and comprehensive. Furthermore, as the Court regularly points out, the deduction system is intended to relieve the trader entirely of the burden of the VAT due or paid in the course of all his economic activities. The common system of VAT therefore ensures that all economic activities, whatever their purpose or results, provided that they are, in principle, themselves subject to VAT, are taxed in a neutral way. ( *5 )

31Under Article 167 of the VAT directive, a right of deduction arises at the time the deductible tax becomes chargeable. The material conditions which must be met in order for that right to arise are set out in Article 168(a) of that directive. Thus, in order to be able to avail of that right, first, the interested party must be a taxable person within the meaning of that directive, second, the goods or services relied on to give entitlement to the right of deduction must be used by the taxable person for the purposes of his own taxed output transactions, and, as inputs, those goods or services must be supplied by another taxable person. ( *6 )

32The rules governing exercise of the right of deduction are set out in Article 178 of the VAT directive. In particular, the taxable person must hold an invoice drawn up in accordance with Article 226 of that directive, ( *7 ) which must include the VAT identification number. ( *8 )

33These conditions which must be fulfilled by the taxable person in order to exercise his right of deduction have been described as ‘formal conditions’ by the Court. ( *9 ) They do not constitute conditions to be fulfilled in order for the right to deduct VAT to arise, but they do allow the tax authorities to have all the information necessary to collect VAT and to exercise their supervision in order to prevent evasion. ( *10 )

34Where, in an inspection by the tax authorities for example, they find errors or omissions in the drawing up of the invoice, the taxable person has the possibility of correcting that invoice with a view to exercising his right of deduction. That possibility is provided for in Article 219 of the VAT directive, which states that ‘[a]ny document or message that amends and refers specifically and unambiguously to the initial invoice shall be treated as an invoice’. The Court has also ruled that that directive does not prohibit the correction of incorrect invoices. ( *11 )

35With that in mind, it is necessary to ascertain the temporal effects of the correction of an invoice on the right to deduct VAT.

36In this regard, the referring court mentions the judgments in Terra Baubedarf-Handel (C‑152/02, EU:C:2004:268), Pannon Gép Centrum (C‑368/09, EU:C:2010:441) and Petroma Transports and Others (C‑271/12, EU:C:2013:297). As far as the latter two judgments are concerned, whilst they do concern the correction of an invoice with a view to the exercise of the right of deduction, the question of the temporal effect of such correction on the exercise of the right of deduction was not addressed.

37Thus, in the judgment in Pannon Gép Centrum (C‑368/09, EU:C:2010:441), the question was whether the provisions of the VAT directive should be interpreted as precluding national legislation or practice whereby the right to deduct VAT was denied where the invoice relating to goods or services supplied to the taxable person had initially contained an error and the subsequent correction of that error did not comply with all the conditions set by the applicable national rules. ( *12 ) The Court therefore had to rule on whether the correction of an invoice with a view to the exercise of the right of deduction was possible and whether the Member States were able to impose conditions in addition to the material and formal conditions laid down by the VAT directive, in that case the sequential numbering of the corrected invoice. ( *13 ) In its judgment in Petroma Transports and Others (C‑271/12, EU:C:2013:297), the Court noted that the common system of VAT does not prohibit the correction of incorrect invoices but ruled that, with regard to the dispute in the main proceedings in that case, the information necessary to complete and regularise the invoices had been submitted after the tax authority had adopted its decision to refuse the right to deduct VAT, with the result that, before that decision was adopted, the invoices provided to that authority had not yet been rectified to enable it to ensure the correct collection of the VAT and to permit supervision thereof. ( *14 ) It must therefore be stated that the judgments in Pannon Gép Centrum (C‑368/09, EU:C:2010:441) and Petroma Transports and Others (C‑271/12, EU:C:2013:297) do not adopt a position on whether or not the correction of an invoice has retroactive effect on the exercise of the right of deduction.

38With regard to reliance on the case-law based on the judgment in Terra Baubedarf-Handel (C‑152/02, EU:C:2004:268) in support of the argument made by the German Government, it seems to me that this must be rejected. In that judgment the Court stated that the right to deduct VAT must be exercised in respect of the tax period in which the two conditions required under the first subparagraph of Article 18(2) of Sixth Directive 77/388/EEC ( *15 ) are satisfied. ( *16 ) In other words, added the Court, the goods must have been delivered or the services performed and the taxable person must be in possession of the invoice. ( *17 ) In the case at issue, Terra Baubedarf-Handel GmbH did not possess an invoice when it exercised its right to deduct VAT for services which had been supplied to it in the course of its business. It had not therefore been able to make payment and had not paid that VAT in the deduction period. In that case the VAT could not be regarded as being chargeable on a given transaction. ( *18 ) For that reason, the Court ruled that it is necessary for the two conditions required by the first subparagraph of Article 18(2) of Sixth Directive 77/388 to be met in order to respect the principle that the right of deduction must be exercised immediately in respect of all the taxes charged on transactions relating to inputs.

39That case giving rise to the judgment in Terra Baubedarf-Handel (C‑152/02, EU:C:2004:268) therefore differs from the present case in so far as Senatex, unlike Terra Baubedarf-Handel GmbH, possessed invoices when it exercised its right of deduction and had paid input VAT. That tax was thus charged on a transaction relating to inputs in the course of Senatex’s economic activity. In my view, that judgment cannot therefore be relied on in the present case in claiming that the Court prohibited the retroactive effect of the right to deduct VAT following the correction of an invoice.

40On the other hand, it seems to me that the judgment in Terra Baubedarf-Handel (C‑152/02, EU:C:2004:268) supports the opposite view. In paragraph 35 of that judgment, the Court reiterates the settled case-law according to which the right to deduct VAT must be exercised immediately in respect of all the taxes charged on transactions relating to inputs. The first paragraph of Article 179 of the VAT directive thus provides that ‘[t]he taxable person shall make the deduction by subtracting from the total amount of VAT due for a given tax period the total amount of VAT in respect of which, during the same period, the right of deduction has arisen and is exercised in accordance with Article 178’.

41The immediate character of the deduction is intended, inter alia, to ensure the neutrality of the common system of VAT and to avoid any financial risk for taxable persons by bearing the burden of the VAT in whole or in part. ( *19 ) That is why, under Article 179 of the VAT directive, the period in which the goods acquired or the service supplied were taxed, giving rise to the right of deduction, must coincide with the period in which the right of deduction is exercised. That principle is merely tempered in that directive such that Member States may require that taxable persons who carry out occasional transactions, as defined in Article 12 thereof, exercise their right of deduction only at the time of supply, ( *20 ) which is not the case here.

42If the correction of an invoice were considered to give rise to the exercise of the right of deduction only for the period in which that correction was made and not for the period in which the invoice was drawn up and paid, as in the main proceedings, that would run counter to the principle that that right is immediate. In addition, it would entail a significant financial risk for the taxable person in so far as, since the tax authorities consider that it could not exercise its right to deduct input VAT before the invoice is corrected, it could be liable for payment of interest for late payment, as is provided for, moreover, in the Tax Code, even though no fiscal loss is incurred by the Member State, as the VAT revenue ultimately remains the same. ( *21 )

43That said, I do not dispute the importance of the invoice in the common system of VAT. It is a form of proof which permits the collection and deduction of VAT. Thus, a trader who invoices the sale of goods or the supply of a service issues an invoice with VAT and collects that VAT on behalf of the State. Similarly, that invoice will enable a taxable person who has paid VAT to provide proof of this and thus to deduct the VAT. More specifically, the VAT identification number allows the tax authorities to levy VAT more easily, by identifying the taxable person concerned, and to verify that the transactions actually occurred, in order to prevent evasion.

44However, as the Court has ruled on several occasions, the principle of VAT neutrality requires deduction of input tax to be allowed if the substantive requirements are satisfied, even if the taxable person has failed to comply with some of the formal requirements. ( *22 ) This case-law is all the more relevant in this case in so far as the failure to state the VAT identification number was rectified by the taxable person, who corrected the invoices, thereby also complying with the formal requirements laid down by EU law.

45In this regard, although the Member States are required to verify declarations by taxable persons and to check all relevant documents in order to calculate the amount of tax or to verify that the transactions actually occurred, there is nothing to prevent them laying down penalties for failure to comply with those formal requirements. The penalty thus imposed would act as a deterrent, seeking to ensure the effectiveness of the obligation to enter on the invoice the details required by the VAT directive, encouraging the taxable person to be more diligent in future and allowing consideration to be given to the administrative expenses arising from the omission and necessary to correct that invoice. ( *23 ) However, Member States are required to exercise that power having due regard to EU law, in particular the principle of proportionality.

46At the hearing, the German Government stated that carrying forward the right of deduction and imposing interest for late payment on the defaulting taxable person, as in the main proceedings, replaced a penalty. However, in my view, that penalty does not comply with the principle of proportionality. The required details on the invoice, which include the VAT identification number, are intended to enable the tax authorities to ensure the correct collection of the VAT and to permit supervision in order to prevent evasion. As stated at the hearing, I cannot see how, in such a case, the tax authorities can differentiate between a taxable person acting in good faith and a fraudster. Moreover, it is easier for a fraudster to enter a false VAT identification number, counting on the fact that his return will slip through the net, than not to include it at all, which would, in contrast, attract the attention of the tax authorities and give them cause for an inspection. If we imagine a taxable person acting in good faith whose invoice submitted in his return did not contain a VAT identification number, he would, in all likelihood, expose himself to an inspection by the tax authorities and could find himself in the same situation as Senatex, that is to say, having his right of deduction carried forward and having interest for late payment imposed, with significant financial consequences. Such an approach would seem to lack legal certainty and to be incapable of combating evasion effectively. Furthermore, it could lead to a taxable person acting in good faith and a fraudster being penalised in the same way.

47In order to prevent abuse, Member States may, in my view, also adopt measures placing a temporal restriction on the possibility of submitting corrected invoices. This leads us to the referring court’s third question, by which it asks the Court if the VAT directive must be interpreted as precluding national legislation or practice under which a taxable person is refused the right to deduct VAT where the correction of an invoice in relation to required details is made after the adoption of a decision refusing VAT deduction on the ground that those details had initially been omitted.

48The VAT directive does not provide for the introduction of measures specifying a deadline, placing a temporal restriction on the correction of incorrect or incomplete invoices. Consequently, I consider that it is for the Member States to adopt such measures in their national law. They must ensure that the measures introduced comply with the principles of equivalence and effectiveness.

49In the case at hand, prohibiting any correction after a decision by the tax authorities refusing the exercise of right of deduction may seem excessive, thus rendering impossible in practice or excessively difficult the exercise of that right.

50In some cases, it may be only at the stage of an amended notice of tax assessment — aside from cases of fraud — that the taxable person becomes aware of an omission or an error in relation to required details on the invoice. Prohibiting any correction after a decision, such as an amended notice of tax assessment, could simply lead to a refusal of any correction of an incorrect or incomplete invoice. This would have the severe consequence of depriving the taxable person of his right of deduction, a fundamental right which makes it possible to ensure the principle of fiscal neutrality, especially since the error or omission may originate from the person who draws up the invoice, namely the seller of goods or the supplier of services.

51In my view, therefore, the judgment in Petroma Transports and Others (C‑271/12, EU:C:2013:297) must be qualified to a large extent in this regard. ( *24 )

52In the light of all the above considerations, I consider that Articles 167, 178(a), 179 and 226(3) of the VAT directive must be interpreted as precluding national legislation such as that at issue in the main proceedings under which the correction of an invoice in relation to certain required details, namely the VAT identification number, does not have retroactive effect, with the result that the right to deduct VAT may be exercised only for the year when the initial invoice was corrected and not for the year when that invoice was drawn up. In this regard, the Member States may adopt measures to penalise failure to provide the required details, as long as they comply with the principle of proportionality, and also measures placing a temporal restriction on the possibility of correcting an incorrect or incomplete invoice, provided they apply in the same way to similar rights in tax matters based on domestic law and to such rights based on EU law (principle of equivalence) and do not render impossible in practice or excessively difficult the exercise of the right of deduction (principle of effectiveness).

V – Conclusion

Conclusion

53In the light of the above considerations, I propose that the Court answer the questions referred by the Niedersächsisches Finanzgericht as follows:

Articles 167, 178(a), 179 and 226(3) 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 such as that at issue in the main proceedings under which the correction of an invoice in relation to certain required details, namely the VAT identification number, does not have retroactive effect, with the result that the right to deduct VAT may be exercised only for the year when the initial invoice was corrected and not for the year when that invoice was drawn up.

In this regard, the Member States may adopt measures to penalise failure to provide the required details, as long as they comply with the principle of proportionality, and also measures placing a temporal restriction on the possibility of correcting an incorrect or incomplete invoice, provided they apply in the same way to similar rights in tax matters based on domestic law and to such rights based on EU law (principle of equivalence) and do not render impossible in practice or excessively difficult the exercise of the right of deduction (principle of effectiveness).

( *1 ) Original language: French.

( *2 ) OJ 2006 L 347, p. 1, ‘the VAT directive’.

( *3 ) BGBl. 2005 I p. 386.

( *4 ) See judgment in PPUH Stehcemp (C‑277/14, EU:C:2015:719, paragraph 26 and the case-law cited).

( *5 ) See judgment in PPUH Stehcemp (C‑277/14, EU:C:2015:719, paragraph 27 and the case-law cited).

( *6 ) See judgment in PPUH Stehcemp (C‑277/14, EU:C:2015:719, paragraph 28 and the case-law cited).

( *7 ) See Article 178(a) of that directive.

( *8 ) See Article 226(3) of the VAT directive.

( *9 ) See judgments in Collée (C‑146/05, EU:C:2007:549, paragraph 25); Polski Trawertyn (C‑280/10, EU:C:2012:107, paragraph 41), and PPUH Stehcemp (C‑277/14, EU:C:2015:719, paragraph 29).

( *10 ) See, with regard to other obligations which Member States may impose to ensure the correct collection of VAT and to prevent evasion, judgments in Nidera Handelscompagnie (C‑385/09, EU:C:2010:627, paragraphs 49 and 50) and VSTR (C‑587/10, EU:C:2012:592, paragraphs 44 and 45).

( *11 ) Judgments in Pannon Gép Centrum (C‑368/09, EU:C:2010:441, paragraphs 43 to 45) and Petroma Transports and Others (C‑271/12, EU:C:2013:297, paragraph 34).

( *12 ) See paragraph 36 of that judgment.

( *13 ) See paragraphs 42 to 45 of that judgment.

( *14 ) See paragraphs 21, 34 and 35 of that judgment.

( *15 ) Sixth Council Directive of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1).

( *16 ) That provision was replaced by the first paragraph of Article 179 of the VAT directive.

( *17 ) Judgment in Terra Baubedarf-Handel (C‑152/02, EU:C:2004:268, paragraph 34).

( *18 ) Judgment in Terra Baubedarf-Handel (C‑152/02, EU:C:2004:268, paragraph 35).

( *19 ) With regard to carrying forward the VAT excess to the following tax period, see judgment in Commission v Hungary (C‑274/10, EU:C:2011:530, paragraph 45 and cited case-law).

( *20 ) See the second paragraph of Article 179 of the VAT directive.

( *21 ) See paragraph 5 of the decision referring the case.

( *22 ) See judgments in Nidera Handelscompagnie (C‑385/09, EU:C:2010:627, paragraphs 50 and 51) and Polski Trawertyn (C‑280/10, EU:C:2012:107, paragraph 43). See also, with regard to the obligation to declare when a taxable activity is to commence, judgment in Dankowski (C‑438/09, EU:C:2010:818, paragraphs 33 to 36) and, with regard to irregularities in accounts and tax returns affecting transactions subject to the reverse charge procedure, judgment in Ecotrade (C‑95/07 and C‑96/07, EU:C:2008:267, paragraph 63).

( *23 ) It should be noted in this regard that several Member States provide for such fines (see Article 70 of the Belgian Code de la TVA, Article 77 of the Luxembourg Loi concernant la taxe sur la valeur ajoutée or Article 1737 of the French Code général des impôts).

( *24 ) In that judgment the Court stated that ‘[i]t should be noted that the common system of VAT does not prohibit the correction of incorrect invoices. Accordingly, where all of the material conditions required in order to benefit from the right to deduct VAT are satisfied and, before the tax authority concerned has made a decision, the taxable person has submitted a corrected invoice to that tax authority, the benefit of that right cannot, in principle, be refused on the ground that the original invoice contained an error’ (paragraph 34, my italics).