C-540/09 Skandinaviska Enskilda Banken

JUDGMENT OF THE COURT (Fourth Chamber)

10 March 2011 (*)

(Reference for a preliminary ruling – Sixth VAT Directive – Article 13B(d)(5) – Exemptions – Underwriting guarantee provided against payment of a commission by credit institutions to the issuing companies in respect of a share issue on the capital markets – Transactions in securities)

In Case C‑540/09,

REFERENCE for a preliminary ruling under Article 267 TFEU from the Regeringsrätten (Sweden), made by decision of 10 December 2009, received at the Court on 21 December 2009, in the proceedings

Skandinaviska Enskilda Banken AB Momsgrupp

v

Skatteverket,

THE COURT (Fourth Chamber),

composed of J.‑C. Bonichot, President of the Chamber, K. Schiemann, C. Toader (Rapporteur), A. Prechal and E. Jarašiūnas, Judges,

Advocate General: N. Jääskinen,

Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 10 November 2010,

after considering the observations submitted on behalf of:

– Skandinaviska Enskilda Banken AB Momsgrupp, by J. Hefner, skattejurist,

– the Skatteverket, by M. Loeb, acting as Agent,

– the Swedish Government, by A. Falk, acting as Agent,

– Ireland, by D. O’Hagan, acting as Agent, and by A. Aston SC,

– the European Commission, by D. Triantafyllou and J. Enegren, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 16 December 2010,

gives the following

Judgment

Legal context and the dispute

1This reference for a preliminary ruling concerns the interpretation of Article 13B(a) and (d)(1), (2) and (5) of Sixth Council Directive 77/388/EEC 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) (‘the Sixth Directive’).

2The reference was made in the course of proceedings between Skandinaviska Enskilda Banken AB Momsgrupp (‘SEB’) and the Skatteverket (Swedish Tax Board) concerning the classification, for the purposes of exemption from value added tax (‘VAT’) of underwriting guarantee services.

Legal context

European Union law

3Article 2 of the Sixth Directive provides:

‘The following shall be subject to [VAT]:

1. the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such;

…’

4Under Article 13B of the Sixth Directive:

‘Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse:

(a) insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents;

…

(d) the following transactions:

(1) the granting and the negotiation of credit and the management of credit by the person granting it;

(2) the negotiation of or any dealings in credit guarantees or any other security for money and the management of credit guarantees by the person who is granting the credit;

…

(5) transactions, including negotiation, excluding management and safe keeping, in shares, interests in companies or associations, debentures and other securities, excluding:

– documents establishing title to goods,

– the rights or securities referred to in Article 5(3),

…’

National law

5Chapter 1, Paragraph 1, of the Law (1994:200) on value added tax (mervärdesskattelagen (1994:200)) of 30 March 1994 (SFS 1994 No 200; ‘the ML’) provides:

‘[VAT] is payable to the State in accordance with this Law

1. on supplies within the territory of the State of goods or services which are subject to tax and carried out as part of a professional activity;

…’

6Chapter 3, Paragraph 9, of the ML provides:

‘Supplies of banking and financial services and transactions involving securities and comparable activities are exempt from taxation.

Banking and financial services shall not include notarial activity, collection of invoices or administrative services relating to factoring or the leasing of storage facilities.

“Transactions in securities” shall mean

1. trading and brokerage of shares, other equities and debts, whether or not represented by instruments, and

2. management of investment funds pursuant to Law (2004:46) on investment funds.’

7Chapter 3, Paragraph 10, of the ML states as follows:

‘Supplies of insurance and reinsurance services, including services supplied by brokers or other insurance intermediaries relating to insurance or reinsurance, shall be exempt from VAT.’

The facts of the main proceedings and the question referred for a preliminary ruling

8SEB is a Swedish credit institution at the head of a ‘VAT group’ (‘mervärdesskattegrupp’). That credit institution also supplies company financing services in conjunction with the issue of financial instruments.

9During 2002, SEB, with another company in the same VAT group, supplied to a third company underwriting guarantees pursuant to which the members of that group undertook to acquire any shares in that company which were not subscribed at the end of the subscription period (‘the underwriting guarantee’). The members of the group were remunerated for the supply of that guarantee by payment of a commission.

10Taking the view that the supply of underwriting guarantees benefited from exemption from VAT, that group neither invoiced nor accounted for VAT in respect of the payment of that commission.

11Following a tax audit carried out in 2005, the Skatteverket took the view that the supply of underwriting guarantees did not constitute a transaction exempt from VAT and, by decision of 30 December 2005, issued an additional VAT assessment for the accounting period pertaining to the month of October 2002.

12That decision was challenged by SEB before the länsrätten i Stockholms län (Regional Administrative Court, Stockholm), which dismissed the action.

13The VAT group appealed against that judgment before the Kammarrätten i Stockholm (Administrative Court of Appeal, Stockholm). Since that court dismissed the appeal, SEB lodged a further appeal before the Regeringsrätten (Supreme Administrative Court), arguing that the underwriting guarantee at issue can be compared to other services supplied in the financial sector without giving rise to payment of VAT, such as transactions in securities, insurance, granting of credit, guarantees, or put options.

14In that regard, the referring court states first that, under Swedish case-law, the issue of underwriting guarantees does not constitute an exempted transaction for the purposes of Article 13B(d)(5) of the Sixth Directive (transactions in securities).

15Nevertheless, the Regeringsrätten finds that there are divergences between the national laws of a number of Member States as regards the application of the exemption provided for by that provision of the Sixth Directive to underwriting guarantee services. Thus, in Ireland and in the United Kingdom, express exemption from VAT has been introduced for such services in particular.

16In addition, the referring court points out that, in its case-law on the interpretation of the exemptions under Article 13B(a) or (d)(1), (2) and (5) of the Sixth Directive, the Court has not given any clear indication as to whether one of those exemptions is applicable to services consisting in the issue of underwriting guarantees.

17In those circumstances, the Regeringsrätten decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Is Article 13B of the [Sixth Directive] to be interpreted as meaning that the [VAT] exemptions provided for therein also include services (underwriting) which involve a credit institution providing, for consideration, a guarantee to a company which is about to issue shares, where under that guarantee the credit institution undertakes to acquire any shares which are not subscribed within the period for share subscription?’

Consideration of the question referred

Preliminary observations

18Before analysing the legal basis of any exemption of an underwriting guarantee such as that at issue in the main proceedings, it is appropriate to state that that guarantee falls within the scope of the Sixth Directive inasmuch as it constitutes a supply of services effected for consideration within the meaning of Article 2(1) of that directive, having regard to the fact that there is a legal relationship between the issuer and the guarantor and that the commission received by the latter from the issuer represents the value actually given in return for the guarantee supplied to the issuer by the guarantor (see, to that effect, Case C‑16/93 Tolsma [1994] ECR I‑743, paragraph 14; Case C‑172/96 First National Bank of Chicago [1998] ECR I‑4387, paragraph 26; and Case C‑270/09 MacDonald Resorts [2010] ECR I‑0000, paragraph 16).

19It must be borne in mind that, in accordance with the case-law of the Court, the exemptions referred to in Article 13 of the Sixth Directive constitute independent concepts of European Union law whose purpose is to avoid divergences in the application of the VAT system as between one Member State and another (see, in particular, Case C‑349/96 CPP [1999] ECR I‑973, paragraph 15, and Case C‑473/08 Eulitz [2010] ECR I‑0000, paragraph 25 and the case-law cited).

20As regards whether such an underwriting guarantee can be exempted from VAT under Article 13B(a) or (d)(1), (2) or (5) of the Sixth Directive, it must be borne in mind that the terms used to specify the exemptions in Article 13 of the Sixth Directive are to be interpreted strictly, since those exemptions constitute exceptions to the general principle that VAT is to be levied on all services supplied for consideration by a taxable person. Nevertheless, the interpretation of those terms must in particular be consistent with the objectives pursued by those exemptions and comply with the requirements of the principle of fiscal neutrality inherent in the common system of VAT. Thus, the requirement of strict interpretation does not mean that the terms used to define the exemptions referred to in Article 13 should be construed in such a way as to deprive the exemptions of their intended effect (see Eulitz, paragraph 27 and the case-law cited).

21Finally, with regard to the reasons underlying the adoption of VAT exemptions for the transactions set out in Article 13B, it is apparent from the case-law of the Court that the purpose of those exemptions is to alleviate the difficulties connected with determining the tax base and the amount of VAT deductible and to avoid an increase in the cost of consumer credit (Case C‑455/05 Velvet & Steel Immobilien [2007] ECR I‑3225, paragraph 24).

22It is in the light of those considerations that the answer must be given to the question referred.

Exemption under Article 13B(d)(5) of the Sixth Directive

23Although it is not excluded that the underwriting guarantee at issue in the main proceedings may fall within a number of categories of transactions exempt from VAT under Article 13B(a) or (d)(1), (2) and (5) of the Sixth Directive, having regard to the observations submitted to the Court in the proceedings before it, the question referred must first be considered in the light of the provisions of Article 13B(d)(5) of that directive concerning transactions in securities.

Observations submitted to the Court

24SEB argues that the underwriting guarantee service at issue in the main proceedings is autonomous in nature in Sweden and can be dissociated from the overall service of issuing securities. Furthermore, it states that, in the present case, the underwriting guarantee was issued by entities other than those which carried out the share issue.

25While agreeing that this underwriting guarantee service does not constitute an element in a group of financial services and that it should be assessed separately for VAT purposes, the Swedish Government takes the view that that service is not exempt from VAT pursuant to Article 13B(d)(5) of the Sixth Directive.

26As regards the classification of that service, SEB, supported in its view by the European Commission, argues that that underwriting guarantee service represents a transaction in securities such as defined in the case-law of the Court, since it is liable to create, alter or extinguish parties’ rights and obligations in respect of securities and to alter the legal and economic conditions between parties within the meaning of the judgments in Case C‑2/95 SDC [1997] ECR I‑3017, paragraphs 72 and 73, and in Case C‑235/00 CSC Financial Services [2001] ECR I‑10237, paragraph 33.

27Ireland submits that, in that Member State, an underwriting guarantee represents only one element in a global and indivisible service connected with the issue of securities which includes, inter alia, advisory and marketing services. That global service is exempt from VAT in Ireland in so far as it constitutes a transaction in securities falling within Article 13B(d)(5) of the Sixth Directive.

28The Skatteverket takes the view that the grant of an underwriting guarantee cannot be regarded as a transaction in securities since, of itself, an underwriting guarantee does not create, alter or extinguish rights or obligations concerning ownership of shares. Those legal effects are produced as between the guarantor and the issuer only if the issue was not entirely covered by other investors and if the guarantor was called upon to subscribe the unsubscribed remainder thereof. It would therefore be only in that hypothetical situation that exemption from VAT would be possible. However, if the issue were entirely covered by market investors, there would be no alteration to the rights and obligations pertaining to the ownership of the shares and, accordingly, no exemption would be possible.

Answer of the Court

29It must first be borne in mind that, having regard to the observations submitted to the Court by SEB and the Swedish Government, which are in agreement on this subject, clearly, in Sweden, the underwriting guarantee in question can be regarded as a stand-alone service which can be supplied autonomously and not as a service linked to other services supplied during a share issue.

30In order to answer the question referred, it must be borne in mind that, with regard to the scope of the exemption based on Article 13B(d)(5) of the Sixth Directive, the Court has held that transactions in shares and other securities are transactions on the market in marketable securities and that trade in securities involves acts which alter the legal and financial situation as between the parties (SDC, paragraphs 72 and 73).

31Nevertheless, the Court has also held that transactions in securities within the meaning of Article 13B(d)(5) of the Sixth Directive refer to transactions which are liable to create, alter or extinguish parties’ rights and obligations in respect of securities (CSC Financial Services, paragraph 33).

32In the light of the criterion thus applied by the Court in the judgment in CSC Financial Services, that is to say, the amendment, even potential, of the legal and financial situation as between the parties concerned, it must be found that, in the present case, as the Advocate General noted in point 53 of his Opinion, the underwriting guarantee at issue in the main proceedings meets the requirements laid down in that case-law.

33Even if the share issue were ultimately to be entirely covered by market investors, so that the purchase of the remaining shares by the guarantor were no longer necessary, conclusion of a contract for an underwriting guarantee, such as that at issue in the main proceedings, would be liable of itself to create, alter or extinguish rights in ownership of shares, such a possibility being alone sufficient to classify such an underwriting guarantee as a transaction in securities within the meaning of that case-law.

34Furthermore, following the position of the Skatteverket, a credit institution which has granted a guarantee in respect of a share issue which led to the full subscription by market investors of the shares issued would not benefit, in respect of such a transaction, from exemption from VAT since there would be no transfer of shares between the parties and, accordingly, no effective alteration of their rights and obligations as regards ownership of shares.

35However, if another credit institution granted the same type of underwriting guarantee in respect of a share issue which was not fully subscribed and was then obliged to purchase the shares not subscribed, such a transaction which, contrary to the submission of the Skatteverket, falls within the scope of the Sixth Directive and is autonomous as regards the share issue, would be exempt from VAT since, in that case, there would be effective alteration to the rights and obligations of the parties as regards ownership of shares.

36In those circumstances, an interpretation of Article 13B(d)(5) of the Sixth Directive according to which an underwriting guarantee service would or would not be exempt from VAT depending on whether the shares issued were fully or partially subscribed would be contrary to the principle of fiscal neutrality on which, in particular, the common system of VAT established by the Sixth Directive is based, and which precludes economic operators carrying out the same transactions being treated differently in relation to the levying of VAT (Case C‑363/05 JP Morgan Fleming Claverhouse Investment Trust and The Association of Investment Trust Companies [2007] ECR I‑5517, paragraph 29 and the case-law cited).

37Since an underwriting guarantee such as that at issue in the main proceedings is exempt from VAT as a transaction in securities within the meaning of Article 13B(d)(5) of the Sixth Directive, it is no longer necessary, for the purposes of the resolution of the dispute in the main proceedings and thus of the answer to be given to the referring court, also to consider such a guarantee in the light of Article 13B(a) or (d)(1) and (2) of the Sixth Directive.

38Having regard to the foregoing, the answer to the question referred is that Article 13B(d)(5) of the Sixth Directive must be interpreted as meaning that the exemption from VAT laid down therein covers services supplied by a credit institution, for consideration, in the form of an underwriting guarantee to a company wishing to issue shares, where under that guarantee the credit institution undertakes to acquire any shares which are not subscribed within the period for share subscription.

Costs

39Since 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 13B(d)(5) of Sixth Council Directive 77/388/EEC 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 must be interpreted as meaning that the exemption from value added tax laid down therein covers services supplied by a credit institution, for consideration, in the form of an underwriting guarantee to a company wishing to issue shares, where under that guarantee the credit institution undertakes to acquire any shares which are not subscribed within the period for share subscription.

Signatures

[Signatures]

Notes

* Language of the case: Swedish.

JUDGMENT OF THE COURT (Third Chamber)

22 December 2010 (*)

(Sixth VAT Directive – Right to deduct input VAT – Services provided – Taxable person not registered for VAT – Details required on the VAT invoice – National tax legislation – Exclusion of right to deduct under Article 17(6) of the Sixth VAT Directive)

In Case C‑438/09,

REFERENCE for a preliminary ruling under Article 234 EC from the Naczelny Sąd Administracyjny (Poland), made by decision of 14 July 2009, received at the Court on 9 November 2009, in the proceedings

Bogusław Juliusz Dankowski

v

Dyrektor Izby Skarbowej w Łodzi,

THE COURT (Third Chamber),

composed of K. Lenaerts, President of the Chamber, D. Šváby, R. Silva de Lapuerta (Rapporteur), E. Juhász and T. von Danwitz, Judges,

Advocate General: P. Mengozzi,

Registrar: K. Malacek, Administrator,

having regard to the written procedure and further to the hearing on 11 November 2010,

after considering the observations submitted on behalf of:

– Bogusław Juliusz Dankowski, by R. Grzejszczak, J. Skrzydło, T. Grzejszczak and A. Kania, adwokaci,

– the Polish Government, by A. Kramarczyk, M. Szpunar and B. Majczyna, acting as Agents,

– the German Government, by C. Blaschke and J. Möller, acting as Agents,

– the Greek Government, by Z. Chatzipavlou, D. Tsagkaraki and K. Georgiadis, acting as Agents,

– the European Commission, by D. Triantafyllou, A. Stobiecka‑Kuik and K. Herrmann, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

Introduction

1This reference for a preliminary ruling concerns the interpretation of Article 17(2) and (6) and Articles 18 and 22 of the Sixth Council Directive 77/388/EEC 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), in the version in force at the material time.

2The reference has been made in proceedings between Mr Dankowski and the Dyrektor Izby Skarbowej w Łodzi (the Director of the Łodź tax chamber) concerning a restriction imposed on the right to deduct value added tax (‘VAT’).

Legal context

European Union law

3Under Article 2 of the Sixth Directive:

‘The following shall be subject to value added tax:

1. the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such;

…’.

4Article 4 of that Directive provides:

‘1 “Taxable person” shall mean any person who independently carries out in any place any economic activity specified in paragraph 2, whatever the purpose or results of that activity.

2. The economic activities referred to in paragraph 1 shall comprise all activities of producers, traders and persons supplying services including mining and agricultural activities and activities of the professions. …

…’.

5Under Article 17 of the Sixth Directive:

‘1. The right to deduct shall arise at the time when the deductible tax becomes chargeable.

2. In so far as the goods and services are used for the purposes of his taxable transactions, the taxable person shall be entitled to deduct from the tax which he is liable to pay:

(a) [VAT] due or paid within the territory of the country in respect of goods or services supplied or to be supplied to him by another taxable person;

…

6. Before a period of four years at the latest has elapsed from the date of entry into force of this Directive, the Council, acting unanimously on a proposal from the Commission, shall decide what expenditure shall not be eligible for a deduction of value added tax. Value added tax shall in no circumstances be deductible on expenditure which is not strictly business expenditure, such as that on luxuries, amusements or entertainment.

Until the above rules come into force, Member States may retain all the exclusions provided for under their national laws when this Directive comes into force.

…’.

6Article 18(1)(a) of the Sixth Directive provides:

‘To exercise his right to deduct, the taxable person must:

(a) in respect of deductions under Article 17(2)(a), hold an invoice drawn up in accordance with Article 22(3) ...’.

7In accordance with Article 22(1) of that directive:

‘(a) Every taxable person shall state when his activity as a taxable person commences, changes or ceases. …

…

(c) Member States shall take the measures necessary to identify by means of an individual number:

– Every taxable person … who, within the territory of the country, effects supplies of goods or of services giving him the right of deduction, other than supplies of goods or of services for which tax is payable solely by the customer or the recipient …’.

8Article 22(3) of the Sixth Directive is worded as follows:

‘(a) Every taxable person shall ensure that an invoice is issued … in respect of … services which he has supplied or rendered to another taxable person …

(b) Without prejudice to the specific arrangements laid down by this Directive, only the following details are required for VAT purposes on invoices issued under … point (a) …:

– the date of issue;

– a sequential number …;

– the VAT identification number referred to in paragraph 1(c) under which the taxable person supplied the … services;

– [where the customer is liable to pay tax on goods supplied or services rendered]… the [customer’s] VAT identification number referred to in paragraph 1(c) under which the …..services [were] rendered to him …,

– the full name and address of the taxable person and of his customer,

– the quantity and nature … of the services rendered,

– the date on which the supply … of services was made or completed …,

– …’

9Article 22(8) of the Sixth VAT Directive provides:

‘Member States may impose other obligations which they deem necessary for the correct collection of the tax and for the prevention of evasion …

The option provided for in the first subparagraph cannot be used to impose additional obligations over and above those laid down in paragraph 3.’

National legislation

10Article 96 of the Law of 11 March 2004 on the tax on goods and services (ustawa o podatku od towarów i usług), in the version applicable to the facts of the main proceedings, provides that taxable persons are required, before commencing their activity, to submit to the competent tax authority, an application for registration.

11Article 88(3)(1)(a) of that Law provides that invoices cannot form the basis for the right to deduct tax payable and for a refund of the tax difference or for a refund of input tax, where the sale is supported by invoices issued by a trader who does not exist or is not entitled to issue invoices.

12The order for the implementation of that Law, adopted by the Minister for Finance, provides that taxable persons registered as active taxable persons for the purposes of VAT who hold a tax identification number are to issue invoices marked with the words ‘VAT invoice’.

13Article 48(4)(1)(a) of that order provides that, where the sale of goods or services is supported by invoices issued by a trader who does not exist or is not entitled to issue invoices, such invoices cannot serve as the basis for the right to deduct tax payable and for a refund of the tax difference or for a refund of input tax.

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

14Mr Dankowski, the applicant in the main proceedings, is the owner of an undertaking named Dan‑Trak. Between 2004 and 2006, a Mr Płacek, the manager of an undertaking named Artem‑Studio, supplied him with a number of taxable marketing services. However, Mr Płacek had neither complied with the requirement to register for the tax on goods and services, nor paid VAT, although he had issued invoices documenting the services provided and specifying the tax payable.

15By decision of 23 March 2007 the Dyrektor Izby Skarbowej w Łodzi, while not questioning that the services concerned had been provided, refused Mr Dankowski the right to deduct the input VAT, as detailed on the invoices drawn up by Mr Płacek.

16The stated grounds for that decision were that the person who had issued the invoices concerned was not registered as a taxable person for VAT and that, because of the failure to comply with the requirement of registration imposed by the relevant provisions of national law, the invoices issued by that trader did not give rise to a right to deduct the input VAT.

17Mr Dankowski then brought before the Wojewódzki Sąd Administracyjny w Łodzi (the Łódź administrative court) an action for annulment of that decision. In support of his action, Mr Dankowski claimed, inter alia, that the registration of a trader as a taxable person liable to pay VAT is no more than a technicality which can have no effect on the right to deduct input tax.

18By judgment of 4 December 2007 the Wojewódzki Sąd Administracyjny w Łodzi dismissed the action.

19In an appeal on a point of law brought before the Naczelny Sąd Administracyjny, Mr Dankowski relied, inter alia, on the fact that the application of the provisions of Polish tax law was not compatible with European Union law, and he claimed that Article 17(6) of the Sixth Directive had been interpreted incorrectly.

20In those circumstances, the Naczelny Sąd Administracyjny decided to stay the proceedings and to refer to the Court the following questions for a preliminary ruling:

‘(1) Do the rules of the [VAT] system, in particular Article 17(6) of the Sixth Directive … preclude legislation of a Member State under which a taxable person does not acquire the right to deduct input tax arising from a VAT invoice issued by a trader who is not registered as a taxable person for the purposes of the tax on goods and services?

(2) Is it relevant to the answer to the first question that:

(a) there is no doubt that the transactions indicated on the VAT invoice are subject to VAT and that they have actually been carried out;

(b) the invoice contained all the details required under Community legislation;

(c) the restriction on the taxable person’s right to deduct input tax arising from an invoice issued by an unregistered trader operated in national law prior to the date on which the Republic of Poland acceded to the Community?

(3) Does the answer to the first question depend on additional criteria being satisfied (for example, proof that the taxable person acted in good faith)?’

Consideration of the questions referred for a preliminary ruling

21By the three questions referred, which can be examined together, the referring court asks, in essence, whether, in the circumstances of the main proceedings and taking into consideration Articles 18(1)(a) and 22(3)(b) of the Sixth Directive, a taxable person has the right of deduction in respect of VAT paid on services supplied by another taxable person who is not registered for VAT purposes and, if the answer is that he does, whether Article 17(6) of that directive precludes national legislation which excludes the right of deduction where services have been supplied by such a taxable person.

The first part of the questions referred for a preliminary ruling

22It must be borne in mind, first, that, the right of deduction provided for in Article 17(2) of the Sixth Directive is an integral part of the VAT scheme and in principle may not be limited (see Case C‑409/99 Metropol and Stadler [2002] ECR I‑81, paragraph 42, and Case C‑465/03 Kretztechnik [2005] ECR I‑4357, paragraph 33).

23The right to deduct is exercisable immediately in respect of all the taxes charged on input transactions (see Case C‑437/06 Securenta [2008] ECR I‑1597, paragraph 24; Case C‑102/08 SALIX Grundstücks-Vermietungsgesellschaft [2009] ECR I‑4629, paragraph 70, and Case C‑29/08 SKF [2009] ECR I‑10413, paragraph 55).

24The deduction system thus established is intended to relieve the trader entirely of the burden of the VAT payable or paid in the course of all his economic activities. The common system of VAT consequently ensures neutrality of taxation of all economic activities, whatever their purpose or results, provided that they are themselves subject in principle to VAT (see Case C‑137/02 Faxworld [2004] ECR I‑5547, paragraph 37, and SKF, paragraph 56).

25As regards the dispute in the main proceedings, it is common ground that the services concerned were provided by a trader as input transactions and that those services were used by the applicant in the main proceedings for the purposes of his taxed output transactions.

26Consequently, the substantive conditions governing the origin of the right of deduction, provided for in Article 17(2) of the Sixth Directive, are satisfied.

27As regards the rules governing the exercise of the right of deduction, Article 18(1)(a) of the Sixth Directive provides that the taxable person must hold an invoice drawn up in accordance with Article 22(3) of that directive.

28Article 22(3)(b) lists the details which are required, for the purposes of VAT, on invoices issued in accordance with the provisions of Article 22(3)(a) of the Sixth Directive, the latter provision stating that every taxable person must ensure that an invoice is issued in respect of services supplied by him to another taxable person.

29As regards the details listed in Article 22(3)(b) of the Sixth Directive, the referring court has found that the invoices submitted by the applicant in the main proceedings contain all the information required by that provision. It is apparent in particular from the documents submitted to the Court, and from the information provided by the Polish Government at the hearing, that those invoices contained the tax identification number of the person providing the services concerned, that number being automatically allocated to traders by the Polish tax authorities, irrespective of whether an application for registration has been submitted by them.

30Even though that provision refers to the ‘VAT identification number’, it is clear that the tax identification number allocated in this particular case ensures that the taxable person concerned can be identified and therefore is such as to meet the requirements of the third indent of Article 22(3)(b) of the Sixth Directive.

31However, as observed by the referring court, although that service provider issued invoices relating to the services supplied to the applicant in the main proceedings, he had not applied for registration with the competent authority for the purposes of VAT.

32Article 22(1) of the Sixth Directive provides that every taxable person is to declare when his taxable activity is to commence.

33However, notwithstanding the importance of such registration if the VAT system is to operate properly, a failure on the part of a taxable person to meet that requirement cannot impinge on the right of deduction conferred on another taxable person by Article 17(2) of the Sixth Directive.

34Article 22(1) of the Sixth Directive provides only that there is an obligation on taxable persons to state when their activity commences, changes or ceases, but that provision in no way authorises Member States, in the event of such a declaration not being submitted, to defer the exercise of the right to deduct until the time at which taxable transactions actually begin to be carried out on a regular basis, or to deprive the taxable person of that right (see Joined Cases C‑110/98 to C‑147/98 Gabalfrisa and Others [2000] ECR I‑1577, paragraph 51, and Case C‑385/09 Nidera Handelscompagnie [2010] ECR I‑0000, paragraph 48).

35Therefore, where the competent tax authority has the information necessary to establish that the taxable person is, as the recipient of marketing services, liable to VAT, it cannot impose, in relation to the right of that taxable person to deduct input tax, additional conditions which may have the effect of rendering that right ineffective for practical purposes (see Joined Cases C‑95/07 and C‑96/07 Ecotrade [2008] ECR I‑3457, paragraph 64, and Case C‑392/09 Uszodaépítő [2010] ECR I‑0000, paragraph 40).

36Accordingly, any failure by the service provider to meet the requirement stated in Article 22(1) of the Sixth Directive cannot call in question the right of deduction to which the recipient of those services is entitled under Article 17(2) of that directive.

37The same is true of Article 22(8) of the Sixth Directive, pursuant to which the Member States may impose other obligations which they deem necessary for the correct collection of the tax and for the prevention of evasion. Although that provision allows Member States to take certain measures, those measures must not however go further than is necessary to attain that objective and may not therefore be used in such a way that they would have the effect of systematically undermining the right to deduct VAT, which is a fundamental principle of the common system of VAT (see Joined Cases C‑286/94, C‑340/95, C‑401/95 and C‑47/96 Molenheide and Others [1997] ECR I‑7281, paragraph 47, Gabalfrisa and Others, paragraph 52 and Ecotrade, paragraphs 65 and 66).

38It follows from the foregoing that Articles 18(1)(a) and 22(3)(b) of the Sixth Directive must be interpreted as meaning that a taxable person has the right to deduct VAT paid in respect of services supplied by another taxable person who is not registered for VAT, where the relevant invoices contain all the information required by Article 22(3)(b), in particular the information needed to identify the person who drew up those invoices and to ascertain the nature of the services provided.

The second part of the questions referred for a preliminary ruling

39Consequently, since, pursuant to the Sixth Directive, the applicant in the main proceedings has the right of deduction, the referring court seeks to ascertain whether Article 17(6) of the Sixth Directive must be interpreted as precluding national legislation which excludes the right to deduct VAT paid by a taxable person to another taxable person, who has provided services, where the latter is not registered for VAT.

40In that regard, it must be borne in mind that that provision is a derogation which enables, in certain circumstances, Member States to retain their existing legislation in respect of exclusion from the right of deduction, as at the date of entry into force of the Sixth Directive for the Member State concerned, until such time as the Council has adopted the provisions envisaged by that article (see Case C‑371/07 Danfoss and AstraZeneca [2008] ECR I‑9549, paragraph 28, and Joined Cases C‑538/08 and C‑33/09 X Holding and Oracle Nederland [2010] ECR I‑0000, paragraph 38).

41As regards the scope of that provision, the Court has held that the power granted to the Member States in Article 17(6) of the Sixth Directive does not constitute an unfettered discretion to exclude all, or virtually all, goods and services from the right to deduct VAT, and thus to render meaningless the system established in Article 11(1) of that Directive. That power does not therefore apply to general exclusions and does not release Member States from the obligation sufficiently to define the goods and services in relation to which the right to deduct is excluded (see Case C‑305/97 Royscot and Others [1999] ECR I‑6671 paragraphs 22 and 24; Case C‑434/03 Charles and Charles-Tijmens [2005] ECR I‑7037, paragraphs 33 and 35, and Case C‑395/09 Oasis East [2010] ECR I‑0000, paragraph 23).

42Furthermore, as the scheme here involves a derogation from the principle of the right to deduct VAT, it must be interpreted strictly (see Case C‑414/07 Magoora [2008] ECR I‑10921, paragraph 28, and Oasis East, paragraph 24).

43So far as concerns the main proceedings and the possible applicability of the derogation provided for in Article 17(6) of the Sixth Directive to the present case, it must be noted that that directive entered into force in Poland on the date of the accession of that Member State to the European Union, namely 1 May 2004. Therefore, that is the material date for the purposes of the application of the abovementioned provision in respect of that Member State (Oasis East, paragraph 25).

44For the purposes of assessing the national legislation at issue in the main proceedings in the light of Article 17(6) of the Sixth Directive and the abovementioned case‑law, it is clear that that legislation constitutes a general measure which excludes the right to deduct input VAT in relation to any transaction carried out by a taxable person who has not complied with the requirement of registration for the purposes of VAT.

45However, such legislation entails a restriction on the right to deduct VAT which goes beyond what is authorised by Article 17(6) of the Sixth Directive.

46The Court has ruled that the Member States are not empowered to maintain exclusions from the right to deduct VAT which apply in a general manner to any expenditure related to the acquisition of goods or services (Case C‑74/08 PARAT Automotive Cabrio [2009] ECR I‑3459, paragraphs 28 and 29, and Oasis East, paragraph 30).

47It follows from all of the foregoing that Article 17(6) of the Sixth Directive must be interpreted as precluding national legislation which excludes the right to deduct VAT paid by a taxable person to another taxable person, who has provided services, where the latter has not registered for the purposes of that tax.

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.

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

1. Articles 18(1)(a) and 22(3)(b) of the Sixth Council Directive 77/388/EEC 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, as amended by Council Directive 2006/18/EC of 14 February 2006, must be interpreted as meaning that a taxable person has the right to deduct value added tax paid in respect of services supplied by another taxable person who is not registered for that tax, where the relevant invoices contain all the information required by Article 22(3)(b), in particular the information needed to identify the person who drew up those invoices and to ascertain the nature of the services provided.

2. Article 17(6) of the Sixth Directive 77/388 as amended by Directive 2006/18 must be interpreted as precluding national legislation which excludes the right to deduct value added tax paid by a taxable person to another taxable person, who has provided services, where the latter has not registered for the purposes of that tax.

Signatures

[Signatures]

Notes

* Language of the case: Polish.