C-56/21 ARVI ir ko

JUDGMENT OF THE COURT (Second Chamber)

30 June 2022 ( *1 )

(Reference for a preliminary ruling – Taxation – Common system of value added tax (VAT) – Directive 2006/112/EC – Article 137 – Optional tax liability scheme – Conditions – National legislation which makes the right of a taxable person to opt to charge VAT on the sale of immovable property conditional on the transfer of that property to a taxable person already registered for VAT purposes – Obligation to adjust VAT deductions where that condition is not satisfied – Principles of fiscal neutrality, of effectiveness and of proportionality)

In Case C‑56/21,

REQUEST for a preliminary ruling under Article 267 TFEU from the Mokestinių ginčų komisija prie Lietuvos Respublikos vyriausybės (Tax Disputes Commission under the Government of the Republic of Lithuania), made by decision of 16 October 2020, received at the Court on 29 January 2021, in the proceedings

UAB ‘ARVI’ ir ko

v

Valstybinė mokesčių inspekcija prie Lietuvos Respublikos finansų ministerijos,

THE COURT (Second Chamber),

composed of A. Prechal, President of the Chamber, J. Passer, F. Biltgen (Rapporteur), N. Wahl and M.L. Arastey Sahún, Judges,

Advocate General: J. Kokott,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

UAB ‘ARVI’ ir ko, by L. Augustinavičienė and A. Paulauskas, advokatai,

the Lithuanian Government, by K. Dieninis and V. Kazlauskaitė-Švenčionienė, acting as Agents,

the European Commission, by J. Jokubauskaitė and L. Lozano Palacios, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 24 March 2022,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of Articles 135 and 137 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1) (‘the VAT Directive’), as well as the principles of fiscal neutrality, of effectiveness and of proportionality.

2The request has been made in proceedings between UAB ‘ARVI’ ir ko (‘Arvi’) and the Valstybinė mokesčių inspekcija prie Lietuvos Respublikos finansų ministerijos (State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania; ‘the State Tax Inspectorate’) concerning the exercise of the right of option for taxation in respect of immovable property sold to a taxable person not registered for value added tax (VAT) purposes at the time of the sale and the detailed rules for the implementation of the right to deduct input VAT.

Legal context

European Union law

3Article 135(1) of the VAT Directive provides:

‘Member States shall exempt the following transactions:

…

the supply of a building or parts thereof, and of the land on which the building stands, other than the supply [before first occupation of a building];

…’

4Article 137 of that directive states:

‘1. Member States may allow taxable persons a right of option for taxation in respect of the following transactions:

…

the supply of a building or parts thereof, and of the land on which the building stands, other than the supply [before first occupation of a building];

…

2. Member States shall lay down the detailed rules governing exercise of the option under paragraph 1.

Member States may restrict the scope of that right of option.’

5According to Article 168 of that directive:

‘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 213(1) of that directive provides:

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

7Article 214(1) of the VAT Directive provides:

‘Member States shall take the measures necessary to ensure that the following persons are identified by means of an individual number:

every taxable person, with the exception of those referred to in Article 9(2), who within their respective territory carries out supplies of goods or services in respect of which VAT is deductible, other than supplies of goods or services in respect of which VAT is payable solely by the customer or the person for whom the goods or services are intended, in accordance with Articles 194 to 197 and Article 199;

…’

Lithuanian law

8Article 32(3) of the Lietuvos Respublikos pridėtinės vertės mokesčio įstatymas Nr. IX-751 (Law of the Republic of Lithuania No IX-751 on value added tax) of 5 March 2002 (Žin., 2002, No 35-1271), in the version applicable to the facts in the main proceedings (‘the Law on VAT’), provides:

‘A taxable person shall have the right to opt to charge VAT in the manner prescribed by this Law on property immovable by nature which is exempt from VAT under paragraph 1 or 2 of this Article, if the property is sold or otherwise transferred to a taxable person who is a registered VAT payer … and this option shall be effective, for not less than 24 months from the day of declaring the option, in respect of all relevant transactions concluded by that person. The taxable person shall declare his option in the manner prescribed by the central tax authority. …’

9Article 58(1) of that law provides:

‘A VAT payer shall have the right to deduct input and/or import VAT in respect of goods and/or services acquired and/or imported, if those goods and/or services are intended to be used for the following activities of that VAT payer:

the supply of goods and/or services on which VAT is chargeable;

…’

10Article 67(2) of that law is worded as follows:

‘VAT deductions must be adjusted in the manner laid down in this Article: in respect of property immovable by nature, for 10 years … starting from the tax period in which input and/or import VAT on that property was wholly or partly deducted (in the case of material improvement of a building/structure, the deduction of the input VAT on the tangible capital assets thus produced shall be adjusted for 10 years from the tax period in which improvement works were completed). …’

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

11Following checks regarding the correctness of the charging, declaration and payment of VAT by Arvi, the Kauno apskrities valstybinė mokesčių inspekcija (Kaunas District State Tax Inspectorate, Lithuania; ‘the District Tax Inspectorate’) drew up, on 15 April 2020, a tax audit report in which it was found that that company had wrongly charged output VAT in connection with the sale, on 8 May 2015, of immoveable property to UAB ‘Investicijų ir inovacijų fondas’ (‘Fondas’). In that report, the District Tax Inspectorate considered that, since Fondas was not yet registered for VAT purposes at the time of that sale, Arvi could not opt for taxation in respect of that transaction or, consequently, invoice the corresponding output VAT, so that Arvi should have adjusted the amount of input VAT deducted in its VAT return.

12By decision of 22 May 2020, the District Tax Inspectorate confirmed that audit report and ordered Arvi to pay the corresponding amount of VAT, plus penalties and default interest.

13The complaint lodged against that decision was rejected by the State Tax Inspectorate by decision of 23 July 2020, following which Arvi referred the matter to the Mokestinių ginčų komisija prie Lietuvos Respublikos vyriausybės (Tax Disputes Commission under the Government of the Republic of Lithuania).

14The Tax Disputes Commission questions, first, whether the choice made by the Lithuanian legislature in the exercise of its discretion, establishing that the right to opt to charge VAT is tied to the condition that the purchaser be exclusively a taxable person registered as a VAT payer, complies with the VAT Directive, having regard to the aims and spirit thereof. Next, it asks whether the taxpayer’s choice to charge VAT for the supply of an old immovable property, when such a choice does not satisfy the condition laid down in Article 32 of the Law on VAT that a purchaser be registered in the VAT-payer register, enables such a transaction to be regarded as a taxable supply of capital goods in respect of which no obligation to adjust the VAT deduction arises for the supplier of the property. Lastly, it seeks to ascertain whether the requirement of the State Tax Inspectorate that the supplier adjust the input VAT deduction, where the purchaser of the property was registered as a VAT payer one month following the conclusion of the transaction, is consistent with the spirit of the VAT Directive and the principles set out by the Court in its case-law.

15In those circumstances, the Mokestinių ginčų komisija prie Lietuvos Respublikos vyriausybės (Tax Disputes Commission under the Government of the Republic of Lithuania) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

Is national legislation under which a VAT payer can have the right to opt to charge VAT in respect of [the supply of] VAT-exempt immovable property only if the property is transferred to a taxable person who has registered as a VAT payer as at the time of conclusion of the transaction compatible with the interpretation of Article 135 and Article 137 of the [VAT] Directive and the principles of fiscal neutrality and effectiveness?

If the answer to the first question is in the affirmative, is an interpretation of the provisions of national law that the supplier of immovable property must adjust the deduction of the VAT borne on the acquisition of the immovable property transferred, when he has opted to charge VAT in respect of the supply of the immovable property and such option is impossible under the national requirements owing to a single condition, that is to say, owing to the purchaser not having the status of registered VAT payer, consistent with the provisions of the [VAT] Directive governing the supplier’s right to deduct VAT and adjustment of the deduction and with the principles of neutrality of VAT and effectiveness?

Is an administrative practice under which, in circumstances such as those in the main proceedings, the supplier of immovable property is required to adjust the deduction of input tax on the acquisition/production of the immovable property, since the transaction for the sale of that property is regarded as a VAT-exempt supply of immovable property owing to the absence of a right to opt to charge VAT (the purchaser not having a VAT identification number at the time of conclusion of the transaction), although at the time of conclusion of the transaction the purchaser of the immovable property had applied for registration as a VAT payer, and was registered as a VAT payer one month after the conclusion of the transaction, consistent with the provisions of the [VAT] Directive governing the supplier’s right to deduct VAT and adjustment of the deduction and with the principle of neutrality of VAT? In such a case is it important to determine whether the purchaser of the immovable property who registered as a VAT payer after the transaction really used the acquired property in activities subject to VAT and there is no evidence of fraud or abuse?’

Consideration of the questions referred

The first question

16By its first question, the referring court asks, in essence, whether Articles 135 and 137 of the VAT Directive and the principles of fiscal neutrality and effectiveness must be interpreted as precluding national legislation which makes the right of a taxable person to opt to charge VAT on the sale of immovable property conditional on the transfer of that property to a taxable person who, at the time of conclusion of the transaction, is already registered for VAT purposes.

17In that regard, it should be noted, first, that Article 137(1) of the VAT Directive provides that Member States may allow taxable persons a right of option for taxation, inter alia, in respect of ‘the supply of a building or parts thereof, and of the land on which the building stands, other than the supply [before first occupation of a building]’, and states, in paragraph 2, that the Member States ‘shall lay down the detailed rules governing exercise of the option under paragraph 1’ and ‘may restrict the scope of that right of option’.

18Second, it is apparent from the case-law of the Court concerning Article 13(C) 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), albeit transposable by analogy to Article 137 of the VAT Directive, the terms of which are substantially identical, that the Member States may, by virtue of the power referred to in that article, allow persons benefiting from the exemptions provided for by that directive to waive the exemption in all cases or within certain limits or subject to certain detailed rules (see, by analogy, judgment of 12 January 2006, Turn- und Sportunion Waldburg, C‑246/04, EU:C:2006:22, paragraph 27 and the case-law cited).

19Thus, Article 137 of the VAT Directive allows the Member States not only to grant taxable persons the right to opt for taxation of transactions covered by that provision, but also allows them to restrict the scope of that right or withdraw it. Accordingly, the Member States have a wide discretion under that article, since it is for them to assess whether they should or should not introduce the right of option, depending on what they consider to be expedient in the situation existing in their country at a given time (see, to that effect, judgment of 12 January 2006, Turn- und Sportunion Waldburg, C‑246/04, EU:C:2006:22, paragraphs 28 and 29 and the case-law cited).

20The Member States may also, in exercising their discretion, exclude certain transactions or certain categories of taxable persons from the scope of application of that right (see, by analogy, judgment of 12 January 2006, Turn- und Sportunion Waldburg, C‑246/04, EU:C:2006:22, paragraph 30).

21Nevertheless, when the Member States use their ability to restrict the scope of the right of option and to determine the arrangements for its exercise, they are to observe the general objectives and principles of the VAT Directive, in particular the principle of fiscal neutrality and the requirement for correct, straightforward and uniform application of the exemptions provided for (see, by analogy, judgment of 12 January 2006, Turn- und Sportunion Waldburg, C‑246/04, EU:C:2006:22, paragraph 31).

22In the present case, in so far as it lays down the detailed rules for waiving the exemption referred to in Article 135(1)(j) of the VAT Directive, the national legislation at issue in the main proceedings merely establishes the conditions under which the taxable person may exercise the right of option for taxation in respect of the supply of immovable property which will give that person the right of deduction.

23The national legislation at issue in the main proceedings is, in that regard, similar to that at issue in the case which gave rise to the judgment of 9 September 2004, Vermietungsgesellschaft Objekt Kirchberg (C‑269/03, EU:C:2004:512), which, adopted by a Member State which had exercised the power to allow taxpayers a right of option for taxation on leasing or letting transactions of immovable property, made full deduction of the input VAT paid conditional upon non-retroactive, prior approval of the tax authorities. In that judgment, the Court held, first, that where a Member State makes the right of option for taxation subject to certain statutory conditions, a process of prior approval enables the fulfilment of those conditions to be established and, second, that an approval process such as that introduced by that Member State is not intended adversely to affect the right to deduct, but, on the contrary, enables that right to be fully exercised, subject to compliance with certain requirements (see, to that effect, judgment of 9 September 2004, Vermietungsgesellschaft Objekt Kirchberg, C‑269/03, EU:C:2004:512, paragraphs 26 and 28).

24The same conclusion must be drawn for legislation such as that at issue in the main proceedings, since that legislation merely lays down the detailed rules for the exercise by taxable persons of the right of option for taxation in respect of transactions which are, in principle, exempt. Such legislation does not adversely affect the right to deduct but, on the contrary, allows, where that option is exercised in accordance with the detailed rules laid down for that purpose, the exercise of that right which, in the absence of such an option, would be precluded. Moreover, the condition that the seller of immovable property may opt for taxation in respect of the sale transaction only if the purchaser is a taxable person already registered for VAT purposes at the time of the sale helps to ensure that the right of option is exercised in a manner consistent with legal certainty.

25That conclusion is not called into question by the argument, put forward in particular by the Commission, that that condition is contrary to the case-law of the Court established, inter alia, in paragraph 32 of the judgment of 7 March 2018, Dobre (C‑159/17, EU:C:2018:161), according to which identification for VAT purposes, provided for in Article 214 of the VAT Directive, and the obligation of the taxable person to state when his activity as a taxable person commences, changes or ceases, provided for in Article 213 of that directive, are only formal requirements for the purposes of control and, accordingly, cannot compromise, inter alia, the right to deduct VAT, where the substantive conditions which give rise to that right have been satisfied. As the Advocate General noted in point 56 of her Opinion, that case-law is irrelevant in the present case, since the case in the main proceedings does not concern the right of deduction of the purchaser who has not yet been registered at the time of acquisition of the immovable property at issue, but the detailed rules for the exercise, by the seller, of the right of option for taxation in respect of the supply of the immovable property.

26In the light of those considerations, the answer to the first question is that Articles 135 and 137 of the VAT Directive must be interpreted as not precluding national legislation which makes the right of a taxable person to opt to charge VAT on the sale of immovable property conditional on the transfer of that property to a taxable person who, at the time of conclusion of the transaction, is already registered for VAT purposes.

The second and third questions

27By its second and third questions, which it is appropriate to examine together, the referring court asks, in essence, whether the provisions of the VAT Directive and the principles of fiscal neutrality, of effectiveness and of proportionality must be interpreted as precluding national legislation and practice under which the seller of immovable property is required to adjust the deduction of input VAT on that property following the refusal to recognise the seller’s right of option for taxation in respect of that sale on the ground that, at the time of the sale, the purchaser did not satisfy the conditions laid down in order for the seller to exercise that right.

28In order to answer that question, it must first be noted that the obligation to adjust at issue in the main proceedings stems from the fact that, in the present case, there was no valid waiver of the exemption of that transaction.

29Second, as regards the principle of fiscal neutrality, the Court has held that that principle precludes, in particular, treating similar supplies of services, which are thus in competition with each other, differently for VAT purposes (see, to that effect, judgment of 12 January 2006, Turn- und Sportunion Waldburg, C‑246/04, EU:C:2006:22, paragraph 33 and the case-law cited).

30In the present case, it is not apparent either from the request for a preliminary ruling or from the observations submitted to the Court that the national legislation or practice at issue in the main proceedings establishes a difference in treatment between similar transactions that are in competition with each other. For the reasons set out in greater detail by the Advocate General in points 30 to 35 and 46 of her Opinion, the purpose of the right of option for taxation in respect of the supply of immovable property is to prevent the taxable person who makes the supply from being placed at a competitive disadvantage, which is intended precisely to implement the principle of fiscal neutrality, and the conditions governing the exercise of the right of option for taxation laid down by the national legislation at issue in the main proceedings are the same for all taxable persons, irrespective of their capacity or legal form, since that exercise depends solely on the registration of the purchaser for VAT purposes at the time of supply of the property.

31Third, as regards the principle of effectiveness, which precludes a national procedural provision from making the application of EU law, in the present case the exercise of the right of deduction, impossible in practice or excessively difficult, it should be recalled that, as is apparent from paragraph 24 above, legislation such as that at issue in the main proceedings merely lays down the detailed rules for the exercise by taxable persons of the right of option for taxation in respect of transactions which are, in principle, exempt and does not adversely affect the right of deduction. Furthermore, it does not follow either from the request for a preliminary ruling or from the observations submitted to the Court that the national legislation at issue in the main proceedings or the application thereof by the authorities would in any way be liable to make the exercise of the right of deduction impossible in practice or excessively difficult.

32On the contrary, the conditions for exercising the right of option are known in advance and, as the Advocate General observed in point 53 of her Opinion, a taxable person such as Arvi has several means at its disposal to be able to comply with the conditions laid down at national level and thus actually to exercise its right of deduction.

33Accordingly, the principle of effectiveness does not preclude national legislation or practice such as that at issue in the main proceedings.

34Fourth, as regards whether the national legislation at issue in the main proceedings or the application thereof by the tax authorities complies with the principle of proportionality, also referred to by the referring court, it must be borne in mind that, according to the case-law of the Court, in order to comply with that principle, a national measure must be appropriate for securing the attainment of the objective it pursues and must not go beyond what is necessary to attain it (see, to that effect, judgment of 26 October 2010, Schmelz, C‑97/09, EU:C:2010:632, paragraph 58).

35In the present case, the requirement for the purchaser to be a taxable person already registered for VAT purposes at the time of the sale in order for the seller to be able to opt for taxation in respect of the transaction helps to protect the supplier’s legal certainty by allowing the supplier to make sure that it can validly exercise the right of option for taxation and helps to ensure that VAT is levied correctly. That requirement is therefore appropriate for attaining the objective pursued.

36Furthermore, that requirement does not go beyond what is necessary to attain the objective pursued, since it ensures that, before carrying out the transaction which the taxable person would like to see taxed once it has exercised its right of option, that taxable person is in a position to know whether it can validly exercise that right of option, without it being necessary for the taxable person or the tax authorities to carry out lengthy checks on or research into the purchaser’s status as a taxable person.

37In the light of the explanations provided by the referring court in its request for a preliminary ruling, it should be added that the competent authorities cannot take account, beyond the fact that the transaction is or is not exempt, of other circumstances such as the purchaser’s use of the immovable property. The relevant factor for the purposes of the right to deduct and the possible obligation to adjust is the nature of the activity for which the taxable person who made the sale used the immovable property in question. To take account, in addition, of the purchaser’s subsequent use of the immovable property for the purposes of determining whether or not there is a transaction subject to VAT would undermine the principle of legal certainty. That is all the more true since it would be for the purchaser to adjust the input VAT deducted if the immovable property in question were to be used for exempt transactions or transactions falling outside the scope of VAT. Such a change in use cannot, however, lead to the situation whereby the adjustment of a VAT deduction in respect of a supply of goods or of services is imposed on a taxable person other than the person who applied that deduction (see, to that effect, judgment of 26 November 2020, Sögård Fastigheter, C‑787/18, EU:C:2020:964, paragraphs 46 and 47).

38In the present case, the use made by Fondas of the immovable property acquired from Arvi cannot therefore affect the right to deduct the input VAT paid by Arvi upon the acquisition of that property. Those are two separate transactions involving separate taxable persons each pursuing their own economic activity.

39As to the remainder, as regards whether it is for the referring court to ascertain that there has been no fraud or abuse, it is sufficient to recall, first, that if the tax authorities were to conclude that the right to deduct has been exercised fraudulently or abusively, they would be entitled to demand, with retrospective effect, repayment of the amounts deducted (judgment of 28 February 2018, Imofloresmira – Investimentos Imobiliários, C‑672/16, EU:C:2018:134, paragraph 52). Second, taxable persons are generally free to choose the organisational structures and the form of transactions which they consider to be most appropriate for their economic activities and for the purposes of limiting their tax burdens, since the principle that abusive practices are prohibited bars only wholly artificial arrangements which do not reflect economic reality and are set up with the sole aim of obtaining a tax advantage the grant of which would be contrary to the purposes of the VAT Directive (see, to that effect, order of 3 September 2020, Vikingo Fővállalkozó, C‑610/19, EU:C:2020:673, paragraph 62 and the case-law cited).

40In the light of the foregoing considerations, the answer to the second and third questions is that the provisions of the VAT Directive and the principles of fiscal neutrality, of effectiveness and of proportionality must be interpreted as not precluding national legislation and practice under which the seller of immovable property is required to adjust the deduction of input VAT on that property following the refusal to recognise the seller’s right of option for taxation in respect of that sale on the ground that, at the time of the sale, the purchaser did not satisfy the conditions laid down in order for the seller to exercise that right. Although the actual use of the immovable property in question by the purchaser in connection with activities subject to VAT is irrelevant in that regard, the competent authorities are nevertheless required to ascertain whether there has been fraud or abuse on the part of the taxable person who intended to exercise the right of option for taxation in respect of the transaction in question.

Costs

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

Operative part

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

Articles 135 and 137 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as not precluding national legislation which makes the right of a taxable person to opt to charge value added tax (VAT) on the sale of immovable property conditional on the transfer of that property to a taxable person who, at the time of conclusion of the transaction, is already registered for VAT purposes.

The provisions of Directive 2006/112 and the principles of fiscal neutrality, of effectiveness and of proportionality must be interpreted as not precluding national legislation and practice under which the seller of immovable property is required to adjust the deduction of input VAT on that property following the refusal to recognise the seller’s right of option for taxation in respect of that sale on the ground that, at the time of the sale, the purchaser did not satisfy the conditions laid down in order for the seller to exercise that right. Although the actual use of the immovable property in question by the purchaser in connection with activities subject to VAT is irrelevant in that regard, the competent authorities are nevertheless required to ascertain whether there has been fraud or abuse on the part of the taxable person who intended to exercise the right of option for taxation in respect of the transaction in question.

Signatures

[Signatures]

( *1 ) Language of the case: Lithuanian.

OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 24 March 2022 ¹

(Reference for a preliminary ruling – Tax law – Value added tax – Directive 2006/112/EC – Article 137 – Possibility to opt for tax liability in the case of exempt transactions – Requirements of the right of option – Leeway afforded to the Member States – The meaning of form – Consequences of a breach of formal requirements)

I. Introduction

1Back in 1858, Rudolf von Jhering – a well-known German legal scholar – said: ‘Form is the sworn enemy of arbitrariness, the twin sister of freedom.’ ²

2It may also be for that reason that Lithuania has made certain substantive legal consequences of value added tax (VAT) law conditional on compliance with certain formalities. Accordingly, an option for tax liability is possible only in the case of a transaction supplied to a registered VAT payer. In the present case, it was not until one month later that the purchaser could be registered. That requirement was therefore not met at the time of the transaction. Consequently, under Lithuanian law, the supplier could not waive the tax exemption of the transaction. It was therefore required to adjust, pro rata temporis, its deduction of input tax in respect of manufacturing costs solely on account of a failure to comply with formalities.

3However, in accordance with the case-law of the Court, consideration of substantive aspects takes precedence over compliance with formalities (‘substance over form’) in certain cases in VAT law, ³ in particular with regard to the deduction of input tax or the exemption of a transaction. But can that approach also be applied to Member States’ rights of option? The present case concerns the importance of formal requirements where a Member State has exercised its right of option and provided for an option for tax liability. The European Commission also advocates an approach in which only substantive aspects are considered in such a situation.

4By contrast, the EU legislature has recently tended towards adherence to the concept of legal certainty through compliance with formal requirements. This is shown by the new version – albeit not applicable to the present case – of Article 138(1) and (1a) of the VAT Directive. ⁴ Perhaps the EU legislature also drew guidance from the above quotation in that respect. In any event, the present case once again gives the Court the opportunity to address the ‘meaning of form’ in VAT law ⁵ – this time in connection with the possibility of an option.

II. Legal framework

A. European Union law

5The legal framework is formed by Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax ⁶ (‘the VAT Directive’).

6Article 135(1)(j) of the VAT Directive contains the following exemption:

‘1. Member States shall exempt the following transactions:

…

the supply of a building or parts thereof, and of the land on which it stands, other than the supply referred to in point (a) of Article 12(1)’.

7Article 137(1)(b) of the VAT Directive provides as follows in that respect:

‘Member States may allow taxable persons a right of option for taxation in respect of the following transactions:

…

the supply of a building or of parts thereof, and of the land on which the building stands, other than the supply referred to in point (a) of Article 12(1)’.

8Article 137(2) of that directive provides:

‘Member States shall lay down the detailed rules governing exercise of the option under paragraph 1. Member States may restrict the scope of that right of option.’

9Article 168(a) of the VAT Directive regulates the substantive scope of the right of deduction:

‘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.’

10Article 187 of the VAT Directive concerns the adjustment of deductions and reads as follows:

‘1. In the case of capital goods, adjustment shall be spread over five years including that in which the goods were acquired or manufactured.

Member States may, however, base the adjustment on a period of five full years starting from the time at which the goods are first used.

In the case of immovable property acquired as capital goods, the adjustment period may be extended up to 20 years.

2. The annual adjustment shall be made only in respect of one-fifth of the VAT charged on the capital goods, or, if the adjustment period has been extended, in respect of the corresponding fraction thereof.

…’

11Article 188 of the VAT Directive provides:

‘1. If supplied during the adjustment period, capital goods shall be treated as if they had been applied to an economic activity of the taxable person up until expiry of the adjustment period.

The economic activity shall be presumed to be fully taxed in cases where the supply of the capital goods is taxed.

The economic activity shall be presumed to be fully exempt in cases where the supply of the capital goods is exempt.

2. The adjustment provided for in paragraph 1 shall be made only once in respect of all the time covered by the adjustment period that remains to run. However, where the supply of capital goods is exempt, Member States may waive the requirement for adjustment in so far as the purchaser is a taxable person using the capital goods in question solely for transactions in respect of which VAT is deductible.’

B. Lithuanian law

12Article 32(3) of the Lietuvos Respublikos pridėtinės vertės mokesčio įstatymas (Law of the Republic of Lithuania on value added tax; ‘the Law on VAT’) implements the power of Member States provided for in Article 137(1)(b) of the VAT Directive and provides:

‘A taxable person shall have the right to opt to charge VAT in the manner prescribed by this Law on property immovable by nature which is exempt from VAT under paragraph 1 or 2 of this Article, if the property is sold or otherwise transferred to a taxable person who is a registered VAT payer …, and this option shall be effective, for not less than 24 months from the day of declaring the option, in respect of all relevant transactions concluded by that person. The taxable person shall declare his or her option in the manner prescribed by the central tax authority. …’

13According to Article 58(1) of the Law on VAT, ‘a VAT payer shall have the right to deduct input and/or import VAT in respect of goods and/or services acquired and/or imported, if those goods and/or services are intended for use in the following activities of that VAT payer: (1) the supply of goods and/or services on which VAT is chargeable …’

14Article 67(2) of the Law on VAT provides:

‘VAT deductions must be adjusted in the manner laid down in this Article: in respect of property immovable by nature, for 10 years, …, starting from the tax period in which input and/or import VAT on that property was wholly or partly deducted (in the case of material improvement of a building/structure, the deduction of the input VAT on the tangible capital assets thus produced shall be adjusted for 10 years from the tax period in which improvement works were completed). …’

15According to Article 67(5) of the Law on VAT:

‘If it transpires that the tangible capital assets have been started to be used for an activity other than those specified in Article 58(1) of this Law or have been lost, the VAT deduction must be adjusted in the VAT return for the tax period when the above circumstances become clear, by increasing the amount of VAT payable into the budget (or reducing the amount of VAT refundable from the budget) accordingly (that is to say, by the deducted portion of the input or import VAT attributable to the period remaining until the end of the time set for adjustment of the VAT deduction).’

16The Republic of Lithuania has not opted for the possibility provided for in Article 188(2) of the VAT Directive of waiving the requirement for adjustment.

III. Main proceedings

17The background to the present request for a preliminary ruling is a dispute between ‘ARVI’ ir ko UAB (‘ARVI’), a limited liability company, and the Kauno apskrities valstybinė mokesčių inspekcija (Kaunas District State Tax Inspectorate, Lithuania; ‘the tax administration’).

18ARVI had constructed an auxiliary building classified as ‘for household use’ with a gym/fitness room (‘the Building’) on a parcel of land classified as ‘for other uses’ that was leased to the shareholders. ARVI declared the capital goods production cost and VAT in the VAT return for January 2013.

19On 8 May 2015, ARVI sold the Building to ‘Investicijų ir inovacijų fondas, UAB’ (‘the purchaser’) for EUR 371 582.48, including VAT of EUR 64 489.52. The purchaser was a taxable person at the time of the sale, but not yet a registered VAT payer. Although the purchaser had applied for registration as a VAT payer at the time of the conclusion of the contract, that (first) application for registration had not been granted – for reasons not known to the Court. The purchaser was not registered as a VAT payer until one month later (June 2015).

20However, the tax administration takes the view that the purchaser’s status as a registered VAT payer is a mandatory condition necessary to enable a taxable person to opt to charge VAT on its supply. Therefore, according to the tax administration, the transaction ought necessarily to have been treated as an exempt supply of immovable property. The consequence of this, in turn, is that the deduction of input tax made in January 2013 ought to have been adjusted in the VAT return for May 2015. Consequently, ARVI ought to have declared an adjustment amount attributable to the period from May 2015 to December 2022. The tax administration therefore ordered ARVI to pay VAT of EUR 252296 as well as related penalties and default interest.

21By contrast, ARVI takes the view that the condition laid down in Article 32(3) of the Law on VAT that a purchaser must be not only a taxable person but also a registered VAT payer is an infringement of the principles of neutrality of VAT and it is in no way compatible with the objectives of the Directive and the case-law of the Court. ARVI therefore brought a complaint before the central tax authority. It was dismissed. ARVI brought a complaint against that decision before the Tax Disputes Commission.

IV. The request for a preliminary ruling and the procedure before the Court

22By order of 16 October 2020, the Mokestinių ginčų komisija prie Lietuvos Respublikos vyriausybės (Tax Disputes Commission under the Government of the Republic of Lithuania, Lithuania) referred the following questions to the Court of Justice for a preliminary ruling:

Is national legislation under which a VAT payer can have the right to opt to charge VAT in respect of VAT-exempt immovable property only if the property is transferred to a taxable person who has registered as a VAT payer as at the time of conclusion of the transaction compatible with the interpretation of Article 135 and Article 137 of the Directive and the principles of fiscal neutrality and effectiveness?

If the answer to the first question is in the affirmative, is an interpretation of the provisions of national law that the supplier of immovable property must adjust the deduction of the VAT borne on the acquisition of the immovable property transferred, when he has opted to charge VAT in respect of the supply of the immovable property and such option is impossible under the national requirements owing to a single condition, that is to say, owing to the purchaser not having the status of registered VAT payer, consistent with the provisions of the Directive governing the supplier’s right to deduct input VAT and adjustment of the deduction and with the principles of neutrality of VAT and effectiveness?

Is an administrative practice under which, in circumstances such as those in the main proceedings, the supplier of immovable property is required to adjust the deduction of input tax on the acquisition/production of the immovable property, since the transaction for the sale of that property is regarded as a VAT-exempt supply of immovable property owing to the absence of a right to opt to charge VAT (the purchaser not having a VAT identification number at the time of conclusion of the transaction), although at the time of conclusion of the transaction the purchaser of the immovable property had applied for registration as a VAT payer, and was registered as a VAT payer one month after the conclusion of the transaction, consistent with the provisions of the Directive governing the supplier’s right to deduct input VAT and adjustment of the deduction and with the principle of neutrality of VAT? In such a case is it important to determine whether the purchaser of the immovable property who registered as a VAT payer after the transaction really used the acquired property in activities subject to VAT and there is no evidence of fraud or abuse?’

23ARVI, the Republic of Lithuania and the Commission submitted written observations in the proceedings before the Court. In accordance with Article 76(2) of the Rules of Procedure, the Court did not did not consider it necessary to hold a hearing.

V. Legal assessment

A. Admissibility of the request for a preliminary ruling

24The request for a preliminary ruling was made by the Tax Disputes Commission under the Government of the Republic of Lithuania, which is a body that examines tax disputes before they are brought before the courts. It is true that, in 2010, the Court ruled with regard to that Commission that it was a court or tribunal entitled to make a reference within the meaning of Article 267 TFEU. ⁷ However, the considerations made at that time may need to be re-examined in the light of the more recent case-law of the Court. ⁸

25In the present case, doubts as to whether the Tax Disputes Commission has the status of a court or tribunal entitled to make a reference arise from the fact that its decisions cannot be challenged by both parties to the same extent. The tax administration can appeal against them only in special circumstances (different interpretation of tax law by the Commission and the tax administration). Thus, it appears that the primary purpose of the Commission’s decisions is to ensure uniform interpretation of the law within the tax administration. This would also explain why it is attached not to the judiciary but to the executive (government), and why it is only after the involvement of the Commission that the courts decide on the remaining disputes.

26On the other hand, the members of the Commission are independent experts, and at least the taxable person can challenge the decision before a court without limitation. In that respect, the situation does not appear to have changed significantly compared to the decision of 2010, and none of the parties has expressed any doubts as to entitlement to make a reference. The Court therefore does not have any new, precise information. Consequently, I continue to proceed on the assumption that the Commission is entitled to make references in respect of tax disputes.

B. Questions referred for a preliminary ruling

27The three questions referred ultimately all concern the question as to whether the VAT Directive precludes national legislation under which the possibility of treating a transaction which is in itself exempt from VAT as a taxable transaction is tied by the Member State to the condition that the recipient is a registered taxpayer.

28Since the consequence of non-compliance with that condition is that the supplier is required to adjust his or her deduction of input tax on a pro rata basis, the referring court raises the question as to whether the principle of neutrality or proportionality is infringed. That question seems to be particularly important for the referring court because the condition was fulfilled just one month later, the recipient carries out transactions conferring entitlement to deduct input tax, and, according to the referring court, no fraud or abuse is involved.

29Since all three questions depend on the extent of a Member State’s possibility to provide for such an option and to tie it to formal requirements, they can all be considered together. To that end, I will first take a closer look at the spirit and purpose of the right of option referred to in Article 137(1) of the VAT Directive (see section C). I will then outline the limits of the regulatory powers conferred on the Member States by Article 137(2) of the VAT Directive as regards the detailed rules governing exercise of the right of option (see section D).

C. Spirit and purpose of the right of option in Article 137(1) of the VAT Directive

30Article 137(1) of the VAT Directive permits Member States to give taxpayers the right to opt for the taxation of certain transactions that are in fact exempt.

31The need to be able to waive an exemption can be explained against the background that the purpose of VAT exemptions is not to favour the supplying undertaking but rather the recipient of the supply. ⁹ This follows from the nature of VAT as a general tax on consumption, the aim of which is to impose a VAT burden not on the supplying undertaking (taxable person), but on the recipient of the supply (ultimate taxpayer). ¹⁰

32However, that favourable treatment of the recipient of the supply leads to the exclusion of the right to deduct on the part of the supplier, in this case ARVI. It is true that, for ARVI, the sale of the property in question is exempt by virtue of the exemption in Article 135(1)(j) of the VAT Directive. However, the consequence is that a deduction of input tax in respect of the construction costs of the buildings is not possible (or, as in the present case, must be adjusted). Consequently, the supplier must factor those costs into his or her price, but cannot state them separately, as the supply is exempt. Thus, any purchaser will sustain a charge to that VAT in respect of the construction costs without being able to claim relief from it. Relief will never be possible where the person concerned does not possess an invoice relating to a taxable supply in which VAT is stated separately. ¹¹

33However, if the purchaser is a trader with a right of deduction, it is uneconomical for him or her to purchase the developed property from ARVI in a VAT-exempt manner. Instead, he or she would purchase an undeveloped plot of land and construct the building himself or herself. This is because, in the latter case, he or she would have a right of deduction in respect of the construction costs of the building. Consequently, no taxable person with a right of deduction would purchase a developed property from ARVI, but would always develop it himself or herself.

34Providers of an exempt supply (developed property) are therefore at a competitive disadvantage in relation to other taxable persons with a right of deduction. It is more advantageous for them to build on the plot of land themselves because they can then deduct the input VAT. However, if it is more advantageous for taxable persons to supply themselves than to obtain the supply externally from another taxable person, commercial suppliers (such as ARVI in the present case) can no longer participate in such a market (selling to undertakings with a right of deduction).

35Consequently, the option provided for in Article 137 of the VAT Directive ensures that the supplier (in casu, ARVI) is not excluded from accessing that market. The purpose of the waiver of the exemption is to prevent the supplier from being placed at a competitive disadvantage in the areas covered by Article 137 of the VAT Directive. It is apparent that the EU legislature saw that there was a possibility of competition being distorted for commercial traders and landlords precisely in the case of property transactions, and it therefore enabled Member States to eliminate that distortion.

D. Limits to the possibility to establish rules which is provided for in Article 137(2) of the VAT Directive

36Article 137(2) of the VAT Directive provides that Member States are to lay down the detailed rules governing exercise of the option under paragraph 1. In so doing, they may restrict the scope of that right of option. It follows – as the Court has confirmed on several occasions ¹² – that the Member States are given a ‘wide discretionary power’, as Lithuania also emphasises. It is for them to assess whether they should or should not introduce the right of option, depending on what they consider to be expedient in the situation existing in their country at a given time. ¹³ They may therefore also revoke the right of option after having introduced it. ¹⁴ According to the case-law of the Court, Member States may determine the rules governing the exercise of the right of option and even withdraw it. ¹⁵

37In accordance with the case-law of the Court, this would also cover, for example, the need for an express prior declaration of option, ¹⁶ but would not cover an additional period for a deduction of input tax after the waiver has been effectively exercised. ¹⁷ Article 137(2) of the VAT Directive also permits the Member States, when exercising their discretion with regard to the right of option, to exclude certain transactions or certain categories of taxable persons from the scope of application of that right. ¹⁸

38When the Member States use their ability to restrict the scope of the right of option and to determine the arrangements for its exercise, they are to observe merely the general objectives and principles of the VAT Directive, in particular the principle of fiscal neutrality and the requirement for correct, straightforward and uniform application of the exemptions provided for, ¹⁹ as well as the principle of proportionality. ²⁰

1. Substantive limits to the power of the Member States

39Article 137(2) of the VAT Directive allows the Member States to lay down the detailed rules governing exercise of the option under paragraph 1 thereof if they grant taxable persons such a possibility of waiver. That power relates to the detailed rules governing the exercise of the waiver of the exemption of the taxable person’s own transaction and the scope of the right of option. ²¹

40By contrast, in accordance with the case-law of the Court, Member States could not use that power to revoke a right of deduction which has already been acquired. ²² A limitation of input VAT deductions connected with taxed transactions, after the right of option has been exercised, would not concern the ‘scope’ of the right of option which Member States may restrict by virtue of the second sentence of Article 137(2) of the VAT Directive, but the consequences of exercising that right. ²³

41Therefore, for example, a unilateral revocation of the waiver with retroactive effect by the supplier at the expense of the recipient of the supply is also not possible under VAT law. This is because the possibility of a retroactive revocation of a waiver does not concern a rule governing the exercise of the waiver by the supplier, but only the consequences for a right of deduction already exercised by the recipient of the supply. Furthermore, according to the Court, the principles of the protection of legitimate expectations and of legal certainty preclude a taxable person being deprived retroactively of the right of deduction by a legislative amendment post-dating the supply. ²⁴

42However, that substantive limitation of the power to determine the right of waiver does not relate to the adjustment made to ARVI’s input tax deduction in the present case. This is because it does not retroactively alter the requirement relating to the detailed rules governing the exercise of the waiver ²⁵ or its legal consequences. Rather, the adjustment in question is simply the consequence of the tax exemption existing due to the lack of an (effective) waiver. It would occur (see Article 188(1) of the VAT Directive) even if the Republic of Lithuania had not provided for any possibility of waiver at all, since it follows from the directive itself or the legislation transposing it.

43Therefore, as already stated by Advocate General Geelhoed a good 18 years ago, ²⁶ that effect (that is to say, the adjustment of an input tax deduction already made on account of an exempt sale) must not be attributed to the national provisions but rather to the conduct of the taxpayers (in casu, a taxpayer’s sale of a property to a taxpayer who is not (yet) registered). Consequently, there is no infringement of the substantive limits to the Member States’ powers arising from Article 137(2) of the VAT Directive.

2. Principle of neutrality

44It is possible, however, that the condition that the recipient of the present supply of immovable property must be a registered taxable person rather than just a taxable person infringes the principle of neutrality under VAT law.

45The principle of neutrality precludes economic operators who effect the same transactions from being treated differently in respect of the levying of VAT. ²⁷

46That equality of competition does not appear to have been infringed in the present case. This is because the option is intended precisely to avoid competitive disadvantages for the supplier, as explained in section C above.

47The requirement under Lithuanian law that the purchaser be a registered taxpayer at the time of the transaction does not change that. This is because the waiver is subject equally to the same condition for all suppliers of immovable property, namely that the purchaser must be a registered taxpayer. ²⁸ No other seller of immovable property could have effectively opted for tax liability in the present case.

3. Principle of proportionality

48However, requiring a taxable person to adjust an input tax deduction already made solely because his or her customer had not registered as a taxpayer – or, as in the present case, had done so just one month too late – might be disproportionate. This presupposes that the registration requirement is not appropriate for securing the attainment of the objective it pursues or goes beyond what is necessary to attain it. ²⁹

49The aim of the registration requirement to which the recipient of the supply is subject is to make it easier for the tax authorities to control the waiver, because – as stated in Section C above – a waiver makes sense only vis-à-vis a taxable person with a right of deduction. Moreover, that requirement serves to ensure legal certainty ³⁰ and legal clarity. Accordingly, the supplier can clearly see from the proof of registration whether the conditions for a waiver are met and, therefore, an input tax deduction made by him or her does not have to be adjusted. Without such a registration requirement, the circumstance of whether someone is already operating as a taxable person within the meaning of VAT law is difficult for another private person (and sometimes also for the tax administration) to determine, especially at the beginning of the economic activity.

50Both effective administration and control of VAT – which, according to the Court, have a direct impact on the financing of the European Union ³¹ – and the principle of legal certainty are legitimate objectives. The requirement of successful registration is not inappropriate for securing the attainment of those objectives.

51It therefore remains to be examined whether there is a less severe but equally appropriate means and, if not, whether the requirement of proportionality between the objective and the means has been met. I am unable to identify a less severe but equally appropriate means in the present case. Reliance on the substantive existence of the status as taxpayer is considerably more difficult to verify, both for the tax authorities and for the supplier. It is therefore neither less severe nor equally appropriate for the attainment of the abovementioned objectives.

52Nor does it follow from the balancing (equation of proportionality between the objective and the means) of the legal interests concerned (legal certainty, more effective administration, on the one hand, and the supplier’s interest in waiving in order not to have to adjust input tax, on the other hand) that reliance on the registration of the recipient of the supply is disproportionate.

53It does not seem unreasonable to me to require a taxable person who, in such a legal situation, wishes to treat a transaction that is actually exempt from tax as taxable to obtain proof of the VAT registration of the recipient of the supply. This is because, if the latter does not provide such proof, the former can factor the impending input tax adjustment into the purchase price, so that no loss arises for him or her. If the recipient of the supply does not want to pay that price – which will presumably be higher in such a case – he or she must provide proof of his or her registration. In the absence of such proof, the supplier may either seek another purchaser or delay the conclusion of the transaction until the completion of registration, which may have already been applied for.

54Consequently, the recipient of the supply is able to influence the VAT treatment of the supply of immovable property himself or herself ³² by initiating the registration process and awaiting its conclusion. On the other hand, the supplier is able to see when he or she is dealing with a registered taxpayer and when not. He or she can base the calculation of the purchase price on that circumstance. In that respect, those (temporary) restrictions on the possibility of waiver are not disproportionate to the objectives pursued (effective administration and legal certainty for the parties involved).

55As a result, the requirement under national law that the recipient of the supply must be a registered taxpayer in order for the supplier to be able effectively to waive the exemption of his or her supply is therefore proportionate.

56The Court’s case-law, according to which a person taxable for VAT purposes may not be prevented from exercising his or her right of deduction on the ground that he or she had not been identified as a taxable person for those purposes before using the goods purchased in the context of his or her taxed activity, ³³ does not lead to a different outcome. This is because the issue in the present case is not the exercise of the taxable person’s right to deduct, but the effectiveness of a waiver of an exemption vis-à-vis a recipient of a supply who is not registered for tax purposes.

57The Court’s ‘substance over form’ case-law, ³⁴ which is broader in scope, cannot lead to a different outcome either. According to that case-law, the principle of fiscal neutrality requires that an exemption from VAT (or a deduction of input tax) be allowed if the substantive conditions for it are satisfied, even if the taxable person has failed to comply with some of the formal requirements.

58Accordingly, the question arises as to whether that case-law can be adhered to in its current form, in view of the legislative changes to the VAT Directive. In response, inter alia, to the case-law of the Court, ³⁵ the EU legislature has now expressly stipulated in Article 138(1) of the VAT Directive that it is a (substantive) requirement for an exempt intra-Community supply that the recipient of the supply has indicated his or her VAT identification number to the supplier.

59Moreover, the Court has already nuanced its ‘substance over form’ approach. Accordingly, certain formalities may have greater importance than others and must therefore be complied with despite their formal nature. ³⁶

60In relation to rights of option, the Court has even expressly held that compliance with a certain process (Luxembourg had made the effective exercise of an option conditional upon a process of prior approval with the tax authorities) precisely does not constitute a restriction of the right to deduct. ³⁷ The Court rightly held that the lack of retroactivity of such a process also does not make it disproportionate. ³⁸ Therefore, it is irrelevant in the present case that the recipient of ARVI’s supply acquired the status of a registered taxpayer one month later – without retroactive effect.

61The Court’s case-law establishing that formal aspects are largely unimportant in VAT law is therefore not relevant to the Member States’ rights of option and design.

VI. Conclusion

Conclusion

62I therefore propose that the Court answer the questions referred by the Mokestinių ginčų komisija prie Lietuvos Respublikos vyriausybės (Tax Disputes Commission under the Government of the Republic of Lithuania, Lithuania) as follows:

Article 137 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax allows a Member State to make the existence of an effective waiver by the supplier of an exemption referred to therein subject to the condition that the recipient of the supply is a registered taxpayer. Compliance with that ‘formal’ requirement is neither contrary to the principle of neutrality nor disproportionate.

The legal consequence of failure to comply with that ‘formality’ – the supplier must adjust his or her deduction of input tax – follows from the exemption of the sale as provided for in the VAT Directive. That outcome is not changed by the fact that, first, the recipient of the supply was registered one month later; second, he or she used the goods for taxable transactions; and, third, no fraud is involved.

¹ Original language: German.

² von Jhering, R., Geist des Römischen Rechts auf den verschiedenen Stufen seiner Entwicklung, Part 2, Vol. 2, Leipzig, 1858, ‘Haften an der Aeußerlichkeit. III. Der Formalismus’, § 45, p. 497 (32) – 1st edition.

³ See, for example, judgments of 20 October 2016, Plöckl (C‑24/15, EU:C:2016:791, paragraph 39 et seq.); of 9 July 2015, Salomie and Oltean (C‑183/14, EU:C:2015:454, paragraph 60 et seq.); of 11 December 2014, Idexx Laboratories Italia (C‑590/13, EU:C:2014:2429, paragraphs 41 and 42); of 27 September 2012, VSTR (C‑587/10, EU:C:2012:592, paragraphs 45 and 46); and of 27 September 2007, Collée (C‑146/05, EU:C:2007:549, paragraph 29).

⁴ Inserted by Council Directive (EU) 2018/1910 of 4 December 2018 amending Directive 2006/112/EC as regards the harmonisation and simplification of certain rules in the value added tax system for the taxation of trade between Member States (OJ 2018 L 311, p. 3) (with effect from 27 December 2018).

⁵ See also in detail in that regard: Kokott, J., ‘Vom Sinn der Form’, Festschrift zu 100 Jahre Umsatzsteuer in Deutschland 1918-2018, Cologne, 2018, p. 109 et seq.

⁶ Directive of 28 November 2006 (OJ 2006 L 347, p. 1), in the version applicable in the year concerned (2015).

⁷ Judgment of 21 October 2010, Nidera Handelscompagnie (C‑385/09, EU:C:2010:627, paragraph 34 et seq.).

⁸ See, expressly, in connection with the Spanish complaints bodies (TEAC), judgment of the Grand Chamber of the Court of 21 January 2020, Banco de Santander (C‑274/14, EU:C:2020:17, paragraph 55).

⁹ See, in general terms, judgment of 26 February 2015, VDP Dental Laboratory and Others (C‑144/13 and C‑160/13, EU:C:2015:116, paragraph 43). Specifically regarding the purpose of the exemption for educational services, see judgments of 28 November 2013, MDDP (C‑319/12, EU:C:2013:778, paragraph 23), and of 20 June 2002, Commission v Germany (C‑287/00, EU:C:2002:388, paragraph 47).

¹⁰ See judgments of 10 April 2019, PSM K (C‑214/18, EU:C:2019:301, paragraph 40); of 18 May 2017, Latvijas Dzelzceļš (C‑154/16, EU:C:2017:392, paragraph 69); of 7 November 2013, Tulică and Plavoşin (C‑249/12 and C‑250/12, EU:C:2013:722, paragraph 34); and of 24 October 1996, Elida Gibbs (C‑317/94, EU:C:1996:400, paragraph 19).

¹¹ Regarding that necessity, see in detail my Opinions in Wilo Salmson France (C‑80/20, EU:C:2021:326, point 55 et seq.), and in Zipvit (C‑156/20, EU:C:2021:558, point 46 et seq.).

¹² Order of 18 May 2021, Skellefteå Industrihus (C‑248/20, EU:C:2021:394, paragraph 39); and judgments of 28 February 2018, Imofloresmira – Investimentos Imobiliários (C‑672/16, EU:C:2018:134, paragraph 48); of 12 January 2006, Turn- und Sportunion Waldburg (C‑246/04, EU:C:2006:22, paragraph 29); of 9 September 2004, Vermietungsgesellschaft Objekt Kirchberg (C‑269/03, EU:C:2004:512, paragraph 21); of 4 October 2001, Goed Wonen (C‑326/99, EU:C:2001:506, paragraph 45); and of 3 December 1998, Belgocodex (C‑381/97, EU:C:1998:589, paragraph 17).

¹³ See, expressly, judgments of 12 January 2006, Turn- und Sportunion Waldburg (C‑246/04, EU:C:2006:22, paragraph 29), and of 3 December 1998, Belgocodex (C‑381/97, EU:C:1998:589, paragraph 17).

¹⁴ Judgment of 3 December 1998, Belgocodex (C‑381/97, EU:C:1998:589, paragraph 17 et seq.).

¹⁵ Order of 18 May 2021, Skellefteå Industrihus (C‑248/20, EU:C:2021:394, paragraph 39); and judgments of 28 February 2018, Imofloresmira – Investimentos Imobiliários (C‑672/16, EU:C:2018:134, paragraph 48); of 12 January 2006, Turn- und Sportunion Waldburg (C‑246/04, EU:C:2006:22, paragraphs 27 and 28); of 9 September 2004, Vermietungsgesellschaft Objekt Kirchberg (C‑269/03, EU:C:2004:512, paragraph 21); of 4 October 2001, Goed Wonen (C‑326/99, EU:C:2001:506, paragraph 45); and of 3 December 1998, Belgocodex (C‑381/97, EU:C:1998:589, paragraphs 16 and 17).

¹⁶ Judgment of 9 September 2004, Vermietungsgesellschaft Objekt Kirchberg (C‑269/03, EU:C:2004:512, paragraph 26 et seq.).

¹⁷ See, in essence, judgment of 30 March 2006, Uudenkaupungin kaupunki (C‑184/04, EU:C:2006:214, paragraph 43 et seq.).

¹⁸ See, expressly, judgment of 12 January 2006, Turn- und Sportunion Waldburg (C‑246/04, EU:C:2006:22, paragraph 30).

¹⁹ Order of 18 May 2021, Skellefteå Industrihus (C‑248/20, EU:C:2021:394, paragraph 40), judgment of 12 January 2006, Turn- und Sportunion Waldburg (C‑246/04, EU:C:2006:22, paragraph 31).

²⁰ This is also a general principle of VAT law: see judgments of 26 October 2010, Schmelz (C‑97/09, EU:C:2010:632, paragraph 57), and of 27 January 2009, Persche (C‑318/07, EU:C:2009:33, paragraph 52).

²¹ Order of 18 May 2021, Skellefteå Industrihus (C‑248/20, EU:C:2021:394, paragraph 39); and judgments of 28 February 2018, Imofloresmira – Investimentos Imobiliários (C‑672/16, EU:C:2018:134, paragraph 49); and of 30 March 2006, Uudenkaupungin kaupunki (C‑184/04, EU:C:2006:214, paragraph 46).

²² Judgment of 28 February 2018, Imofloresmira – Investimentos Imobiliários (C‑672/16, EU:C:2018:134, paragraph 48), and also, in essence, judgment of 3 December 1998, Belgocodex (C‑381/97, EU:C:1998:589, paragraphs 24 and 26).

²³ Judgments of 28 February 2018, Imofloresmira – Investimentos Imobiliários (C‑672/16, EU:C:2018:134, paragraph 49), and of 30 March 2006, Uudenkaupungin kaupunki (C‑184/04, EU:C:2006:214, paragraph 46).

²⁴ Judgment of 8 June 2000, Schloßstrasse (C‑396/98, EU:C:2000:303, paragraph 47), and also, in essence, judgment of 3 December 1998, Belgocodex (C‑381/97, EU:C:1998:589, paragraphs 24 and 26).

²⁵ See judgment of 26 November 2020, Sögård Fastigheter (C‑787/18, EU:C:2020:964, paragraph 48 et seq. and the case-law cited).

²⁶ Opinion of Advocate General Geelhoed in Vermietungsgesellschaft Objekt Kirchberg (C‑269/03, EU:C:2004:189, point 51).

²⁷ See judgments of 16 October 2008, Canterbury Hockey Club and Canterbury Ladies Hockey Club (C‑253/07, EU:C:2008:571, paragraph 30); of 7 September 1999, Gregg (C‑216/97, EU:C:1999:390, paragraph 20); and of 11 June 1998, Fischer (C‑283/95, EU:C:1998:276, paragraph 22).

²⁸ This is what distinguishes the present situation from, for example, that underlying the Court’s statements in the judgment of 12 January 2006, Turn- und Sportunion Waldburg (C‑246/04, EU:C:2006:22, paragraph 47).

²⁹ See judgments of 26 October 2010, Schmelz (C‑97/09, EU:C:2010:632, paragraph 57), and of 27 January 2009, Persche (C‑318/07, EU:C:2009:33, paragraph 52).

³⁰ Regarding that criterion, see also the Opinion of Advocate General Geelhoed in Vermietungsgesellschaft Objekt Kirchberg (C‑269/03, EU:C:2004:189, point 49).

³¹ This argument can be found in several decisions of the Court (see judgments of 17 January 2019, Dzivev and Others (C‑310/16, EU:C:2019:30, paragraph 26); of 5 December 2017, M.A.S. and M.B. (C‑42/17, EU:C:2017:936, paragraph 31)); of 8 September 2015, Taricco and Others (C‑105/14, EU:C:2015:555, paragraph 38); and of 26 February 2013, Åkerberg Fransson (C‑617/10, EU:C:2013:105, paragraph 26). However, it is called into question by statements recently made by the Commission and the actual structure of the EU financing mechanism. See Commission proposal of 24 April 2019 for a Council directive amending Directive 2006/112 and Directive 2008/118/EC concerning the general arrangements for excise duty as regards defence effort within the Union framework, COM(2019) 192 final, p. 10 (EN version: ‘By extending the scope of VAT exemptions, the proposal could reduce VAT revenue collected by Member States and therefore the VAT own resource. While there will be no negative implications for the EU budget, as the own resource based on gross national income (GNI) compensates for any expenditure not covered by traditional own resources and the VAT own resource, the non-collected VAT own resources from certain Member States would have to be compensated by all Member States through the GNI own resource.’

³² In relation to that argument, see also Opinion of Advocate General Geelhoed in Vermietungsgesellschaft Objekt Kirchberg (C‑269/03, EU:C:2004:189, point 51), and judgment of 9 September 2004, Vermietungsgesellschaft Objekt Kirchberg (C‑269/03, EU:C:2004:512, paragraph 26 et seq.).

³³ Judgments of 7 March 2018, Dobre (C‑159/17, EU:C:2018:161, paragraph 33); of 9 July 2015, Salomie and Oltean (C‑183/14, EU:C:2015:454, paragraph 61); and of 21 October 2010, Nidera Handelscompagnie (C‑385/09, EU:C:2010:627, paragraph 51).

³⁴ See also in detail in that regard Kokott, J., ‘Vom Sinn der Form’, Festschrift zu 100 Jahre Umsatzsteuer in Deutschland 1918-2018, Cologne, 2018, p. 109 et seq.

In connection with the deduction of input tax, see: judgments of 21 November 2018, Vădan (C‑664/16, EU:C:2018:933, paragraph 41); of 15 September 2016, Senatex (C‑518/14, EU:C:2016:691, paragraph 38); of 9 July 2015, Salomie and Oltean (C‑183/14, EU:C:2015:454, paragraph 60 et seq.); and of 11 December 2014, Idexx Laboratories Italia (C‑590/13, EU:C:2014:2429, paragraphs 41 and 42).

In connection with tax exemptions, see: judgments of 20 October 2016, Plöckl (C‑24/15, EU:C:2016:791, paragraph 39 et seq.); of 27 September 2012, VSTR (C‑587/10, EU:C:2012:592, paragraphs 45 and 46); and of 27 September 2007, Collée (C‑146/05, EU:C:2007:549, paragraph 29).

³⁵ The statements made in recitals 3 and 7 of Directive 2018/1910 of 4 December 2018 amending Directive 2006/112 as regards the harmonisation and simplification of certain rules in the value added tax system for the taxation of trade between Member States (OJ 2018 L 311, p. 3) cannot be understood otherwise:

(3) ‘The Council … invited the Commission to make certain improvements to the Union VAT rules for cross-border transactions with regard to the role of the VAT identification number in the context of the exemption for intra-Community supplies …’

(7) ‘… it is proposed that the inclusion of the VAT identification number of the person acquiring the goods … become … a substantive condition for the application of exemption rather than a formal requirement. …’

³⁶ See judgment of 21 October 2021, Wilo Salmson France (C‑80/20, EU:C:2021:870, paragraph 82). Unfortunately, the Court left open the question as to which formal details an invoice must necessarily contain in order to be able to be regarded as an invoice. In that regard, see, however, my Opinions in Wilo Salmson France (C‑80/20, EU:C:2021:326, point 89 et seq.), and in Zipvit (C‑156/20, EU:C:2021:558, point 77 et seq.).

³⁷ Judgment of 9 September 2004, Vermietungsgesellschaft Objekt Kirchberg (C‑269/03, EU:C:2004:512, paragraph 28).

³⁸ Judgment of 9 September 2004, Vermietungsgesellschaft Objekt Kirchberg (C‑269/03, EU:C:2004:512, paragraph 29).