C-566/07 Stadeco

JUDGMENT OF THE COURT (Third Chamber)

18 June 2009 *

In Case C-566/07,

REFERENCE for a preliminary ruling under Article 234 EC, from the Hoge Raad der Nederlanden (Netherlands), made by decision of 30 November 2007, received at the Court on 21 December 2007, in the proceedings

Staatssecretaris van Financiën

v

Stadeco BV,

THE COURT (Third Chamber),

composed of A. Rosas, President of Chamber, A. Ó Caoimh, U. Lõhmus, P. Lindh and A. Arabadjiev (Rapporteur), Judges,

* Language of the case: Dutch.

Advocate General: J. Kokott, Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 11 December 2008,

after considering the observations submitted on behalf of:

Stadeco BV, by A. Fruijtier, advocaat,

the Netherlands Government, by C. Wissels, M. de Grave and C. ten Dam, acting as Agents,

the German Government, by M. Lumma and C. Blaschke, acting as Agents,

the Greek Government, by S. Spyropoulos, S. Trekli and M. Tassopoulou, acting as Agents,

the Italian Government, by R. Adam, acting as Agent, assisted by G. De Bellis, avvocato dello Stato, the Commission of the European Communities, by D. Triantafyllou and W. Roels, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 12 March 2009,

gives the following

Judgment

Legal context and the dispute

1This reference for a preliminary ruling concerns the interpretation of Article 21(1)(c) 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), as amended by Council ‘ ’ Directive 91/680/EEC of 16 December 1991 (OJ 1991 L 376, p. 1)( the Sixth Directive ), and the principle of fiscal neutrality.

2The reference for a preliminary ruling was made in the course of proceedings between ‘ ’ ‘ ’ the Staatssecretaris van Financiën (the Staatssecretaris ) and Stadeco BV ( Stadeco ) ‘ ’ concerning the right of a taxable person to a refund of the value added tax ( VAT ) mentioned on the invoice sent to the beneficiary of the services supplied.

Legal context

Community legislation

‘

3Under Article 2(1) of the Sixth Directive, the supply of goods or services effected for ’ consideration within the territory of the country by a taxable person acting as such is to be subject to VAT.

‘

4Article 9(2)(c) of that directive specifies that the place of the supply of services relating … to cultural, artistic, sporting, scientific, educational, entertainment or similar activities, including the activities of the organisers of such activities, and where … appropriate, the supply of ancillary services shall be the place where those services ’

are physically carried out .

‘

5Article 21(1)(c) of that directive provides that under the internal system, any person ’ who mentions the [VAT] on an invoice or other document serving as invoice , is to be liable to pay VAT.

National legislation

6Under Article 1(1)(a) of the law on turnover tax (Wet op de Omzetbelasting) of 28 June 1968 (Staatsblad 1968, No 329), in the version applicable to the tax year at issue in the ‘ ’ ‘ “ ”

main proceedings (the Wet ), provides that a tax called turnover tax shall be levied on … the supply of goods or services effected in the Netherlands by traders in the course of ’

their business .

‘

7Article 6(2)(c)(1) of the Wet specifies that the place of the supply of services relating to … cultural, artistic, sporting, scientific, educational and entertainment or similar … ’

activities is the place where those services are actually carried out .

‘

8Article 12(1) of the Wet states that the tax is collected by the trader who makes the ’

supply or who provides the service .

‘

9Article 14(1) of the Wet stipulates that the tax which becomes chargeable in a given tax ’

period must be paid on the basis of a declaration .

‘

10Article 37 of the Wet provides that [a]nyone who makes any form of tax return in respect of turnover tax for which, under any provision other than the present article, he was not liable shall become liable for that tax upon issuing the invoice; he must pay it in ’

accordance with Article 14 .

11According to the order for reference, at the material time and as the Netherlands Government has stated, in accordance with the instruction of the Staatssecretaris, for the purposes of the refund of turnover tax, the Netherlands tax authorities required the issuer of an invoice incorrectly mentioning such a tax to correct the invoice, either by issuing a new invoice or by issuing a credit note addressed to the beneficiary of the services provided.

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

12Stadeco is a company established in the Netherlands which is in the business of renting, constructing and dismantling stands for trade fairs and exhibitions.

13In the years 1993 to 1995, Stadeco provided its services in Germany and in third countries for the Economische Voorlichtingsdienst (Economic Affairs Press and ‘ ’

Information Service; the EVD ), a body governed by public law established in the Netherlands and attached to the Ministry of Economic Affairs. The EVD used the services of Stadeco solely for activities not subject to turnover tax in the Netherlands and is not, as part of a body governed by public law, entitled to deduct that tax.

14The invoices for those services provided outside the Netherlands included amounts due by way of turnover tax which would have been applicable to identical services provided in the Netherlands. The EVD paid those invoices in their entirety and Stadeco paid in the Netherlands the tax so included.

15In 1996, the tax authorities informed Stadeco that it was not liable to any turnover tax in the Netherlands with regard to the services in question provided outside the Netherlands. Subsequently, Stadeco requested reimbursements of all the taxes paid on that basis, the amount of which was NLG 230 314 (EUR 104 512). As the tax authorities made the reimbursement requested subject to the correction of the invoices, Stadeco sent them a copy of a credit note to that effect. As a result, it received that reimbursement.

16However, during an inspection in 2000, the tax authorities established that Stadeco had not issued any credit notes to EVD, nor corrected the invoices, nor had it made any repayment to it. For this reason, the tax authorities issued a supplementary tax notice for the entirety of the reimbursed taxes.

17Following the dismissal of its complaint lodged against that notice, Stadeco obtained ’

the annulment of that notice before the Gerechtshof te s-Gravenhage (Regional Court of Appeal, The Hague). That court held that the correction of the invoicing errors was not essential in the circumstances, because there was no risk of loss of tax revenue on account of the fact that the status of EVD excludes any right to deduct turnover tax.

18The Staatsecretaris appealed in cassation to the Hoge Raad der Nederlanden against the ’

judgment of the Gerechtshof tes-Gravenhage. He argues that, since Stadeco did not respect the requirements relating to the correction of the invoice, it does not have any right to retain the reimbursement of the turnover tax.

19The referring court is of the view that, under the substantive rules on VAT, since the place of the supply of the services in question is not the Netherlands, the supplementary tax notice can only be based on Article 37 of the Wet, which transposes Article 21(1)(c) of the Sixth Directive into Netherlands law.

20However, the referring court expresses doubts as to whether a turnover tax debt arises, under Article 21(1)(c) of the Sixth Directive, in the Member States where the issuer of an invoice is established, when the place of supply relating to that invoice is deemed to be, according to the common system of VAT, in another Member State.

21If it does not, it also raises the question whether the refund of the tax debt can be made subject to the correction of the invoice in question, in particular when the beneficiary of the services supplied does not have the right to deduct tax. In that respect, it maintains that it cannot be ruled out from the outset that the Member States have the right to prescribe such requirements to prevent unjust enrichment.

22In those circumstances, the Hoge Raad der Nederlanden decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘ … 1. Is Article 21(1)(c) of the Sixth Directive to be interpreted as meaning that no liability to pay VAT arises in the Member State in which the issuer of the invoice is resident or established if the issuer of that invoice includes on it the VAT in respect of an activity which, according to the common system of [VAT] is deemed to be carried out in another Member State or in a non-member country?

2. If not: if an invoice as referred to in Article 21(1)(c) of the Sixth Directive has been issued to an addressee who is not entitled to deduct VAT (and consequently there is no risk of any loss of tax revenue), are the Member States entitled to make the refund of the erroneously invoiced VAT which, according to that provision, is consequently liable to be paid, subject to the requirement that the taxable person subsequently issues a corrected invoice to his customer in which there is no ’

mention of any VAT amount?

The questions referred for preliminary ruling

The first question

23By its first question, the referring court asks, essentially, whether Article 21(1)(c) of the Sixth Directive must be interpreted as meaning that no liability to pay VATarises under that provision in the Member State in which the issuer of the invoice is resident or established, if the issuer of that invoice includes on it the VAT in respect of an activity which, according to the Sixth Directive, is deemed to be carried out in another Member State or in a non-member country.

24In that connection, it must straight away be pointed out that, contrary to the assertion of Stadeco, the fact that Article 21(1)(c) of the Sixth Directive seeks to determine who is ‘ ’

liable to pay VAT under the internal system , whereas in the main proceedings Stadeco did not provide the services in question to the EVD in the Netherlands, does not prevent subparagraph (c) of that provision from being applicable to the facts in the main proceedings.

25First, as the Advocate General points out in point 12 of her Opinion, it follows in particular from Article 7(1) and Article 21(2) of the Sixth Directive that the expression ‘ ’

under the internal system refers to all of the territory of the European Community, as laid down in Article 3 of the Sixth Directive.

26Second, it should be noted that under Article 21(1)(c) of the Sixth Directive, any person who mentions VAT on an invoice or other document serving as invoice is liable to pay that tax. In particular, those persons are liable to pay VAT mentioned on an invoice independently of any obligation to pay it on account of its being a transaction subject to VAT (see, to that effect, Case C-342/87 Genius Holding [1989] ECR 4227, paragraph 19; Case C-454/98 Schmeink & Cofreth and Strobel [2000] ECR I-6973, paragraph 53; and Case C-35/05 Reemtsma Cigarettenfabriken [2007] ECR I-2425, paragraph 23).

27Consequently, in contrast to the case of tax debt which may arise on the basis of a transaction subject to VAT, the place of the supply of services giving rise to an invoice is not relevant with regard to the question whether a tax debt arises under Article 21(1)(c) of the Sixth Directive, which is due solely because theVAT is mentioned on that invoice.

28In stating that the VAT mentioned on an invoice is due regardless of any obligation to pay on the basis of a transaction subject to VAT, Article 21(1)(c) of the Sixth Directive seeks to eliminate the risk of loss of tax revenue which the right to deduct provided for in Article 17 of the Sixth Directive might entail (see, to that effect, Schmeink & Cofreth and Strobel, paragraphs 57 and 61; C-78/02 toC-80/02 Karageorgou and Others [2003] ECR I-13295, paragraphs 50 and 53; and Reemtsma Cigarettenfabriken, paragraph 23).

29Even if the exercise of that right to deduct is limited only to taxes corresponding to a transaction subject to VAT (see Genius, paragraph 13), the risk of loss of tax revenue is not in principle completely eliminated as long as the addressee of an invoice incorrectly mentioning VAT could still use it for the purposes of such deduction under Article 18(1)(a) of the Sixth Directive (see, to that effect, Schmeink & Cofreth and Strobel, paragraph 57).

30According to that provision, when a taxable person holds an invoice drawn up in accordance with Article 22(3) of that directive, he can rely on his right to deduct VAT before the tax authorities. As pointed out by the Netherlands and German Governments, it is conceivable that complex circumstances and legal relations could prevent the tax authorities from determining in sufficient time that other considerations preclude the exercise of the right to deduct.

31Since the risk of the loss of tax revenue which the exercise of the right to deduct by the addressee of the invoice entails is carried by the Member State to which the VAT mentioned on the invoice relates, the VAT is due, pursuant to Article 21(1)(c) of the Sixth Directive, in that Member State.

32In that connection, it is for the national court to ascertain, taking into account all the relevant circumstances of the case, to which Member State the VAT mentioned on the invoice in question is due. In particular, the rate mentioned, the currency in which the amount to be paid is expressed, the language in which the invoice was drawn up, the content and context of the invoice in question, the place of establishment of the issuer of that invoice and the beneficiary of the services performed, as well as their behaviour, can be relevant in that regard.

33In the light of the foregoing, the answer to the first question is that Article 21(1)(c) of the Sixth Directive must be interpreted as meaning that the VAT is due, pursuant to that provision, to the Member State to which the VAT mentioned on the invoice or other document serving as invoice relates, even if the transaction in question was not taxable in that Member State. It is for the national court to ascertain, taking into account all the relevant circumstances of the case, to which Member State the VAT mentioned on the invoice in question is due. In particular, the rate mentioned, the currency in which the amount to be paid is expressed, the language in which the invoice was drawn up, the content and context of the invoice in question, the place of establishment of the issuer of that invoice and the beneficiary of the services performed, as well as their behaviour, can be relevant in that regard.

The second question

34By its second question, the referring court asks, essentially, whether the principle of fiscal neutrality precludes a Member State from making the refund of VAT, due in that Member State merely because it was erroneously mentioned on the invoice, subject to the requirement that the taxable person have sent the beneficiary of the services supplied a corrected invoice not mentioning that VAT, where the latter does not have any right to deduct VAT, and consequently there is no risk of loss of tax revenue.

35In that regard, it should be borne in mind that the Sixth Directive does not make express provision for the case where the VAT is mentioned in error on an invoice when it is not due on the basis of a transaction subject to that tax. Accordingly, so long as this lacuna has not been filled by the Community legislature, it is for the Member States to provide a solution (Schmeink & Cofreth and Strobel, paragraphs 48 and 49, and Karageorgou and Others, paragraph 49).

36The Court has held that, to ensureVAT neutrality,it is for the Member States to provide for the possibility in their internal legal systems of refunding any tax improperly invoiced, once the person who issued the invoice shows that he acted in good faith (Genius Holding, paragraph 18).

37However, where the issuer of the invoice has in sufficient time wholly eliminated the risk of any loss in tax revenues, the principle of the neutrality of VAT requires that VAT which has been improperly invoiced can be adjusted without such adjustment being made conditional by the Member States upon the issuer of the relevant invoice having acted in good faith (see Schmeink & Cofreth and Strobel, paragraph 58, and Karageorgou and Others, paragraph 50).

38In addition, that refund cannot be dependent upon the discretion of the tax authorities (Schmeink & Cofreth and Strobel, paragraph 68).

39It should be borne in mind, in that connection, that the measures that the Member States may adopt in order to ensure the correct levying and collection of the tax and for the prevention of fraud must not go further than is necessary to attain such objectives. They may not therefore be used in such a way that they would have the effect of undermining VAT neutrality, which is a fundamental principle of the common system of VAT established by the relevant Community legislation (see, by way of analogy, Schmeink & Cofreth and Strobel, paragraph 59 and the case-law cited).

40Consequently, if reimbursement of theVAT becomes impossible or excessively difficult as a result of the conditions under which applications for reimbursement of tax may be made, those principles may require that the Member States provide for the instruments and the detailed procedural rules necessary to enable the taxable person to recover the unduly invoiced tax (see, to that effect and by way of analogy, Reemtsma Cigarettenfabriken, paragraph 41).

41In the main proceedings, it is clear that the Netherlands tax authorities, according to the general instructions of the Staatssecretaris to that effect, made the refund of the VAT ’

paid by Stadeco subject to Stadeco s correction of the invoices sent to EVD, either by the sending of new invoices not mentioning the VAT or by the drawing up of a credit note.

42Since both a corrected invoice and a credit note clearly indicate to the beneficiary of the services supplied that no VAT is due to the Member State in question and, therefore that that beneficiary does not have any right in that regard to deduct VAT, that requirement can in principle ensure the elimination of the risk of loss of tax revenue. In addition, that requirement clearly does not make the reimbursement of that tax dependent on the discretion of the tax authority.

43Furthermore, while it is for the national court to assess in the main proceedings whether Stadeco had demonstrated that it had itself completely eliminated in sufficient time the risk of the loss of tax revenue, the Court may, in order to give the national court a useful answer, provide it with all the guidance that it deems necessary (see to that effect, in particular, Case C-49/07 MOTOE [2008] ECR I-4863, paragraph 30, and Case C-414/07 Magoora [2008] ECR I-10921, paragraph 33).

44According to the order for reference, Stadeco sent the Netherlands tax authorities a copy of a credit note made out to EDV whereas, in reality, Stadeco had neither drawn up such a note nor corrected the invoices in question in the main proceedings.

45It appears that, in the main proceedings, the risk of loss of tax revenue was only eliminated because, on the one hand, the status of the EVD as a public-law body and, on the other, the fact that EVD used the services of Stadeco exclusively for activities not subject to turnover tax in the Netherlands excluded any right to deduct in respect of that tax.

46However, as has been pointed out in paragraph 30 of this judgment, it cannot in a general manner be ruled out that complex circumstances and legal relations could stand in the way of a finding, in sufficient time, by the tax authorities that such considerations preclude the exercise of the right to deduct.

47In such circumstances, it must be held that making the refund of theVAT mentioned on an invoice subject to the requirement that that invoice be corrected, does not in principle go beyond what is necessary to achieve the objective of completely eliminating all risk of loss of tax revenue.

48In addition, in so far as it appears from the circumstances of the main proceedings that the Netherlands tax authorities have also made the refund of the VAT subject to the payment by the issuer of the invoice in question, to the beneficiary of the services performed, of the amount of tax incorrectly paid, it must be recalled that Community law does not prevent a national legal system from disallowing repayment of charges which have been levied but were not due, where to allow such repayment would lead to unjust enrichment of those having the right (Case C-309/06 Marks & Spencer [2008] ECR I-2283, paragraph 41 and the case-law cited).

49The existence and the degree of unjust enrichment which repayment of a charge which was levied though not due under Community law entails for a taxable person can be established only following an analysis in which all the relevant circumstances are taken into account (see, to that effect, Marks & Spencer, paragraph 43).

50It must be pointed out that it is for the national court to carry out such an analysis. In that context, it could be relevant whether the contracts concluded between Stadeco and EVD relate to fixed amounts of remuneration for the services provided or basic amounts increased, where appropriate, by the tax applicable. In the first case, there might be no unjust enrichment of Stadeco.

51In view of all the foregoing, the answer to the second question is that the principle of fiscal neutrality does not generally preclude Member States from making the refund of VAT due in that Member State merely because it was erroneously mentioned on the invoice subject to the requirement that the taxable person have sent the beneficiary of the services performed a corrected invoice not mentioning that VAT, if that taxable person has not completely eliminated in sufficient time the risk of the loss of tax revenue.

Costs

52Since 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 (Third Chamber) hereby rules:

1. Article 21(1)(c) 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 91/680/EEC of 16 December 1991 must be interpreted as meaning that turnover tax is due, in accordance with that provision, to the Member State to which the VAT mentioned on an invoice or other document serving as invoice relates, even if the transaction in question was not taxable in that Member State. It is for the national court to ascertain, taking into account all the relevant circumstances of the case, to which Member State the VAT mentioned on the invoice in question is due. In particular, the rate mentioned, the currency in which the amount to be paid is expressed, the language in which the invoice was drawn up, the content and context of the invoice at issue, the place of establishment of the issuer of that invoice and the beneficiary of the services performed, as well as their behaviour, can be relevant in that regard.

2. The principle of fiscal neutrality does not generally preclude Member States from making the refund of VAT due in that Member State merely because it was erroneously mentioned on the invoice subject to the requirement that the taxable person have sent the beneficiary of the services performed a corrected invoice not mentioning that VAT, if the taxable person has not completely eliminated in sufficient time the risk of the loss of tax revenue.

[Signatures]

Opinion of the Advocate-General

I – Introduction

1The Hoge Raad der Nederlanden has referred two questions on the interpretation of the Sixth VAT Directive (2) to the Court. The first question seeks to determine whether a taxable person is liable for the VAT he has mentioned in an invoice, even though the service invoiced was not actually subject to taxation at the place where the issuer is established. The following question seeks to determine whether any tax refund can be made subject to the requirement that the incorrect invoice be replaced by a corrected invoice.

2This was demanded by the Netherlands tax authorities in the main proceedings. The underlying national rules are intended to prevent the recipient of the invoice from deducting the incorrectly mentioned VAT even though the issuer of the invoice has not paid it or has had it refunded to him. In the present case, however, there is no danger of this, because the recipient of the service was a State authority not entitled to deduct VAT. The question therefore arises whether the application of the legislation at issue in such a case goes beyond what is necessary in order to achieve that objective.

II – Legal context

A – Community Law

3Article 21 of the Sixth Directive, in the version resulting from Article 28g, (3) states, in extract:

‘The following shall be liable to pay value added tax:

I. under the internal system

...

(c) any person who mentions the value added tax on an invoice or other document serving as invoice; …’

B – National legislation

4Article 37 of the Wet op de Omzetbelasting 1968 (Law on Turnover Tax) provides that anyone who makes any form of tax return in respect of turnover tax for which, save under Article 37, he is not liable shall become liable for that tax upon issuing the invoice, and must pay it in accordance with the tax return.

III – Facts, questions referred and procedure

5Stadeco BV hires out stands for trade fairs, which it builds and takes down on location. In the years 1993 to 1995 it provided such services for the Economische Voorlichtingsdienst (Economic Affairs Press and Information Service; ‘EVD’), an authority of the Netherlands Ministerie van Economische Zaken (the Ministry of the Economy,) at trade fairs and exhibitions in Germany and in non-member countries. It issued invoices for this to EVD referring to amounts described as VAT and paid the tax. EVD used the services supplied by Stadeco solely for activities in respect of which, as part of a body governed by public law, it is not entitled to deduct VAT.

6The tax authorities informed Stadeco that it was not liable to pay VAT in the Netherlands in respect of those services, as they had not been supplied in the Netherlands. Stadeco therefore applied in 1996 for repayment of the tax, in the total sum of NLG 230 314 (EUR 104 512). The tax authorities requested Stadeco to draw up a credit note in favour of EVD in respect of the sums reclaimed and to send them a copy. By decision of 7 February 1997, the refund applied for was granted to Stadeco.

7During an inspection in 2000, it was established that Stadeco had not issued any credit notes to EVD, nor had it made any repayment. For this reason, the tax authorities issued a supplementary tax notice, which Stadeco however successfully challenged before the Gerechtshof te ‘s-Gravenhage (Regional Court of Appeal, The Hague).

8By order of 30 November 2007, the Hoge Raad (Supreme Court of the Netherlands), before which the appeal against that decision had been brought, referred the following questions to the Court for a preliminary ruling:

‘(1) Is Article 21(1)(c) of the Sixth Directive to be interpreted as meaning that no liability to pay VAT arises in the Member State in which the issuer of the invoice is resident or established if the issuer of that invoice includes in it the VAT in respect of an activity which, according to the common system of value added tax, is deemed to be carried out in another Member State or in a non-member country?

(2) If not: if an invoice as referred to in Article 21(1)(c) of the Sixth Directive has been issued to a recipient of services who is not entitled to deduct VAT (and consequently there is no risk of any loss of tax revenues), are the Member States entitled to make the correction of the erroneously invoiced VAT which, according to that provision, is consequently liable to be paid, subject to the requirement that the taxable person subsequently issues a corrected invoice to his customer in which there is no mention of any VAT amount?’

9In the proceedings before the Court, the Greek, German, Italian and Netherlands Governments and the Commission of the European Communities submitted written and oral observations. Stadeco only commented at the hearing before the Court.

IV – Legal assessment

A – The first question

10By the first question, in substance, the referring court asks the Court whether Article 21(1)(c) of the Sixth Directive should be interpreted as meaning that the issuer of an invoice is liable for the VAT of a Member State mentioned in the invoice in that State even if the transaction was not actually taxable there.

11A preliminary point to note is that this provision is applicable in cases such as the present where services were provided in another Member State.

12Article 21(1) determines which persons are liable to pay tax under the internal system. So the provision covers not only transactions within the country, as the Dutch version ( binnenlands verkeer ) (4) would seem to suggest. The other language versions make it clear that the provision refers to transactions effected within the Community. (5) This also emerges from the systematic context. Transactions under the internal system in accordance with paragraph 1 and the special rules relating to them in paragraphs 2 and 3 contrast with imports into the Community governed by paragraph 4. The ambiguous reference to the internal system is moreover no longer mentioned in the new version in Article 203 of Directive 2006/112/EC. (6)

13In addition, in Reemtsma , (7) a case with similar facts, the Court proceeded on the assumption that Article 21(1)(c) applied. That case also concerned the liability of the issuer of an invoice for the tax mentioned, but the tax was actually due from the recipient of the service in another Member State. In the end, that provision was nevertheless inapplicable, because it was not the issuer who requested the adjustment of tax, but the recipient.

14However, Article 21(1)(c) establishes a tax liability only with respect to the State where VAT is mentioned in the invoice. In the absence of an explicit statement, it must be ascertained by interpretation of the invoice which VAT is involved. The tax rate, the currency of the amount invoiced, the issuer’s and the recipient’s place of establishment and the place where the service was provided, if that place is evident from the invoice, may be strong indications. That restrictive understanding is necessary in order to rule out the possibility that several Member States claim that the tax is due, on the basis of the same invoice.

15According to the wording of Article 21(1)(c) of the Sixth Directive, a person is liable to pay tax merely because he mentions the tax on an invoice. (8)

16It is uncertain whether that formal circumstance actually suffices to charge the tax, or whether there must also be a taxable transaction for the purposes of Articles 5 to 7 or Article 28a of the Sixth Directive in the State where VAT was mentioned on the invoice. In that latter case, the refund could be requested without a prior correction of the invoice, if the underlying transaction proves not to be taxable in the relevant State.

17The meaning and purpose of Article 21(1)(c) militate against subjecting tax liability under that provision to the further requirement that the tax mentioned must also be in fact based on a taxable transaction in the relevant State.

18The provision is intended to exclude the risk of any loss in tax revenues through the use of the invoice in order to deduct VAT. (9) By mentioning the VAT in the invoice, the issuer gives the impression that a taxable transaction has been effected and that he has paid VAT or intends paying VAT. According to Article 21(1)(c) the issuer of the invoice must therefore also be liable for the payment of the tax. That is because, for the exercise of the right to deduct VAT, it suffices for the purposes of Article 18(1)(b) of the Sixth Directive that the taxable recipient holds an invoice mentioning the VAT, in accordance with the requirements of Article 22(3) of the Directive. Article 21(1)(c) ensures that VAT is not deducted without it having been actually paid.

19In the Genius Holding (10) judgment, the Court in any case rejected the claim to deduct VAT in respect of tax mentioned on an invoice which does not correspond to the supply of goods or the provision of services. However, it is not always guaranteed that the tax authorities will gain knowledge of that fact. Moreover, the tax deduction may have already been granted before it becomes apparent that the invoiced supply of services or goods was not at all taxable or not taxable to the amount mentioned. Therefore the issuer of the invoice must be responsible for the payment of the tax mentioned, as long as the invoice has not been corrected and the risk of loss of tax revenue has not been eliminated. (11)

20The tax liability referred to in Article 21(1)(c) is not ruled out simply because the recipient is not entitled to deduct VAT. As the German Government rightly stressed, it is not evident from the invoice alone whether the recipient is entitled to deduct VAT.

21The answer to the first question is therefore that Article 21(1)(c) of the Sixth Directive is to be interpreted as meaning that the issuer of an invoice is liable for the VAT of a Member State mentioned in the invoice in that State, even if the transaction was not actually taxable there.

B – The second question

22By the second question, the referring court asks whether the refund of the tax erroneously mentioned in an invoice can be made subject to the taxable person replacing the invoice with a corrected invoice.

23In that regard, it should be noted that the Sixth Directive makes no provision for the correction of an invoice mentioning in error the VAT of a Member State, even though no taxable transaction was effected in that State. Consequently, it is for the Member States to ensure VAT neutrality by providing in their internal legal systems for the possibility of correcting any tax improperly invoiced. (12)

24In the Schmeink & Cofreth and Strobel judgment, (13) the Court pointed out in that regard that measures which the Member States may adopt under Article 22(8) of the Sixth Directive in order to ensure the correct levying and collection of the tax and for the prevention of fraud must not go further than is necessary to attain such objectives. They may not therefore be used in such a way that they would have the effect of undermining VAT neutrality, which is a fundamental principle of the common system of VAT. Where the issuer of the invoice has in sufficient time wholly eliminated the risk of any loss of tax revenues, it is not necessary to ensure the collection of VAT or to prevent tax evasion that the issuer demonstrates his good faith.(14)

25That statement could be understood as meaning that the provisions of national law may not, in cases such as the present, where there is no risk of any loss of tax revenues, impose any further conditions for the refund of the tax. As ECD, the recipient of the invoice, is not entitled to deduct the erroneously mentioned Netherlands VAT, there is in the present case no risk of a loss of tax revenues for the Netherlands.

26However, I do not think that the Court of Justice wished to set the Member States such narrow limits. On the contrary, the national legislature enjoys a wide discretion with regard to the detailed formulation of the rules on the adjustment and refund of tax mentioned in error on an invoice. It must however observe the principles of equivalence and effectiveness (15) and the general principles of law, in particular the principle of proportionality. (16)

27A national rule generally prescribing the exchange of an incorrect invoice against a correct invoice does not seem disproportionate. That condition is, as a rule, a suitable means of excluding any unwarranted deduction of VAT with the assistance of the original invoice. It serves the purpose of administrative simplification if the tax authorities are not required to examine in every individual case whether the recipient of the receipt is perhaps not entitled to deduct VAT, so that there is no threat of risk of any loss of tax revenues.

28It must be borne in mind in this context that the taxable person, by issuing the incorrect invoice, has himself necessitated the replacement procedure and that the replacement of the invoice does not normally make the exercise of the right to refund excessively difficult. At most, it could be contrary to the principle of proportionality to refuse the refund where the invoice has not been replaced, if in the individual case a replacement is impossible, for example, because the invoice has been misplaced and the possibility of its being used to exercise the right to deduct VAT is ruled out.

29That is not precluded by the Court’s statement in Collée (17) ‘that a national measure which, in essence, makes the right of exemption in respect of an intra-Community supply subject to compliance with formal obligations, without any account being taken of the substantive requirements and, in particular, without any consideration being given as to whether those requirements have been satisfied, goes further than is necessary to ensure the correct levying and collection of the tax’. In contrast to the rules on the taxation of intra-Community acquisitions and the exemption of intra-Community supplies, the tax liability under Article 21(1)(c) does not depend on the material taxability of a transaction, but is tied solely to the formal criterion of being mentioned in an invoice.

30Furthermore, it is settled case-law that Community law does not prevent a national legal system from disallowing repayment of charges which have been levied but were not due where to do so would lead to unjust enrichment of the recipients.(18) It follows that the refund may be tied to a condition which makes an unjust enrichment of the issuer of the invoice more difficult.

31If there was a VAT amount originally mentioned in the invoice which was not actually payable or not payable to the amount specified, the recipient will – subject to specific contractual arrangements – have a civil claim for repayment of the amount wrongly paid. (19) By making the refund of the tax to the issuer of the invoice conditional on the issuer exchanging or in some suitable way correcting the invoice, the national rules ensure that the recipient receives the information necessary to exercise the right to repayment.

32In the present case, there is no need to examine whether the Member States may, in addition, insist that the issuer of the invoice actually repay the unduly paid VAT to his contract partner. This seems to be required by the Netherlands tax authorities, according to the Netherlands Government, but the referring court has not asked about the admissibility of such a further condition. (20)

33Last, it must also be observed that Community law contains no specific requirements for the adjustment of tax in the case that the transaction is not taxable in the State whose VAT is mentioned in the invoice but rather in another Member State or in a non-member country.

34The Sixth Directive in particular does not oblige the first Member State to allow reimbursement of the tax only on condition that the replacement invoice mentions the tax of the other Member State, as the Italian Government has argued. For that, the first Member State would have to assess whether the issuer of the invoice is liable for tax in the other Member State and in what amount. That assessment is however not automatically possible for the State whose VAT is to be reimbursed. In the other State, it could be the recipient and not the provider of the service who is liable for tax, for example, under Article 21(1)(b). Moreover, a non-harmonised exemption or a reduced rate could apply.

35Irrespective of that, however, the issuer is obliged, under Article 22(3) of the Sixth Directive in conjunction with the relevant provisions of the implementing legislation of the Member State in which the transaction is actually subject to tax, to mention in the corrected invoice the tax he may be liable for in that State.

36The answer to the second question is therefore that Community law does not prohibit Member States from making the correction of tax erroneously invoiced and hence payable under Article 21(1)(c) of the Sixth Directive subject to the requirement that the taxable person subsequently issues a corrected invoice to his customer. This applies even if the recipient of the invoice is not entitled to deduct VAT.

V – Conclusion

Conclusion

37I accordingly propose that the questions referred for a preliminary ruling be answered as follows:

(1) Article 21(1)(c) of Sixth Directive 77/388/EEC, as amended by Directive 91/680/EEC, is to be interpreted as meaning that the issuer of an invoice is liable for the VAT of a Member State mentioned in the invoice in that State, even if the transaction was not actually taxable there.

(2) Community law does not prohibit Member States from making the correction of the tax erroneously invoiced and hence payable under Article 21(1)(c) of the Sixth Directive subject to the requirement that the taxable person subsequently issues a corrected invoice to his customer. This applies even if the recipient of the invoice is not entitled to deduct VAT.

(1) .

(2) – 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), replaced with effect from 1 January 2007 by Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).

(3) – In the version of Directive 91/680/EEC of 16 December 1991 supplementing the common system of value added tax and amending Directive 77/388 with a view to the abolition of fiscal frontiers (OJ 1991 L 376, p. 1). By Council Directive 2000/65/EC of 17 October 2000 amending Directive 77/388 as regards the determination of the person liable for payment of value added tax (OJ 2000 L 269, p. 44), which is not temporally applicable to the facts of the main proceedings, subparagraph c became subparagraph d, without any changes to its content. The relevant provision is now to be found in Article 203 of Directive 2006/112.

(4) – See, in that regard, the views set out in points 5.2 to 5.8 of the Opinion of Advocaat‑General W. de Wit of 29 June 2007, which is part of the Hoge Raad’s order for reference.

(5) – Compare, inter alia, FR: régime interne; IT: regime interno; EN: internal system; ES: régimen interior.

(6) – Cited in footnote 2.

(7) – Case C-35/05 Reemtsma Cigarettenfabriken [2007] ECR I‑2425.

(8) – See Case C‑342/87 Genius Holding [1989] ECR 4227, paragraph 19; Case C-454/98 Schmeink & Cofreth and Strobel [2000] ECR I-6973, paragraph 53; Joined Cases C-78/02 to C-80/02 Karageorgou and Others [2003] ECR I-13295, paragraph 50; and Reemtsma Cigarettenfabriken , cited in footnote 7, paragraph 23.

(9) – See the Commission proposal of 29 June 1973 for a Sixth Council Directive on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, Bulletin of the European Communities , Supplement 11/73, p. 22.

(10) – Genius Holding , cited in footnote 8, paragraph 15.

(11) – For details see comments on the second question referred for a preliminary ruling.

(12) – See, to that effect, Genius Holding , cited in footnote 8, paragraph 18; Schmeink & Cofreth and Strobel , cited in footnote 8, paragraphs 48, 49 and 56; and Karageorgou and Others , cited in footnote 8, paragraphs 49 and 50.

(13) – Cited in footnote 8, paragraph 59, which refers to Joined Cases C-110/98 to C-147/98 Gabalfrisa and Others [2000] ECR I-1577, paragraph 52. See also Case C‑146/05 Collée [2007] ECR I‑7861, paragraph 26.

(14) – Schmeink & Cofreth and Strobel , cited in footnote 8, paragraph 60, and Karageorgou and Others , cited in footnote 8, paragraph 50.

(15) – See, inter alia, Reemtsma Cigarettenfabriken , cited in footnote 7, paragraph 37 and the case-law cited.

(16) – See, on the applicability of the principle of proportionality to national measures for the purposes of implementing and supplementing the Sixth VAT Directive, inter alia, Joined Cases C-286/94, C-340/95, C-401/95 and C-47/96 Molenheide and Others [1997] ECR I-7281, paragraph 48, and Case C‑25/07 Sosnowska [2008] ECR I-0000, paragraph 23.

(17) – Cited in footnote 13, paragraph 29.

(18) – Case 104/86 Commission v Italy [1988] ECR 1799, paragraph 6; Case C-343/96 Dilexport [1999] ECR I-579, paragraph 47; and Case C‑309/06 Marks & Spencer [2008] ECR I-0000, paragraph 41.

(19) – In Reemtsma Cigarettenfabriken , cited in footnote 7, paragraph 39, the Court of Justice expressly held that it was permissible for the neutrality of VAT to be ensured by a civil law action for recovery of the sum received but not due.

(20) – At the hearing, the representative of the Netherlands Government, in response to the Court's question, conceded that this condition was not expressly foreseen under national law at the time of the facts of the main proceedings.