VATcodexEU VAT case law · Court of Justice and General Court

National derogations EU VAT case law

21 cases of the Court of Justice and the General Court of the European Union on this point of VAT law, from 2010 to 2024.

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The 21 cases, most recent first

Under each case, what the Court decided, from its summary. The summaries are AI-generated and are not official documents: open the case for the Court’s own text.

C-573/22 Foreningen C and Others

Judgment · 19 December 2024 · Denmark

VAT on the public broadcasting licence fee under the standstill derogation

The Court answered all three questions in the Member State's favour. Article 370 permits continued taxation regardless of whether the activity is a supply for consideration, applying the GIS reasoning on Article 378(1) by analogy. Extending the fee to smartphones and computers merely reflects technological development and does not alter the chargeable event. Financing other bodies is acceptable provided the activities come within the remit of the public broadcasting bodies. The qualification is that the taxation arrangements in force on 01-01-1978 must remain essentially unchanged. Confirms that Article 370 standstill derogations operate outside the harmonised scope, so taxpayers cannot attack them by showing there is no supply for consideration.

C-249/22 GIS

Judgment · 26 October 2023 · Austria

VAT on the Austrian public broadcasting fee under the accession derogation

Austria may charge VAT on the programme fee, irrespective of whether the broadcasting activity amounts to a supply of services for consideration under Article 2(1)(c). The Article 378(1) derogation permits Austria only to continue an existing tax, not to introduce a new one, so the arrangements must have remained essentially unchanged since accession. The 2011 amendment extending liability to those within the terrestrial area lacking a receiver module merely reflected technological change and did not alter the chargeable event. Broadcasting fees in Member States enjoying an accession or Article 370/378 derogation cannot be attacked simply by invoking Cesky rozhlas.

C-9/20 Grundstücksgemeinschaft Kollaustraße 136

Judgment · 10 February 2022 · Germany

Timing of input tax deduction where the supplier accounts for VAT on a cash basis

Article 167 precludes such legislation. Where a Member State uses the Article 66(b) derogation so that VAT becomes chargeable to the supplier only on receipt of payment, the customer's right of deduction likewise arises on payment. The link between chargeability and deduction may be severed only within the optional and much narrower scheme of Article 167a, which Germany had not adopted. The second question did not require an answer. Where a supplier accounts for VAT on a cash basis under an Article 66(b) derogation, the customer's deduction right follows the supplier's chargeability and not the time of supply.

C-191/21 Ministère de l’Économie, des Finances et de la Relance

Order · 10 February 2022 · France

Margin scheme on resale of land, legal identity of the goods purchased and resold

Ruling by reasoned order under Article 99, the Court held that Article 392 precludes the margin scheme where land purchased as built-on land has become building land before resale. The goods purchased and resold must be legally identical. It does not preclude the scheme where land already classified as building land under national law is merely altered, such as by partitioning into lots, provided the alterations do not amount to "buildings". It is for the national court to classify the land purchased. For property dealers the classification of the land is fixed at the moment of purchase, not only at resale.

C-717/19 Boehringer Ingelheim

Judgment · 6 October 2021 · Hungary

Reduction of the taxable amount for voluntary payments to a State health insurance agency

Article 90(1) of the VAT Directive precludes both conditions. Article 90(1) is not limited to price reductions imposed by law. A voluntary contractual payment reducing the consideration actually retained is a price reduction after the supply, the health insurance agency being treated as final consumer. Member States' discretion cannot extend to conditions that deny the reduction to an entire category of taxpayers. Where no invoice has been issued, neutrality and proportionality require the taxpayer to be allowed to prove the transaction by other means, particularly where the counterparty is a State entity. Confirms and extends Boehringer Ingelheim Pharma (C-462/16) to voluntary rebate arrangements with public payers, relevant to pharmaceutical and medical device suppliers operating under price volume or clawback agreements with State reimbursement bodies across the EU.

C-299/20 Icade Promotion

Judgment · 30 September 2021 · France

Margin scheme on resale of building land

The margin scheme applies where acquisition bore non-deductible VAT, and also where no VAT was charged but the purchase price incorporated input VAT borne by the initial seller. Otherwise it does not apply to acquisitions outside the scope (for example from a private individual managing private assets) or exempt. It cannot apply where land not built on only becomes building land after purchase, but partitioning into lots and connection to grids and networks does not exclude it, provided the improvements are not themselves "buildings". For developers and land traders in Member States operating the Article 392 derogation, an acquisition is tested for embedded VAT and not merely for the absence of a deduction.

C-787/19 Commission v Austria (VAT – Travel agents)

Judgment · 27 January 2021 · Austria

Austria could not exclude business customers from the travel agents scheme or use global margins

The Court finds the infringement established on both counts. The scheme applies to all types of customer, so business clients cannot be carved out, and the margin has to be determined for each supply of travel services rather than globally by category or period. Austria was ordered to pay the costs. The judgment closes the two most common national departures from the margin scheme.

C-335/19 E. (VAT – Reduction of the taxable amount)

Judgment · 15 October 2020 · Poland

Bad debt relief and the status of debtor and creditor

Article 90 precludes all of those conditions. VAT registration of debtor or creditor is unconnected with whether non-payment is definitive, and symmetry with the debtor's input tax adjustment under Article 185(2) does not require either party to retain taxable status. Excluding relief pending the outcome of insolvency proceedings is disproportionate. A reasonable probability of non-payment, with upward re-evaluation if payment follows, suffices. Article 90(1) has direct effect and the conditions must be set aside even if other national provisions are affected. Suppliers with unpaid Polish invoices can claim relief notwithstanding the customer's deregistration, liquidation or insolvency, and notwithstanding their own loss of taxable status, relying directly on Article 90(1).

C-276/19 Commission v United Kingdom (VAT – Scheme applicable to futures markets)

Judgment · 14 May 2020 · United Kingdom

Extending a pre-1978 derogation without fresh notification

The Court declared an infringement of Article 395(2). Derogations must be construed strictly and cannot be stretched to transactions excluded when the original notification was made, still less to markets covering types of transaction that did not then exist, such as carbon emission allowance trading. Sharing the same purpose is not enough. Only notification allows the Commission and Council to verify compliance. The Court expressly declined to rule on whether the measures satisfied the revenue test in Article 395(1). A reminder that grandfathered pre-1978 simplifications are frozen by their original notification text.

C-756/19 Ramada Storax

Order · 29 April 2020 · Portugal

Bad debt relief cannot be refused because the insolvency was declared abroad

The Court holds that those provisions preclude such legislation. Article 90(1) reflects the principle that the taxable amount is the consideration actually received, and a Member State cannot confine bad debt relief to insolvencies declared before its own courts under its own law. A finding of irrecoverability made by a court of another Member State must be given effect. An important order for cross border trade, where the customer insolvency will normally be handled abroad.

C-211/18 Idealmed III

Judgment · 5 March 2020 · Portugal

Private hospitals and comparable social conditions

Those contractual and funding features are relevant factors in assessing comparable social conditions, alongside the public interest nature of the services. Price fixing is not a precondition, its absence does not defeat exemption. The proportion of contracted services within the provider's total activity is irrelevant. The test attaches to the services, not the provider. Once supplies fall within Article 132(1)(b) exemption is mandatory, and the national option to tax, including any unexpired minimum period, cannot keep them taxed. Relevant to private hospitals, clinics and diagnostic centres, particularly in Portugal, that hold an option to tax while progressively contracting with public health bodies or social security schemes.

C-127/18 A-PACK CZ

Judgment · 8 May 2019 · Czechia

Bad debt relief where the insolvent debtor has lost taxable person status

Article 90 precludes national legislation denying correction of the taxable amount for total or partial non-payment on the ground that the debtor is no longer a taxable person. The derogation in Article 90(2) exists only to address uncertainty as to whether non-payment is definitive. Loss of taxable person status in insolvency points the other way. Article 273 cannot justify a rule that forces a supplier to pay VAT it never received, absent any particular evasion risk.

C-305/16 Avon Cosmetics

Judgment · 14 December 2017 · United Kingdom

Direct selling through unregistered resellers and the scope of an Article 27 derogation

The derogation is valid and is not precluded by Articles 17 and 27, even though it makes no allowance for input VAT on demonstration items borne by the unregistered resellers. The derogation touches only the taxable amount. The deduction rules remain intact, and non-taxable resellers simply have no right to deduct. Giving credit would itself be an unauthorised derogation from Article 17(2). No obligation existed to notify the Commission of that point. Direct selling groups operating under open market value directions cannot claw back the sticking VAT suffered by their unregistered representatives on demonstration items or third party purchases.

C-400/15 Landkreis Potsdam-Mittelmark

Judgment · 15 September 2016 · Germany

Scope of the German 10% derogation and non-economic use

The derogation does not apply where the goods or services acquired are used more than 90% for non-economic activities falling outside the scope of VAT. "Non-business purposes" bears its Sixth Directive meaning. Use for purposes other than the business, which may be taxed, is distinct from non-economic activity, which is outside the system altogether. Excluding deduction where economic use is below 10% breaches fiscal neutrality. The earlier interpretation applies retroactively, so no different reading applies before 12-02-2009. Public bodies and other entities in Germany with mixed economic and non-economic activity can rely on the ruling to claim a proportional deduction for the economic part, however small, since the 10% floor in Paragraph 15(1) UStG cannot be applied to non-economic use.

C-144/13 VDP Dental Laboratory and Others

Judgment · 26 February 2015 · Netherlands

Exemption of dental prostheses on intra-Community acquisition and importation

No cherry-picking: a taxable person cannot both use a national exemption that conflicts with the Directive and deduct input tax. The choice is exemption without deduction or taxation with deduction. Articles 140(a) and (b) and 143(a) do exempt intra-Community acquisitions and final importations of dental prostheses, but only where supplied by dentists or dental technicians and where the Member State of destination has not taken the Article 370 derogation. The position in the Member State of origin is irrelevant. The reference point is always the destination Member State's treatment. Relevant to dental supply chains and to advisers handling non-conforming national exemptions generally.

C-183/13 Banco Mais

Judgment · 10 July 2014 · Portugal

Turnover-based deduction proportion for motor vehicle leasing

It does not preclude it. Member States exercising the use-based option may impose a method other than turnover, provided it determines the deductible proportion more precisely and objectively reflects the actual share of expenditure attributable to taxed transactions. Restricting the fraction to the interest element is permissible where the mixed use goods and services are used primarily because of the financing and management of the leasing contracts rather than the provision of the vehicles, which the national court must verify. Relevant to banks, captive finance houses and leasing companies with mixed taxable and exempt activity, and to their advisers.

C-599/12 Jetair and BTWE Travel4you

Judgment · 13 March 2014

Standstill taxation of travel agents' services for journeys outside the EU

The standstill provisions do not preclude legislation adopted during the transposition period imposing VAT on travel agents' non-EU journeys. The Directive expressly fixed 01-01-1978 as the reference date, so such a law did not seriously compromise its result. A Member State taxing those services on 01-01-1978 need not apply Article 309. Article 370 with Annex X, Part A, point 4 is valid despite the resulting divergence, harmonisation being still partial. Treating margin-scheme travel agents differently from intermediaries is lawful, the two not being comparable. Confirms that Belgium may continue to tax margin-scheme supplies relating to journeys outside the EU, closing off refund claims built on Article 309 for periods since 1978.

C-65/11 Commission v Netherlands

Judgment · 25 April 2013 · Netherlands

Non-taxable persons may be included in a Dutch VAT group

The Court dismisses the action in its entirety. Nothing in Article 11 confines membership of a VAT group to taxable persons, and any risk of abuse is met by the second paragraph of that article, which allows Member States to take the measures needed to prevent evasion or avoidance. The complaint about the VAT Committee was also rejected. The Commission was ordered to pay the costs. Part of the series of grouping judgments of 25-04-2013 covering Ireland, Sweden, Finland, the United Kingdom, Denmark, the Czech Republic and the Netherlands.

C-285/10 Campsa Estaciones de Servicio

Judgment · 9 June 2011 · Spain

Open market value as taxable amount for supplies between connected parties

The Sixth Directive did not allow that substitution. Where consideration is agreed and actually paid, the transaction is one effected for consideration and the taxable amount is that subjective consideration, however low and whatever the connection between the parties. The private use valuation rules apply only to transactions free of charge, and equal treatment does not require otherwise because the two are not comparable. A derogating national rule not notified and authorised under Article 27 cannot be enforced against a taxable person. Later authorisation does not cure past periods. Confirms that below market pricing between connected parties is not itself a valuation issue.

C-489/09 Vandoorne

Judgment · 27 January 2011 · Belgium

Bad debt relief under a single-stage tobacco tax label scheme

The Court held that those provisions do not preclude such legislation. Intermediate suppliers under the scheme neither deduct input tax nor owe output tax, so they have no VAT debt capable of refund. That the tax is economically included in the price they paid is irrelevant. Because the taxable amount is fixed by reference to the final retail price, non-payment does not reduce it, and a refund would affect tax revenue at the final consumption stage to a non-negligible extent. Confirms that bad debt relief is structurally unavailable to wholesalers and distributors within Member States operating tax label style single-stage collection for manufactured tobacco.

C-188/09 Profaktor Kulesza, Frankowski, Jóźwiak, Orłowski

Judgment · 29 July 2010 · Poland

Reduction of input tax deduction as a penalty for not using a cash register

The Court held that the common VAT system does not preclude a temporary restriction on the amount of deductible input tax where sales record keeping obligations are breached, provided the sanction respects proportionality, which the national court must verify. The right to deduct itself must not be rendered meaningless. A 30% withholding, preserving most of the input tax, appeared neither excessive nor inadequate. Such a measure falls under Article 22(8), not Article 27(1), and is not a turnover tax caught by Article 33. Member States may enforce cash register and accounting obligations by penalties calculated as a percentage of deductible input tax, without seeking a derogation. Relevant to retail and cash businesses across Member States operating till based reporting regimes.

Related topics

Taxable amount · Right of deduction · Origin and scope of right of deduction · Supply of goods or services · Principles of fiscal neutrality and proportionality · Supply of services · Building land · Special scheme for travel agents · Total or partial non-payment of the price · Exemptions