Taxable person EU VAT case law

C-167/26 RX Dyrektor Krajowej Informacji Skarbowej

Opinion of the Advocate General · 10 September 2026 · Poland

Review, when the right to deduct is exercised where the invoice arrives in a later period

Advocate General’s proposal, not a ruling. The Advocate General proposes that the Court hold that the judgment of the General Court of 11 February 2026 in Dyrektor Krajowej Informacji Skarbowej (T-689/24) affects the unity and consistency of EU law. On the substance she proposes that the provisions and principles at issue be interpreted as meaning, first, that the right to deduct input tax must be exercised in respect of the period during which the two required conditions are satisfied for the first time, the goods have been delivered or the services performed and the taxable person holds the relevant invoice, and, second, that they do not preclude national legislation under which a taxable person may not assert the right in a return for a period in which the substantive conditions were met but the invoice had not yet been received, even where the invoice arrived before that return was submitted.

C-565/24 P-GmbH & Co. KG (Coffee trips)

Judgment · 10 September 2026 · Germany

Travel agents' margin scheme, day excursions financed by on-board sales, and a negative margin

Article 26 applies where a taxable person buys tourist services from third parties, in particular transport, in order to sell them in his own name to consumers in the form of excursions, and the fee received does not cover all the costs of those services, the remainder being financed by the revenue from goods sold to those consumers during the excursion. On the third question, the first sentence of Article 12(1) and the third sentence of Article 26(2) confer no right to a refund of input VAT where the margin on a single supply is negative. The judgment settles that the margin scheme is not displaced by the fact that the travel element is sold below cost and cross-subsidised by the sale of goods during the trip, and that a margin below zero marks the limit of the scheme rather than a claim against the exchequer. Relevant to day-excursion and promotional-selling operators, and to any margin computed on a single supply.

T-366/25 Szytelbiecka

Judgment · 9 September 2026 · Poland

Transfer of a totality of assets, donation of an undertaking in two half shares to two individuals who intend to contribute them to their own partnership, Article 19 of the VAT Directive

Article 19 of the VAT Directive does not cover such a transfer. The two transfers are distinct and independent of one another, so the condition that the elements transferred must together be sufficient to allow an independent economic activity to be carried on falls to be tested for each daughter separately. A share amounting to half of the undertaking is not an autonomous unit with which each daughter could have carried on that activity on her own, so the first condition for Article 19 is not met, irrespective of the intention to contribute the shares to a partnership. With that condition unmet, the condition on the recipient's intention to carry on the activity did not need to be examined. The Commission's admissibility objection was rejected. Absent a transfer of a totality of assets, the gratuitous transfer would not be an exempt transaction, so the question is not hypothetical. The judgment fixes the level at which the autonomy test bites in a divided transfer.

T-614/25 Trading 4

Judgment · 9 September 2026 · Latvia

Chain of supplies with a single intra-Community transport, triangular transaction, excise goods moving under a duty suspension arrangement, Articles 138(1), 141 and 197(1) of the VAT Directive

Those three circumstances do not, in themselves, exempt the supply made by the taxable person registered in the first Member State to the intermediary acquiring the goods and registered in the second. The third question was held inadmissible. The simplification arrangement in Article 141 concerns the intermediaries established in the second Member State, whereas the dispute concerns the application of Article 138(1), read in the light of Article 141, to the transactions carried out by Trading 4 in the first Member State, so the question bears no relation to the subject matter of the main proceedings. The judgment keeps the ascription of the single transport as the operative question in a chain, and refuses to let three surrounding facts stand in for it. It reaches fuel and other excise goods moving under suspension, where the duty arrangement and the transfer of the right to dispose of the goods run on separate tracks.

T-413/25 Peckeger

Judgment · 2 September 2026 · Austria

Contributing property for no shares, and the limits a Member State may place on Article 19

The General Court held that the contribution is not a supply of goods for consideration, since the transferor obtains no actual consideration for the properties. It is, however, an application of goods forming part of the business assets, transferred free of charge or applied for purposes other than those of the business within the first paragraph of Article 16, and is therefore treated as a supply for consideration. The Court further held that Article 19 precludes national legislation restricting the regime to certain categories of activity or income, including where the legislature opted for the rule before accession but confined it to specific cases not covered by the second paragraph of Article 19. Finally, the first paragraph of Article 19 has direct effect and may be relied on before the national courts. The transfer of a totality of assets is an autonomous concept of EU law, and the second paragraph of Article 19 sets out the only grounds on which a Member State may restrict it.

T-268/25 Sampension Livsforsikring

Judgment · 15 July 2026

100% ownership condition for VAT groups including exempt or non-taxable members

Article 11 precludes such a 100% ownership condition, unless it is a necessary and proportionate measure to combat tax evasion or avoidance under the second paragraph, a matter for the national court, bearing in mind that reduced receipts or a merely theoretical risk do not amount to evasion, and that the advantage is identical below 100%. Article 11 has no direct effect, so it cannot be relied on against a Member State where national law is incompatible and cannot be interpreted consistently. Relevant to financial services, insurance and pension groups, and to any partly exempt structure using shared service or administration companies where minority external shareholdings break wholly owned chains.

T-356/25 Rapera

Judgment · 8 July 2026

Liability of the tax representative of a non-established taxable person

Article 204 does not preclude designating a representative as the person liable even where he takes no part in the taxable transactions, provided the taxable person has so designated him. Article 205, read with proportionality, does preclude joint and several liability of a representative not designated as person liable where involvement, knowledge and good faith cannot be examined. Which VAT identification number was used is not decisive. A person liable under Article 204 cannot simultaneously be jointly liable under Article 205. The dividing line is designation.

T-444/25 Cavert

Judgment · 10 June 2026

Whether a VAT group can claim welfare and medical exemptions where the supplying member is not itself recognised

A VAT group may rely on the Article 132(1)(b) and (g) exemptions only where the services are supplied to third parties by a member which itself meets all the conditions, including, where it is not a public body, recognition as a medical care establishment or as a body of a social character. Grouping does not transfer one member's recognition to the others. The status conditions are assessed by reference to the person actually supplying, as a group member. The second question did not need answering. Healthcare, elderly care and disability care providers using VAT grouping in Member States that operate Article 11 cannot pool recognitions.

C-513/24 Oblastní nemocnice Kolín

Judgment · 19 March 2026 · Czechia

Regulatory equipment requirements and general costs

Such costs do not qualify as general costs on that basis alone. A statutory obligation to acquire goods or services is not in itself enough to establish a direct and immediate link with taxable output transactions or with the taxable person's economic activity as a whole. Only the objective relationship counts, though the obligation is one relevant circumstance. Each item must be assessed separately by reference to its actual use and, in particular, its intended allocation. Equipment allocated exclusively to exempt care gives no deduction. Equipment also serving taxable supplies gives a pro rata deduction. Hospitals, clinics, laboratories and other regulated operators with mixed exempt and taxable activity cannot claim a blanket residual deduction on licensing related infrastructure by pointing to the regulatory rulebook.

C-521/24 Aptiv Services Hungary

Judgment · 12 March 2026 · Hungary

Late receipt of invoices and the period for deducting acquisition VAT

The Court held that those provisions preclude such national rules and practice. Where the substantive conditions are met and the invoices, a formal condition, arrived only later, the two cumulative conditions for exercise are satisfied in the period of receipt, and confining the taxable person to a self-correction that has already expired makes the right practically impossible or excessively difficult. The qualification is that the taxable person must have acted in good faith, with no fraud established, and within the applicable limitation period. Relevant to any business making intra-Community acquisitions where supplier invoices arrive years late, and to groups with decentralised invoice capture.

C-527/24 Harry et Associés

Judgment · 12 March 2026 · Italy

Corrupted electronic refund application and access to a court

The Court held that those provisions preclude such national law. Where an application was transmitted in accordance with Directive 2008/9 and duly received by both administrations, and no element suggests the required information was missing, a technical fault not attributable to the taxable person cannot mean no application was introduced. Good administration required the refund authority to flag the fault and request a clean file under Article 20(1). Inaction must be challengeable before a court. Res judicata cannot perpetuate that error in a dispute with a different object, subject to the referring court's verification. Relevant to any business claiming cross-border VAT refunds through the portal procedure, and to advisers handling stalled claims.

T-575/24 Digipolis

Judgment · 25 February 2026 · Belgium

VAT status of an intermunicipal commissioning association

Such an association is a taxable person on its supplies to members, with no distinction by reference to members' VAT status, provided the supplies are for consideration and the association independently carries on an economic activity, matters for the national court. Cost-covering, pre-set lump sum contributions do not break the direct link. Article 13(1) does not shelter it. Telematics is telecommunications within Annex I and not negligible, and non-taxation could distort competition. The "emanation" theory cannot override that status. The Belgian "emanation" tolerance for commissioning associations and intermunicipal structures is incompatible with the Directive where the entity has its own legal personality, organs, staff, assets and risk.

C-796/23 Česká síť (Partners in a ‘company’)

Judgment · 11 December 2025 · Czechia

Who is the taxable person where partners in a partnership without legal personality supply services

Such national legislation is precluded. The taxable person, and so the person liable under Article 193, is whoever independently carries out the activity. Acting in its own name, on its own behalf and responsibility, and bearing the economic risk. Close cooperation does not remove independence. Departing from the civil law representation rules is irrelevant, save that the partnership itself cannot then be treated as the supplier. It remains for the national court to verify the facts, including whether the Article 11 grouping rules and abuse could apply. Relevant wherever domestic law channels VAT liability to a nominated partner or lead member of an unincorporated association or joint venture.

T-646/24 MS KLJUČAROVCI

Judgment · 3 December 2025 · Slovenia

Triangular simplification in a four party chain, and fraud

Article 141(c) does not require the person to whom the subsequent supply is made to take physical possession or receipt. Transport to that person's own customer in the same Member State does not prevent the condition being met, and the intermediary's knowledge of the onward supply is irrelevant, transactions being taxed on their objective characteristics. However, the authorities and courts of the Member State of identification must refuse both the Article 42 and 141 scheme and the second paragraph of Article 41 reduction where the acquirer knew or should have known it was participating in fraud in the chain. Useful for traders and advisers structuring chain transactions.

C-475/24 Fashion TV RO and Maestro

Order · 12 November 2025 · Romania

Use of criminal evidence in deduction disputes after proceedings against directors are discontinued

By reasoned order under Article 99, the Court held that the national court must verify that the substantive and formal conditions for deduction are met and may, to that end, examine evidence obtained in earlier criminal proceedings against persons distinct from the taxable person, provided the rights guaranteed by EU law, notably equality of arms and the rights of the defence, are respected. Discontinuance of those proceedings is irrelevant. The ne bis in idem question was inadmissible. Directors are not the same person as the company. The legal certainty limb was inadmissible for inadequate reasons. Confirms that a discontinued or time-barred criminal case against directors gives a company no immunity in the parallel VAT assessment.

C-744/23 Zlakov

Judgment · 23 October 2025 · Bulgaria

Pro bono representation and fees paid by the losing party

Court representation supplied free of charge is nonetheless a supply for consideration under Article 2(1)(c) where national law obliges the losing party, when ordered to pay the costs, to pay the lawyer fees fixed by that legislation. The direct link rests on both the engagement contract and the statute. Payment by a third party rather than the client is irrelevant, and uncertainty as to the outcome of the litigation does not break the link. Articles 26(1)(b), 28 and 75 do not apply. Where a statutory costs award goes directly to the lawyer under a pro bono or conditional arrangement, the awarded fee is taxable consideration and not an exempt or out-of-scope recovery, so VAT falls due on it.

C-234/24 Brose Prievidza

Judgment · 23 October 2025 · Bulgaria

Refund of VAT on tooling that never leaves the supplier's Member State

Refusal is precluded where the equipment has not physically left the territory of the supplier's Member State, unless, on all the circumstances, that supply forms part of a single indivisible economic supply with, or is ancillary to, the intra-Community supplies of the goods produced using it. Without physical movement to the acquirer there is no intra-Community acquisition and hence no exempt supply. Supplies by two independent suppliers, separately contracted and invoiced, with no abuse alleged, are normally independent. Useful for manufacturers and contract manufacturing groups where tooling is bought, often via a central group purchasing entity, and left with the producer.

C-794/23 Finanzamt Österreich (VAT invoiced in error to final consumers II)

Judgment · 1 August 2025 · Austria

Correcting VAT overcharged on simplified invoices to a mixed customer base

The risk of revenue loss is assessed invoice by invoice. No Article 203 liability for the excess VAT invoiced to a non-taxable person, even if similar supplies were made to taxable persons. But the exempting concept covers only non-taxable persons. A taxable recipient triggers the risk even if the supply was used privately or for non-deductible purposes. Estimating the proportion of invoices issued to taxable persons is permissible if all relevant circumstances are weighed and neutrality, proportionality and the rights of the defence are respected, the estimate being rebuttable. Relevant to any business in mass market B2C sectors (leisure, hospitality, retail, transport) that has applied the wrong rate and issued simplified receipts to unidentified customers.

C-427/23 Határ Diszkont

Judgment · 1 August 2025

A refund handling fee is its own supply, and it is not a net amount

The Court held that the handling service is a distinct and independent supply and not part of a single supply with the goods, and that it is not covered by the exemptions relied on. The protection of legitimate expectations may be relied on against the tax authority where that authority had consistently treated such services as exempt and had not informed the taxable person of the change in the national legislation which, in its earlier version, expressly listed them among exempt activities. It is irrelevant in that context that the taxable person later received a non-binding reply, given after the event on a request for a ruling, stating that the services were ancillary costs sharing the treatment of the exempt principal transaction. Articles 73 and 78 preclude the practice of treating the amounts invoiced as the handling fee as net amounts not including VAT, where the supplier treated its supply as exempt and it is manifestly impossible for it to recover the VAT afterwards from the purchasers. The judgment separates two operations that a retailer performs in the same transaction with the same customer and gives them different treatment, and it does so without allowing the exemption on the goods to carry across to the service.

C-501/24 Klinka-Geo Trans

Order · 2 May 2025 · Hungary

Refusing deduction where the transaction never took place, without testing knowledge of fraud

Ruling by order, the Court held that the Directive does not preclude a refusal made without any examination of the recipient's knowledge where the authority establishes that the transaction did not take place. The knowledge test belongs to cases where a real transaction is tainted by fraud elsewhere in the chain, not to cases where there was no supply at all. The Court declared itself manifestly without jurisdiction on the second question and the fourth and sixth questions manifestly inadmissible, and confirmed that the national court must disapply directions it considers contrary to clear case law without needing to make a prior reference. The distinction it draws is the one that decides many Hungarian and Romanian disputes.

C-278/24 Genzyński

Judgment · 30 April 2025 · Poland

Joint and several liability of company directors for VAT arrears

They do not preclude such a system, provided liability is confined to arrears arising during the director's term and to amounts unrecovered from the company, and provided the director can genuinely rebut the presumption by showing he exercised all due diligence in managing the company's affairs. The escape route must not be merely theoretical. But the mere fact that the exchequer was the company's sole creditor when permanent insolvency arose is not by itself a defence. Confirms Member States may attach personal VAT liability to directors on a rebuttable presumption of knowledge and influence, without proof of fraud or bad faith, following Herdijk.

C-213/24 Grzera

Judgment · 3 April 2025 · Poland

Land sales prepared by an agent, taxable person status of co-owning spouses

Article 9(1) permits treating the owner as a taxable person acting independently. The initial private character of the land is irrelevant, and the agent's acts, done in the owner's name and for the owner's account, are active property marketing using means comparable to a trader, the ultimate risk of no sale remaining with the principals. It does not preclude treating the spouses' statutory community as the single taxable person where both spouses jointly carry out the sales towards third parties and the community bears the economic risk. Landowners who outsource plot division, rezoning, servicing and marketing to a developer or agent cannot rely on the agent's involvement or margin based fee to stay outside VAT.

C-164/24 Cityland

Judgment · 3 April 2025 · Bulgaria

Removal from the VAT register as a penalty for persistent non-compliance

Those provisions and principles preclude such legislation. Member States may, within their discretion under Articles 213 and 273, provide for removal from the VAT register, and the removal rules in Articles 363 and 369r concern only the special scheme numbers. But deregistration is a particularly severe penalty, close to a prohibition on trading, so it can only be imposed after a full examination of the nature and seriousness of the infringements, the taxable person's conduct, and the risk to revenue and fraud. Confirms that deregistration is available as an anti-fraud tool but only on a reasoned, individualised assessment, with lesser penalties considered first.

C-277/24 Adjak

Judgment · 27 February 2025 · Poland

Directors' joint and several liability and the rights of the defence

Exclusion of the potentially liable director from the company's assessment proceedings is permissible. At that stage liability is only a possibility, and participation could compromise confidentiality and delay collection. But the exclusion is lawful only if, in the subsequent joint and several liability proceedings, the director can effectively challenge the findings of fact and legal classifications made in the assessment proceedings and can access the tax authority's file, subject to the rights of others. Member States may keep assessment and derivative liability in separate tracks, but the second track must be a genuine opportunity to reopen the quantum and characterisation of the debt, not merely to test the statutory conditions of liability.

C-262/24 Pegazus Busz

Order · 12 February 2025 · Hungary

Evidence of fraud must be put to the taxable person, and a lower court may depart from binding directions

Ruling by order, the Court declared several of the questions manifestly inadmissible or answerable from existing case law. On the merits it held that Article 47 of the Charter requires the taxable person to have knowledge of, and to be able to debate on an adversarial basis before the national court, the evidence on which the administration relies to find participation in evasion. It further held that the primacy of EU law and Article 267 TFEU oblige the national court to set aside directions it considers contrary to EU law, without being required to make a preliminary reference first. Two points of real practical weight in fraud cases.

C-331/23 Dranken Van Eetvelde

Judgment · 12 December 2024 · Belgium

Joint and several liability for another trader's VAT fraud

Article 205 permits liability for the entire VAT debt, with no apportionment by degree of participation, provided the taxable person can show it took all reasonably required measures to ensure its transactions were not part of the fraud. The underlying presumption must be rebuttable. No account need be taken of the actual debtor's deduction right, since in fraud cases that right is refused anyway. Article 50 does not apply because conduct in different tax years is not the same facts, whatever national law says about a continuing offence. Confirms that Member States may collect the full VAT loss from any knowing or negligent participant in a chain fraud, without civil style apportionment. Relevant to wholesale distribution and any sector exposed to missing trader arrangements.

C-527/23 Weatherford Atlas Gip

Judgment · 12 December 2024 · Romania

Deduction of VAT on intra-group administrative services

Article 168 precludes such a refusal where it is established that the services are used by the taxable person for the purposes of its own taxed output transactions. Simultaneous supply to other group members is irrelevant, as is the necessity or economic profitability of the purchase. But the national court must verify that the share of costs borne corresponds to the services actually received for its own transactions. VAT on expenditure serving third parties' transactions is not deductible. Useful for groups operating shared service or management charge arrangements across borders, where local authorities challenge deduction on "benefit to the group" or "no business need" grounds.

C-475/23 Voestalpine Giesserei Linz

Judgment · 4 October 2024 · Romania

Deduction on equipment provided free of charge to a subcontractor

Free provision to the subcontractor does not of itself break the link. Deduction must be allowed where the cost forms a component of the taxable person's output transactions or general costs. The qualification is that if the making available goes beyond what is necessary for that purpose, the link is partly broken and deduction is limited to the objectively necessary part. Absence of separate accounts is a formal failing and cannot bar deduction where the authorities can verify the substantive conditions. Penalties may be imposed instead. Useful for manufacturers and toll processing structures where the principal supplies plant, tooling, cranes or premises to contractors at no charge, a common pattern in automotive, foundry and construction supply chains.

C-709/22 Syndyk Masy Upadłości A

Judgment · 12 September 2024 · Poland

Blocked VAT account under the split payment mechanism in insolvency

The restriction is compatible with Articles 273 and 395 and the implementing decision. No provision of the Directive imposes obligations on Member States as to split payment, and the mechanism is not a derogation from Article 206. VAT is not paid to the State early, and the funds remain usable to pay suppliers' VAT and State liabilities, so there is no absolute blocking and no excess pre-financing. The Charter and TEU questions were inadmissible. Payment of municipal property tax is not governed by the Directive. Confirms that Polish split payment survives EU scrutiny, including where the account holder has ceased trading and is in insolvency.

C-741/22 Casino de Spa and Others

Judgment · 12 September 2024 · Belgium

VAT exemption for online lotteries but not other online gambling

Differentiated treatment is permissible provided objective differences (chance alone determining winners, the waiting period, stakes and odds, cultural factors) considerably influence the average consumer's choice. The identity, legal form, licence category, regulatory regime and legislative objectives of providers are irrelevant. National courts must disapply provisions incompatible with Article 135(1)(i), a constitutional court's maintenance of effects being irrelevant. Tax wrongly levied is refundable unless refund unjustly enriches the taxable person. No damages equivalent to the VAT paid on unlawful State aid grounds. Relevant to gambling operators in Member States that split the exemption by game type.

C-184/23 Finanzamt T II

Judgment · 11 July 2024 · Germany

Intra-group supplies for consideration where the recipient cannot deduct

Services supplied for consideration between members of the same group treated by a Member State as a single taxable person are not subject to VAT, even where the recipient cannot deduct the input VAT. A supplier inside the group cannot be treated individually as a separate taxable person, so the independence test in Article 4(1) is not reached. The "risk of tax losses" condition from the December 2022 judgments concerns only the designation of the controlling company as single taxable person, not the taxation of internal supplies. Confirmation, on the Sixth Directive and by extension Article 11 of Directive 2006/112, that intra-group supplies remain outside VAT regardless of the recipient's deduction position.

C-182/23 Makowit

Judgment · 11 July 2024 · Poland

Expropriation of farmland and acting as a taxable person

The Court held that such an expropriation against compensation is subject to VAT where the owner is a farmer who is a taxable person and acts as such, even absent any property marketing activity or steps by him. Article 14(2)(a) is a lex specialis with its own conditions: transfer of ownership, by public authority order or law, and effective payment of compensation directly linked to it. The qualification is that if the land formed part of the owner's private, non farming property, he does not act as a taxable person and the transaction escapes VAT. For farmers and other landholding businesses caught by compulsory purchase, road, rail and infrastructure schemes, the compensation is consideration for a taxable supply whenever the land sits in the business assets.

C-87/23 Latvijas Informācijas un komunikācijas tehnoloģijas asociācija

Judgment · 4 July 2024 · Latvia

Non-profit association, EU-funded training and the taxable amount

Subcontracted training invoiced by a non-profit association, subsidised by European funds up to 70%, is a supply of services for consideration. Article 28 does not apply absent an express agency agreement showing supply in one's own name on behalf of another. Subsidies paid by a European fund for a specific supply enter the taxable amount as third-party payment. Non-profit status does not preclude taxable person status where conduct is comparable to a typical operator. The referring court must still consider the Article 132(1)(i) exemption. Relevant to associations, foundations and other non-profit bodies delivering EU or nationally co-funded training and similar programmes, and to their advisers.

C-763/23 Dragoram Tour

Order · 25 June 2024 · Romania

Reselling air tickets alone falls within the travel agents' scheme

Ruling by reasoned order, the Court held that such a supply does fall within the special scheme, irrespective of the absence of additional services beyond information and advice. It further held that Articles 306(1) and 308 preclude national legislation giving travel agents an option to apply the normal VAT regime in the case of international passenger transport. The special scheme is mandatory where its conditions are met, and a Member State cannot turn it into a choice. Two practical consequences for travel businesses.

C-696/22 C (Court-appointed administrators and liquidators)

Judgment · 13 June 2024 · Romania

Chargeability on continuous services and proof of the link for input deduction

Such continuous services fall within Article 64(1) where they give rise to successive statements of account or payments, so VAT becomes chargeable on expiry of each period irrespective of non-payment. Article 90(1) governs non-payment. Increased turnover or volume of taxable transactions is irrelevant to the deduction link. The objective content, actual use and exclusive reason for the purchase decide. A hearing breach requires annulment only if the outcome might have differed, suspension of enforcement being irrelevant. Suppliers billing periodically, insolvency practitioners, professional firms and any provider with milestone or periodic fee arrangements, cannot defer chargeability by making payment conditional on the customer's cash position.

C-746/22 Slovenské Energetické Strojárne

Judgment · 16 May 2024 · Hungary

Late replies to requests for additional information in cross-border VAT refund claims

The Court held that such a national prohibition is precluded. The one-month period in Article 20(2) is not a limitation period, and the taxpayer must be able to regularise its claim by producing the information on appeal, whether administrative or judicial. Discontinuation of the procedure is, however, permissible, provided it is treated as a decision refusing the refund application under Article 23(1), with reasons notified, and is open to an appeal meeting Article 23(2). Businesses reclaiming VAT in other Member States under the electronic refund procedure can rely on this where a claim has been closed for a missed one-month deadline.

C-207/23 Finanzamt X (Application and disposal of goods free of charge)

Judgment · 25 April 2024 · Germany

Free-of-charge disposal of surplus heat and calculation of cost price

Yes: where the goods (heat is tangible property) formed part of business assets and input VAT was wholly or partly deductible, the free transfer is a deemed supply for consideration, regardless of the recipient's tax status or use. The only exception is samples and gifts of small value under the second paragraph of Article 16. Cost price under Article 74 applies only absent a purchase price for the goods or similar goods, and then includes direct and indirect costs, including financing costs, whether or not they bore input VAT. Energy producers, biogas and CHP operators and anyone releasing surplus output free of charge cannot argue away Article 16 on the basis that the recipient is a taxable person using the goods in a deductible activity.

C-341/22 Feudi di San Gregorio Aziende Agricole

Judgment · 7 March 2024 · Italy

Denial of deduction to "non-operating" companies

Status as a taxable person depends solely on whether an economic activity is actually carried on. It cannot be made conditional on output transactions exceeding a pre-set income threshold. Nor may deduction be refused on the ground that output transactions are insufficient. A volume-based presumption is unconnected to the criteria for establishing fraud or abuse and goes beyond what is necessary under Article 273. Deduction may still be refused where fraud or abuse is established on objective evidence, not by assumption. Italian companies caught by the Article 30 Law No 724/1994 shell company regime can challenge refusals of VAT credits, refunds, offsets and carry-forwards based purely on turnover falling short of the asset-based threshold.

C-314/22 Consortium Remi Group

Judgment · 29 February 2024 · Bulgaria

Bad debt relief, limitation periods, invoice correction and interest

A limitation period is permissible, penalising the insufficiently diligent, but it may only start when the taxable person could, acting diligently, assert the right to reduction. Absent national rules that starting point must be identifiable with reasonable probability. Requiring prior invoice correction and prior notice to the debtor is precluded where, absent specific national provisions, compliance is impossible in time for reasons beyond the taxable person's control. Refund carries default interest, running from when the reduction is claimed in the current period's return. Relevant wherever a Member State has used the Article 90(2) derogation but denies relief outright.

C-676/22 B2 Energy

Judgment · 29 February 2024 · Czechia

Proving the acquirer's taxable status for an intra-Community supply

The exemption must be refused where the supplier has not shown that the goods were supplied to a recipient having taxable status in the Member State of arrival and, in the light of the factual circumstances and the evidence supplied, the information needed to verify that status is lacking. Physical delivery to the recipient named in the tax documents is not itself a substantive condition. Authorities must weigh all documents held. Only if verification remains impossible is refusal justified, and then no proof of fraud is needed. Relevant to traders whose CMR notes, delivery notes, weighbridge tickets and bank statements show receipt by a party other than the invoiced customer, notably in bulk commodity and agri-oil chains.

C-674/22 Gemeente Dinkelland

Judgment · 22 February 2024 · Netherlands

Interest on VAT refunded after the taxable person's own errors

No interest is required from the date of payment. VAT levied on the basis of the taxable person's own return is not levied in breach of EU law merely because errors in its accounts meant the deduction right was not fully exercised. A retroactive change of allocation method gives rise to interest only if the original method was incompatible with EU law because of national legislation or a tax authority requirement. Here the key was set under the taxable person's sole responsibility. Under Article 183, an eight week processing period is not unreasonable. Distinguishes refunds triggered by unlawful national rules or authority insistence, which carry interest from payment, from refunds triggered by the taxable person's own errors or freely chosen methodology, which do not.

C-537/22 Global Ink Trade

Judgment · 11 January 2024 · Hungary

Due diligence and the burden of proof in denying deduction

A lower court must disregard higher court rulings inconsistent with the Court's interpretation, whether given by judgment or reasoned order. An obligation merely to give reasons for departing is permissible. Refusal for lack of diligence assessed by circular is allowed only if the authority still proves, by objective evidence, fraud and the taxable person's knowledge. No complex, far-reaching checks on counterparties may be required. The authority must follow its own circular, which must be unequivocal and foreseeable. Establishing a circular invoicing chain alone is insufficient. Fraud must be accurately described, though not every operator identified. Relevant to traders facing Hungarian (and comparable) deduction denials based on supplier unreliability or "passive fraud".

C-288/22 Administration de l’Enregistrement, des Domaines et de la TVA (VAT – Member of a board of directors)

Judgment · 21 December 2023 · Luxembourg

VAT status of a company director

There is an economic activity where services are supplied to the company for consideration, provided the activity is on a continuing basis (a term of up to six years suffices) and the method of fixing remuneration is foreseeable. Profit-linked fees require that fees can also be paid in loss-making years. However, the activity is not carried out independently where the director, though free to organise his work, receiving his own emoluments, acting in his own name and outside any employer-employee relationship, does not act on his own behalf or under his own responsibility and bears no economic risk. Independence, not economic activity, is the decisive test for directors' fees.

C-519/22 MAX7 Design

Opinion of the Advocate General · 14 December 2023

Guarantee for another taxable person's tax debts and cancellation of the VAT number

Advocate General’s proposal, not a ruling. Advocate General Kokott proposes that Article 273, read with Articles 16 and 17 of the Charter, precludes such a guarantee set by reference to another taxable person's unpaid tax, absent any corporate link recognised under company law between the two taxable persons and absent any assessment of the risk or responsibility attributable to the taxable person itself. She also proposes that Article 47 precludes rules under which the guarantee decision cannot be challenged on the substance by its addressee and no appeal suspends the payment deadline.

C-151/23 ZSE Elektrárne

Order · 5 October 2023 · Slovakia

Default interest on a late VAT refund and where the clock starts

Ruling by reasoned order, the Court confirmed that the taxable person is entitled to default interest where the credit is not repaid within a reasonable period. The detailed arrangements fall within the procedural autonomy of the Member States, framed by the principles of equivalence and effectiveness, but national rules on the starting point for the calculation must not have the effect of depriving the taxable person of adequate compensation for the loss caused by the late repayment. The companion to Kovozber on the same Slovak rule, and expressed in more general terms.

C-108/22 Dyrektor Krajowej Informacji Skarbowej

Judgment · 29 June 2023 · Poland

Travel agents' margin scheme for bare accommodation resold B2B

Article 306 applies. A taxable person who buys accommodation services from other taxable persons in its own name and resells them to other economic operators falls within the special scheme for travel agents even where no ancillary services are supplied. Extending Alpenchalets Resorts beyond holiday accommodation to hotels and similar establishments, the Court noted that the multiplicity of locations itself creates the practical difficulties the scheme exists to avoid. Confirms that "no complexity" and "business customer" arguments do not remove bed banks, hotel consolidators, online booking platforms buying in their own name and corporate travel intermediaries from the margin scheme.

C-418/22 Cezam

Judgment · 17 May 2023 · Belgium

Penalties calculated on gross VAT before deduction

Article 273 and those principles do not preclude such legislation, subject to the referring court's assessment of proportionality in the individual case. Neutrality is not infringed where the fine does not itself deny or hinder the right of deduction. Here input VAT was allowed of the authorities' own motion. EN.SA. is distinguished because there the output tax had been paid and no revenue was at risk, whereas here declaration and payment were withheld over a prolonged period. Confirms that Member States may compute VAT penalties on gross output tax rather than on the net amount payable, provided the right of deduction itself remains intact.

C-620/21 MOMTRADE RUSE

Judgment · 11 May 2023 · Bulgaria

Cross-border social care and the welfare exemption, which Member State's law applies

The exemption is not confined to services performed in the supplier's Member State, and recourse to an intermediary abroad is irrelevant, that being a separate supply. Both conditions, the nature of the services and recognition as a body devoted to social wellbeing, fall to be assessed under the law of the Member State of taxation, here the State of establishment, transposing the Directive. Registration with a national public body suffices only if it involves a prior determination by the competent authorities of the body's social wellbeing. Providers of home and personal care established in one Member State serving private clients elsewhere in the EU may claim the exemption in their own State and need not obtain confirmation from the State where the care is delivered.

C-127/22 Balgarska telekomunikatsionna kompania

Judgment · 4 May 2023 · Bulgaria

Adjustment of input VAT on goods written off, scrapped or destroyed

Sale of written-off goods as waste subject to VAT is no change in the deduction factors, even if waste sales are outside the taxpayer's usual activity and the value is reduced. Voluntary destruction is a change under Article 185(1), but falls within "destruction" under the first subparagraph of Article 185(2), so no adjustment, provided it is duly proved or confirmed and the goods had objectively lost all usefulness. Disposal counts where it causes irreversible disappearance. National rules requiring adjustment in those cases are precluded. Businesses scrapping obsolete or defective plant and stock can resist adjustment demands, whether the items are sold on as scrap or destroyed.

C-677/21 Fluvius Antwerpen

Judgment · 27 April 2023 · Belgium

VAT on electricity taken unlawfully from the distribution network

Unlawful consumption of electricity is a taxable supply of goods for consideration under Article 14(1). Consumption of electricity coincides with disposal as owner, and the legal relationship criterion is met by the applicable energy legislation and connection regulation, so Article 14(2)(a), a lex specialis, does not apply. It is an economic activity under Article 9(1) because the loss is a risk inherent in operating the network. Even for a public law body acting as a public authority, the activity is negligible only if so minimal in space or time that resulting competitive distortion is insignificant. Where a network operator or utility recovers the cost of energy theft or unmetered consumption, the energy element of the compensation is consideration for a taxable supply and not damages outside VAT. Relevant to advisers on energy, water, gas and heat recovery billing.

C-612/21 Gmina O.

Judgment · 30 March 2023 · Poland

Municipal renewable energy installations and the limits of economic activity

Such activity does not constitute a supply of goods and services subject to VAT where it is not intended to obtain income on a continuing basis and residents pay at most a quarter of the costs incurred, the balance coming from public funds. The decisive point is the absence of economic activity. No permanence, no staff, structurally loss-making pricing unlike an RES installer. Article 13(1) therefore did not need examination, and the taxable amount question fell away. Useful for advisers to local authorities running subsidised energy efficiency, insulation or renewables schemes.

C-616/21 Gmina L.

Judgment · 30 March 2023 · Poland

Municipal asbestos removal financed by public subsidy, no economic activity

The Court held that such an activity does not constitute a supply of services subject to VAT. Even if a third party subsidy can be consideration, so that a direct link may exist, the municipality does not carry out an economic activity. It employs no staff, seeks no customers, the operation is not recurrent, residents pay nothing and its organisational costs are unreimbursed, so it bears only risk of loss with no profit prospect. Article 13(1) therefore needed no consideration. Article 28 (commission agent) did not apply absent a mandate. Confirms the Gemeente Borsele line for local authorities running one off, grant funded schemes for residents.

C-695/20 Fenix International

Judgment · 28 February 2023 · United Kingdom

Validity of the electronic services deemed supplier presumption

Article 9a(1) is valid. It merely clarifies when the Article 28 condition of acting in one's own name but on behalf of another is met for electronically supplied services, and does not alter that provision's normative content. The third subparagraph, making the presumption irrebuttable where the taxable person authorises the charge or delivery or sets the general terms, reflects economic and commercial reality. Contractual designation of another supplier cannot override it. Awareness by the final customer of the agency does not itself exclude Article 28. Platforms, app stores, marketplaces and portals intermediating digital services cannot contract out of deemed supplier status where they authorise the charge to the customer or the delivery, or set the general terms and conditions.

C-519/21 DGRFP Cluj

Judgment · 16 February 2023 · Romania

Unregistered association without legal personality, who is the taxable person and who deducts

The parties to an association contract without legal personality that was not registered with the tax authorities before the activity began cannot be treated as taxable persons alongside the person liable on the taxable transaction. The sales' legal effects concerned only the registered owners. Absence of an invoice in the claimant's own name is not fatal, but deduction depends on objective evidence that the goods and services were actually supplied to her by taxable persons for her own taxed transactions, avoiding double deduction. The third question was inadmissible. Relevant to property developers and joint ventures structured as contractual associations or silent partnerships, particularly where individuals pool land and finance.

C-289/22 A.T.S. 2003

Order · 9 January 2023 · Hungary

Deduction refused for fraud, regulatory breaches up the chain and the taxable person's duty of care

By reasoned order under Article 99. Cost reduction is legitimate because refusal requires a wholly artificial arrangement whose sole or essential aim is a tax advantage contrary to the Directive. A breach of national sector rules is not itself proof of fraud, but may be one indication in an overall assessment. The authority must characterise the fraud and prove participation or knowledge, though not identify every perpetrator. Taxable persons need not verify upstream compliance, unless indications of irregularity call for greater care.

C-141/20 Norddeutsche Gesellschaft für Diakonie

Judgment · 1 December 2022 · Germany

Financial links and the single taxable person in a VAT group

Designating the controlling company as the single taxable person is permissible, but only where it can impose its will on the other members and the designation carries no risk of tax losses. Requiring a majority of voting rights on top of a majority shareholding is precluded. It is not, in principle, a necessary and appropriate anti-avoidance measure. Member States may not classify members as non-independent by categorisation. Entities bearing their own economic risk carry out independent economic activities notwithstanding group membership. Germany's Organschaft conditions are narrowed: financial integration cannot be made to depend on voting majorities where a majority shareholding exists, widening the range of subsidiaries drawn into (or excluded from) existing groups, with knock-on effects on past returns and assessments.

C-269/20 Finanzamt T (Internal supplies within a VAT group)

Judgment · 1 December 2022 · Germany

Designation of the controlling company as the single taxable person of a VAT group

Article 4(4), second subparagraph, does not preclude a Member State from designating the controlling company, rather than the group itself, as the single taxable person, provided that company can impose its will on the other members and there is no risk of tax losses. Internal supplies made by a group member for the single taxable person's public authority activities are not taxable under Article 6(2)(b). Non-economic activities are not "purposes other than those of the business", and here the services were in any event paid for.

C-512/21 Aquila Part Prod Com

Judgment · 1 December 2022 · Hungary

Proving participation in carousel fraud and the limits of the duty of diligence

The authority cannot rely merely on the existence of a circular invoicing chain. It must accurately describe the constituent elements of the fraud, prove the fraudulent conduct and establish either active participation or that the taxable person knew or ought to have known, though it need not identify every operator. Where fraud indicators exist, greater diligence may be required, but not complex checks equivalent to the authority's own investigations. Food safety breaches cannot alone justify refusal, but may be one element among others. Relevant to any business facing deduction refusals in chain transaction cases, particularly in Hungary and in the food sector.

C-596/21 Finanzamt M (Scope of the right to deduct VAT)

Judgment · 24 November 2022 · Germany

Refusal of deduction in full where the buyer ought to have known of upstream fraud

Deduction may be refused to the second purchaser who knew or ought to have known of the original seller's VAT fraud, and the first purchaser's own knowledge of that fraud does not prevent this. Refusal is not limited to the amount of the fraud or the tax loss. The right to deduct must be refused in its entirety, because absence of such knowledge, after checks reasonably required of any operator, is an implied material condition of deduction. No risk of revenue loss need be shown. Confirms that the knowledge test operates as an all or nothing material condition, not a proportionate sanction, and is separate from penalties under Article 273. Relevant to anyone dealing in high value movable goods, notably motor vehicles.

C-607/20 GE Aircraft Engine Services

Judgment · 17 November 2022 · United Kingdom

Retail vouchers awarded free of charge to employees under a reward scheme

The free award of retail vouchers to employees under a programme designed to recognise and reward the most deserving and high-performing staff falls outside Article 26(1)(b). The scheme was dictated by the proper conduct of the business and the pursuit of profit through improved employee motivation and performance. The personal advantage to employees was merely incidental. Employees could not be certain of receiving vouchers, awards resting on strictly professional criteria applied by colleagues. Fiscal neutrality is preserved because the retailers account for output VAT on redemption. Employers running performance-based recognition schemes funded with third-party retail vouchers need not account for deemed output tax on the award, provided the scheme is genuinely driven by business objectives and any private benefit is incidental. Relevant to HR, reward and employment tax advisers, and to groups recharging vouchers between entities.

C-641/21 Climate Corporation Emissions Trading

Judgment · 27 October 2022 · Austria

Place of supply of services cannot be shifted because of fraud

The authorities of the supplier's Member State may not relocate the place of supply on that ground. The place of supply rules delimit fiscal competence between Member States and cannot be set aside on fraud grounds. The Italmoda line, refusing a right such as exemption for an intra-Community supply, does not apply by analogy. Intra-Community supplies involve shared competence between two Member States, whereas for cross-border services only one Member State has competence. Member States remain free to act under Article 273, including inspections and penalties against those responsible. Relevant to anyone advising on cross-border B2B services caught in fraud chains, notably emission allowance, telecoms and other intangibles traders.

C-293/21 Vittamed technologijos

Judgment · 6 October 2022 · Lithuania

Adjustment of deductions on voluntary liquidation and deregistration

Adjustment is required because once the taxable person no longer has, and will never have, any intention of using the capital goods for taxable transactions, the close and direct link with taxed output transactions is broken. The reasons for liquidating, even if beyond the taxable person's control, are irrelevant, and the tax authorities are not to assess them. The Court distinguished the position where liquidation itself generates taxed transactions, for example asset sales to discharge debts, or where economic activity continues. Here the assets remained unsold. Confirms that the INZO and Ryanair line protects abandoned investment only where the taxable person still intends taxable use.

C-98/21 Finanzamt R (Deduction of VAT linked to a shareholder contribution)

Judgment · 8 September 2022 · Germany

Input VAT on services supplied as a shareholder contribution in kind

The holding company has no right to deduct that input tax. Although supplying management and accounting services for consideration makes the holding company a taxable person, the bought-in services were the very object of the shareholder contribution, which is part of share holding and not an economic activity. Their actual use was in the subsidiaries' transactions, so they had no direct and immediate link with the holding company's own supplies and were not general costs. The abuse question did not need answering. The reliance on the contribution sustaining the subsidiaries' need for management services was irrelevant. Groups using a managing holding company to buy in construction, planning or marketing services and inject them into exempt-supplying subsidiaries cannot recover that input VAT, even where the holding company also invoices genuine management fees.

C-194/21 Staatssecretaris van Financiën (Time-barring of the right to deduct)

Judgment · 7 July 2022 · Netherlands

Adjustment cannot revive a time-barred right of deduction

Articles 184 and 185 do not preclude refusal. The adjustment mechanism presupposes an existing right of deduction and cannot itself create one. Where the right has been lost through expiry of a national limitation period, adjustment is unavailable, whether or not first use differs from intended use. Fiscal neutrality is a principle of interpretation only and yields to legal certainty. Absence of fraud, abuse or revenue loss does not permit circumvention of the limitation period. Confirms that Articles 184 to 186 are not a second window for deductions missed at the outset.

C-56/21 ARVI ir ko

Judgment · 30 June 2022 · Lithuania

Option to tax immovable property conditional on the buyer's VAT registration

Those provisions and principles preclude neither of the two national rules. Article 137(2) gives Member States wide discretion to set the detailed rules for, and restrict, the option to tax. A registration condition serves legal certainty and correct collection of VAT and does not affect the right to deduct, which without a valid option would not arise. The seller must therefore adjust. The purchaser's actual use of the property for taxed activities is irrelevant, but the authorities must still check for fraud or abuse by the seller. Confirms that formal conditions attached to the option to tax are not the same as formal conditions on the right to deduct: the Dobre line on VAT identification as a mere formality does not rescue a seller whose option fails. Relevant to property developers and vendors of second-hand commercial property in Member States with registration-based option regimes, notably Lithuania.

C-188/21 Megatherm-Csillaghegy

Order · 3 June 2022 · Hungary

Forfeiture of input VAT deduction on revocation of a tax identification number

Ruling by reasoned order under Article 99, the Court held that those provisions and the principles of neutrality and proportionality preclude such automatic forfeiture where the substantive conditions for deduction are met and the taxable person has not acted fraudulently or improperly. The qualification is that refusal remains possible where the breach of formal obligations prevents conclusive proof that the substantive conditions are satisfied, or where fraud or abuse is established by the authorities. The national court must verify these matters. Confirms Siemens Gamesa and Promexor Trade for pre-revocation periods. Relevant to advisers handling Hungarian deregistration cases and any businesses whose VAT numbers have been cancelled and later reinstated, including historic claims.

C-627/21 Administraţia Judeţeană a Finanţelor Publice Sibiu and Direcţia Generală Regională a Finanţelor Publice Braşov

Order · 2 May 2022 · Romania

Deregistration for inactivity cannot trigger an irrebuttable adjustment of input tax

The Court holds that those provisions preclude such rules and practice. An irrebuttable presumption that the capital goods have been used for purposes other than economic activity denies the taxable person any possibility of proving the contrary, and so goes beyond what is necessary to ensure the correct collection of the tax and to prevent evasion. One of a series of Romanian cases on the consequences of deregistration, alongside Promexor Trade and Siemens Gamesa.

C-697/20 Dyrektor Izby Skarbowej w L. (Loss of flat-rate farmer status)

Judgment · 24 March 2022 · Poland

Spouses farming jointly owned land as separate taxable persons

A blanket prohibition on treating such spouses as separate taxable persons is precluded where each independently carries out an economic activity, acting in his or her own name and bearing the economic risk. Joint ownership of the holding is irrelevant. But automatic loss of the other spouse's flat-rate status is permissible only after examination of the specific situation, where necessary to counter abuse or evasion that evidence cannot dispel, or where dual normal-scheme treatment raises no administrative difficulty. Member States cannot apply a one-holding-one-taxable-person rule as a general presumption of evasion.

C-582/20 SC Cridar Cons

Judgment · 24 February 2022 · Romania

Suspension of a tax appeal pending criminal proceedings

No preclusion, subject to three conditions: the suspension must not push the complaint beyond a reasonable time. The suspension decision must state its reasons in fact and law and be open to judicial review, and, if the refusal turns out to breach EU law, the taxable person must be repaid within a reasonable time with default interest where appropriate. Suspension of enforcement need not be automatic, but must be available where there is serious doubt as to lawfulness and serious, irreparable harm would otherwise result. Confirms that tax authorities may pause appeal proceedings to await criminal evidence, but fences the practice.

C-605/20 Suzlon Wind Energy Portugal

Judgment · 24 February 2022 · Portugal

Warranty repair costs recharged within a group, supply of services for consideration

Such transactions are a supply of services for consideration. The contractual framework identified supplier, customer and the nature of the services, the debit notes were booked as remuneration, and neither the absence of any profit margin nor the existence of a warranty on the goods alters that. The Court distinguished the position where the taxable person acts in the name and on behalf of another, using a suspense account under Article 79(c), not deducting input VAT and invoicing in the principal's name. Verification is for the national court. Relevant to any group recharging warranty rectification costs to a manufacturer or parent, in manufacturing, energy and equipment supply chains.

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-154/20 Kemwater ProChemie

Judgment · 9 December 2021 · Czechia

Deduction where the true supplier is unidentified

Deduction must be refused, without proof of fraud or knowledge of fraud, where the true supplier has not been identified and the taxable person fails to show that the supplier was a taxable person. The qualification is that refusal is only permissible if, on the factual circumstances and the evidence produced, the information needed to verify that status is lacking. Taxable person status is a material condition and may follow from the facts, for example where the volume and price of supplies show the small business exemption cannot apply. Naming the supplier on the invoice is formal.

C-334/20 Amper Metal

Judgment · 25 November 2021 · Hungary

Deduction of VAT on advertising services said to be overpriced and ineffective

Deduction is available where the advertising is a supply subject to VAT under Article 2 and has a direct and immediate link with taxable output transactions or with the taxable person's economic activity as a whole, as general costs. Neither an excessive price against an authority's reference value nor the absence of any turnover increase is relevant. Article 80 does not apply between independent parties. The national court must still verify the link, and whether the spending is entertainment expenditure outside strictly business expenditure under Article 176. Tax authorities cannot use profitability, economic rationality or benchmark pricing to deny deduction on arm's length purchases.

C-358/20 Promexor Trade

Judgment · 18 November 2021

Deregistration for VAT, continued trading, and the right to deduct that follows

The Court held that those provisions and principles do not preclude such national legislation, where the identification has been revoked because no taxable transactions were indicated in the returns filed for six consecutive months and the taxable person continues its activities notwithstanding the revocation, provided that the taxable person is able to re-register for VAT purposes and to deduct the input VAT paid. The Court added that the fact that the director of the taxable person is a partner in another company which is the subject of insolvency proceedings cannot, in itself, be relied on to refuse systematically the re-registration of that taxable person for VAT purposes. Identification is a formal requirement and not a substantive condition of the right to deduct, and the judgment keeps that distinction workable by making the compatibility of the national regime conditional on a real route back to registration.

C-281/20 Ferimet

Judgment · 11 November 2021 · Spain

Deduction where the invoice names a fictitious supplier under the reverse charge

Naming the supplier is a formal condition, but the supplier's status as a taxable person is a material one. Deduction must be refused where, on the facts and the evidence the taxable person produces, the information needed to verify that the true supplier was a taxable person is lacking, or where it is established to the requisite legal standard that the taxable person committed VAT fraud or knew or should have known the transaction was connected with such fraud. Neither a risk of revenue loss nor a tax advantage need be shown. Relevant to scrap, metals and waste traders and anyone self-billing under domestic reverse charges.

C-80/20 Wilo Salmson France

Judgment · 21 October 2021 · Romania

Holding an invoice and the refund period for non-established taxable persons

No refund without an invoice, but a document is only not an invoice if its defects are so serious as to deprive the authorities of the information needed to support the claim. A claim cannot be refused merely because the VAT became chargeable in an earlier period if invoicing occurred in the claim period. However, unilateral cancellation and reissue by the supplier, after a refusal decision has become final, does not revive the right or shift it to a later period. Relevant to any business claiming cross-border refunds under the Eighth Directive procedure and to advisers handling refused claims.

C-396/20 CHEP Equipment Pooling

Judgment · 21 October 2021 · Hungary

Duty to invite correction of a cross-border VAT refund application

Article 20(1), read with fiscal neutrality and good administration, precludes the refund State, where it is certain (if need be from additional information supplied) that the input VAT actually paid per the attached invoice exceeds the amount claimed, from refunding only the lower claimed amount without first diligently inviting the taxable person to rectify the application. A corrected application is deemed lodged on the date of the original. No further information request is required where the information already held is genuinely sufficient. Refund authorities can no longer treat the figure in the claim as an absolute ceiling where the invoices plainly show more, provided the error is easily recognisable and the correct amount can be established with certainty. Relevant to any business making Directive 2008/9 claims, particularly groups with high invoice volumes, and to advisers handling refused or partially refused refunds.

C-583/20 EuroChem Agro Hungary

Order · 21 October 2021 · Hungary

A minimum fine of 30% of 40% of the value of the goods for a transport declaration error

Ruling by order, the Court held that Article 273 and the principle of proportionality do preclude such legislation. Member States may impose obligations and penalties to ensure the correct collection of VAT and prevent evasion, but the sanction must not go beyond what is necessary. A fine with an absolute floor calculated on the value of the goods, without regard to the nature and gravity of the breach or to whether any revenue was lost, exceeds those limits. The third question referred was declared manifestly inadmissible for want of sufficient explanation. One of the clearest applications of proportionality to the reporting obligations that surround electronic freight monitoring.

C-45/20 Finanzamt N and Finanzamt G (Communication of the allocation decision)

Judgment · 14 October 2021 · Germany

Deadline for communicating the allocation of mixed-use assets to business assets

The allocation decision itself is a substantive condition. Communicating it is only formal. Nevertheless, a Member State may refuse deduction where, by expiry of the statutory annual return deadline, the authority has not been put in a position to establish allocation by an express decision or sufficient evidence, unless the arrangements for exercising the option breach proportionality. Intention may be shown implicitly, so the national court must weigh less onerous penalties such as administrative fines against outright refusal. Time limits for signalling allocation of mixed-use capital goods survive, but only subject to a proportionality review that national courts must actually carry out.

C-186/20 HYDINA SK

Judgment · 30 September 2021 · Slovakia

Time limits for cross-border information exchange and suspension of a tax audit

Article 10, read with recital 25, does not lay down time limits whose breach can affect the lawfulness of a suspension of a tax audit under the requesting Member State's law. Articles 11 and 12 show the legislature expressly contemplated late replies, and the time limits govern only relations between the tax authorities, not their relations with taxable persons. The Regulation confers no specific right on taxable persons and does not regulate audit duration or suspension. Taxpayers under prolonged audit cannot use delays in cross-border information requests to attack the suspension of the audit or its overall length.

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-21/20 Balgarska natsionalna televizia

Judgment · 16 September 2021 · Bulgaria

Public broadcasting funded by State subsidy and the scope of deduction

The activity is not a supply for consideration. There is no legal relationship of reciprocal performance with viewers and no direct link between the services and the subsidy, which is set per programme hour regardless of viewership. Le Rayon d'Or is distinguished. The exemption question therefore falls away. Under Article 168, input VAT is deductible on purchases used for activities giving rise to deduction and not deductible on purchases used for out-of-scope activities. The method of financing is irrelevant. Member States set the apportionment method, respecting proportionality. Public broadcasters and comparable subsidy-funded bodies must treat free-to-air public service output as outside the scope of VAT, not exempt, and exclude it from the Articles 173 to 175 pro rata. Relevant to advisers to public bodies, cultural and media organisations and any taxable person with substantial grant funding alongside taxable supplies.

C-844/19 technoRent International and Others

Judgment · 12 May 2021 · Austria

Default interest on late VAT refunds where national law is silent

Articles 90(1) and 183, read with fiscal neutrality, require interest where either type of refund is not made within a reasonable period. A refund following a reduction of the taxable amount is treated exactly like excess input VAT. Article 27(2) of Directive 2008/9 is a catch-all for non-established claimants and cannot be applied by analogy outside its scope. The conditions (rate, starting point) remain for national law, and the referring court must interpret domestic law in conformity, short of contra legem. Silence in national law is no answer to an interest claim.

C-868/19 Finanzamt für Körperschaften Berlin

Judgment · 15 April 2021 · Germany

Germany could not require every partner in a partnership to be financially integrated

The Court holds that Article 11 precludes such a condition. The anti avoidance power in the second paragraph of that article allows measures needed to prevent evasion or avoidance, but a blanket requirement of this kind applies irrespective of any risk of abuse and goes beyond what is necessary. It also treats partnerships less favourably than companies without objective justification. One of the series of German grouping cases that also produced Norddeutsche Gesellschaft fur Diakonie and Finanzamt T.

C-935/19 Grupa Warzywna

Judgment · 15 April 2021 · Poland

Proportionality of automatic VAT penalties

Article 273 and the principle of proportionality preclude such a penalty where it applies without distinction to an error of assessment by both parties as to the taxable nature of the transaction, absent any evidence of evasion or loss of revenue, and to cases where those circumstances are absent. Member States may still penalise wrongly claimed deductions. The defect is the automatic calculation, which leaves the authorities unable to adjust the amount to the individual circumstances. Neutrality was not examined. Relevant to anyone facing fixed-rate surcharges on disallowed input tax or overstated refunds, in Poland and in other Member States with automatic percentage penalties.

C-108/20 Finanzamt Wilmersdorf

Order · 14 April 2021 · Germany

Deduction may be refused for known upstream fraud even without active participation

The Court holds that the directive does not preclude that practice. A taxable person who knew or should have known that by his purchase he was taking part in a transaction connected with VAT fraud must be regarded as a participant in that fraud, irrespective of whether he profits from it or plays any active role. Refusing the deduction in those circumstances is compatible with the directive. A reasoned order that closes off a line of argument sometimes run in defence.

C-573/20 Casa di Cura Città di Parma

Order · 14 April 2021 · Italy

Italian health provider could not deduct input tax attributable to exempt care

The Court holds that it does not preclude such legislation. Deduction is available only in so far as the inputs are used for taxed transactions, so tax attributable to exempt supplies is not recoverable, and including those supplies in the denominator of the deductible proportion is what the directive itself provides. The second to fourth questions were held manifestly inadmissible. Decided on the same day and to the same effect as Debiasi, this order confirms that the exempt status of healthcare carries its familiar cost.

C-812/19 Danske Bank

Judgment · 11 March 2021 · Sweden

Cross-border branch and a VAT group in another Member State

They are separate taxable persons. Article 11 is territorially limited, so the branch cannot belong to the Danish group. The group alone is the supplier, and the recharged services are taxable transactions. The Skandia principle applies whether it is the branch or the head office that is in the group, and whether the head office sits in a Member State or a third country. Fiscal neutrality is not breached. The position is not comparable to a head office outside any group. Financial services and insurance groups using head office cost recharges to foreign branches must check whether either establishment sits in a national VAT group.

C-604/19 Gmina Wrocław (Transformation of the right of usufruct)

Judgment · 25 February 2021 · Poland

Statutory conversion of perpetual usufruct into ownership by a municipality

The conversion is a supply of goods under Article 14(2)(a). The fee is compensation because it is directly linked to the transfer of ownership and effectively paid, regardless of its nature or amount. Because the fee is payable over 20 years, the municipality obtains income on a continuing basis, so this is economic activity. Absence of active steps is irrelevant. Subject to national verification, the municipality does not exercise public law powers, merely certifying the conversion, so Article 13(1) does not apply. Confirms that Article 14(2)(a) operates independently of Article 14(1). Relevant to municipalities and state property bodies across Member States dealing with statutory land conversions, expropriations and similar compulsory transfers.

C-288/19 Finanzamt Saarbrücken

Judgment · 20 January 2021 · Germany

Company cars provided to employees and the place of long-term hiring of means of transport

Article 56(2), first subparagraph, does not apply where there is no supply of services for consideration under Article 2(1)(c). Provision free of charge, even if treated as a supply under Article 26(1)(a), is not a "hiring". Rent must be payable in money, and a benefit in kind taxed for income tax purposes will not do. Article 56(2) does apply where the employee pays rent for an agreed period exceeding 30 days and enjoys a permanent right of private use excluding others. Employers with cross-border workforces must distinguish cars given free of charge from those provided against a real monetary contribution, typically a salary deduction. Relevant to employee benefit and company car schemes, and to advisers reviewing benefit-in-kind valuations used as a VAT proxy.

C-655/19 AJFP Sibiu and DGRFP Braşov

Judgment · 20 January 2021 · Romania

Sale of mortgaged property acquired by a creditor on enforcement

Such a transaction does not in itself amount to an economic activity where it falls within the simple exercise of the right of ownership and the sound management of private assets, so the person is not a taxable person for that transaction. The qualification is that this depends on the referring court verifying that the aim was recovery of the debts and assets and that no active marketing steps were taken using means comparable to those of a trader. Sales forming a direct extension of a lending business were not at issue. Confirms that the number and scale of disposals are not decisive.

C-801/19 Franck

Judgment · 17 December 2020 · Croatia

Exempt credit granted by a non-financial trader through bills of exchange

The Court held the exemptions in Article 135(1)(b) and (d) apply. Making funds obtained from a factoring company available to another taxable person for remuneration, following transfer of a bill of exchange issued by that person and with a guarantee of repayment at maturity, is exempt. The provision of funds is the principal supply. The rest is ancillary. Non-financial status, the contractual labels and repayment to the factor rather than the lender are irrelevant, subject to national court verification. Confirms that industrial and retail groups providing intra-group or third party finance can rely on the credit exemption, and that the 135(1)(b) and (d) exemptions do not depend on regulated status or on funds being repaid to the provider.

C-787/18 Sögård Fastigheter

Judgment · 26 November 2020 · Sweden

Transfer of the capital goods adjustment obligation to the purchaser of a property

The Directive precludes such legislation. Where a Member State uses Article 188(2) to relieve the seller of adjustment because the purchaser will use the property only for deductible transactions, it cannot then impose adjustment of that deduction on the purchaser when the conditions cease to be met. The person liable for amounts due on adjustment is a substantive rule. Only the taxable person who applied the deduction can be required to repay it. The Article 19 question was inadmissible as hypothetical. Confirms and extends Pactor Vastgoed. Relevant to property investors and their advisers pricing acquisitions of opted properties, and to anyone assessed on a predecessor's deductions.

C-371/19 Commission v Germany (VAT refund – Invoices)

Judgment · 18 November 2020 · Germany

Germany could not reject refund claims without first asking for the missing invoices

The Court finds the infringement established. Rejecting such claims without first inviting the applicant to supply the copies, if necessary after 30 September, or to provide appropriate information, breaches the principle of fiscal neutrality and deprives the right to a refund of its practical effect. Germany infringed Articles 170 and 171 of the VAT Directive and Article 5 of Directive 2008/9. The action was dismissed as to the remainder. An important judgment for anyone running cross border refund claims.

C-42/19 Sonaecom

Judgment · 12 November 2020 · Portugal

Deduction on abortive acquisition costs, but not on a bond loan that was on-lent

The Court answers yes to the first and no to the second. The consultancy costs are deductible even though the acquisition never happened, since the intention to carry out taxable transactions is what counts. The loan commission is not deductible, because the capital was in fact used for a different purpose, an exempt on-lending to the parent, which broke the link with the intended taxable activity. The judgment draws the line by reference to what actually happened to the resources.

C-734/19 ITH Comercial Timişoara

Judgment · 12 November 2020 · Romania

Deduction on abandoned investment projects and the commission agent fiction

Deduction is retained where the projects were abandoned owing to circumstances beyond the taxable person's control, and no adjustment is required so long as the taxable person still intends to use the goods for taxed transactions. The tax authorities may not presume abuse or fraud. Awareness of a planning or profitability risk does not defeat the right. The commission agent fiction requires an agency agreement and identical onward supplies, including transfer of ownership, so it does not apply here. Useful for developers and their advisers facing clawback of VAT on aborted schemes.

C-657/19 Finanzamt D

Judgment · 8 October 2020 · Germany

Social welfare exemption for subcontracted care assessment reports

The Court held that such reports are closely linked to welfare and social security work provided they are essential to the proper implementation of transactions in that sector. The exemption does not depend on the services being supplied directly to the person reliant on care. However, Article 132(1)(g) does not preclude refusing recognition as a body devoted to social wellbeing where the expert is only a subcontractor of a recognised body, costs are borne indirectly on a flat-rate basis, and the option of contracting directly with the fund was not used.

C-405/19 Vos Aannemingen

Judgment · 1 October 2020 · Belgium

Deduction where costs also benefit a third party

An ancillary benefit to a third party, flowing from services acquired in the taxable person's own interest, does not restrict deduction. That holds equally where the costs attach to particular output transactions rather than overheads, but only in so far as a direct and immediate link with the taxable person's own taxable transactions is maintained. No deduction arises for the part of the expenditure linked to transactions carried out by the third party. The unexercised ability to on-charge is one relevant factor, not decisive. Relevant to property developers building on third party land, and more widely to any business bearing marketing, agency or administrative costs from which a counterparty also profits.

C-312/19 Valstybinė mokesčių inspekcija (Joint activity agreement)

Judgment · 16 September 2020 · Lithuania

Which partner is the taxable person under a joint activity agreement

The individual who participates alone and in his own name in dealings with third parties, notwithstanding a contractual power to act in the name of all partners, carries out the economic activity independently. He is the taxable person under Article 9(1) and solely liable under Article 193, whether acting on his own behalf or on behalf of another as a commission agent under Articles 14(2)(c) and 28. The remaining questions on allocation between partners and the Article 287 threshold did not require an answer. Relevant to advisers on unincorporated joint ventures, property development consortia and silent partnership structures, particularly in Member States where partnerships lack legal personality.

C-528/19 Mitteldeutsche Hartstein-Industrie

Judgment · 16 September 2020 · Germany

Input tax on infrastructure works carried out for a municipality

Deduction is available where the road serves both the taxable person's economic activity and the public, provided the works did not exceed what was objectively necessary for that activity and their cost is reflected in the price of the taxable output transactions. Excess works break the link in part. A unilateral operating authorisation is not consideration but a condition sine qua non, so the works are not made for consideration. Nor are they a deemed supply under Article 5(6), given the actual end-use benefits the taxable person.

C-424/19 UR (Liability of lawyers to VAT)

Judgment · 16 July 2020 · Romania

Lawyers as taxable persons and the limits of res judicata

A person practising the profession of lawyer carries on an economic activity as a liberal profession and is a taxable person under Article 9(1). EU law precludes applying res judicata where the later dispute concerns a different tax period and a different subject matter and where applying the principle would stop the national court giving effect to the EU VAT rules. Finality is otherwise respected because EU law does not generally require a court to reopen definitive judgments. Confirms that lawyers and other liberal professions are within the VAT net.

C-374/19 Finanzamt Bad Neuenahr-Ahrweiler

Judgment · 9 July 2020 · Germany

Adjustment of deduction where taxed use of mixed-use capital goods ceases

The Court held that those provisions do not preclude an adjustment. Where taxed transactions cease but exempt transactions continue in the same premises, the premises are used from then on exclusively for exempt purposes, breaking the direct link with taxed output, and the reasoning in Imofloresmira (property left genuinely empty pending intended taxed use) does not apply. Adjustment is due even if the cessation was outside the taxable person's control. It would be otherwise if other taxed uses were found. That is for the national court to verify. Relevant to any operator of mixed-use immovable property within the adjustment period, notably care homes, hospitals, schools and other exempt providers with ancillary taxed catering or retail.

C-835/18 Terracult

Judgment · 2 July 2020 · Romania

Correcting invoices after a final tax assessment where reverse charge applied

The Directive and those principles preclude such legislation or practice. Where the reverse charge applied, the supplier was never the person liable, no risk of loss of revenue arises (the recipient can deduct), and refusal to refund imposes a burden contrary to neutrality. Finality of the earlier assessment cannot bar correction while the five-year limitation period runs, particularly where the relevant facts emerged only after the assessment and the complaint window was days. Negligence may attract a penalty, but not outright denial of refund. Fraud or abuse would be different. Relevant to suppliers in reverse charge sectors (cereals, industrial crops and other Article 199a categories) and to anyone who has paid an assessment rather than appeal it.

C-146/19 SCT

Judgment · 11 June 2020 · Slovenia

Bad debt relief where the claim was not lodged in the debtor's insolvency

Extinction of the claim through failure to lodge it produces a definitive reduction of the debtor's obligations, so this is not "non-payment" under Article 90(2) but falls under Article 90(1). Requiring lodgement is in principle a legitimate formality under Articles 90(1) and 273, but refusal is precluded where the taxable person shows the claim would not have been recovered even if lodged. Article 90(1) has direct effect. National courts must interpret national law consistently or disapply it. Creditors in Member States that condition bad debt relief on procedural steps in the debtor's insolvency now have an escape route. Relevant to insolvency practitioners, credit control and finance teams, and advisers handling write-offs.

C-242/19 CHEP Equipment Pooling

Judgment · 11 June 2020 · Romania

Cross-border refund where the claimant should have been VAT registered

The derogation applies only where two cumulative conditions are met: the use of the goods in the destination Member State for the service supplied is temporary, and the goods were dispatched from the Member State where the supplier is established. Goods sent from other Member States, or used for an indefinite or extended period, fall outside it. Separately, refunds cannot be refused merely because the claimant is or should be VAT identified in the refund State. Only the cumulative conditions in Article 3 of Directive 2008/9 matter. Relevant to pooling, leasing and equipment hire structures moving assets around the EU, and to anyone facing a refund refusal grounded in national registration requirements.

C-430/19 C.F. (Tax inspection)

Judgment · 4 June 2020 · Romania

Access to the audit file and evidence beyond the invoice

Denial of access to file information relied on requires annulment only where the national court finds that, absent the irregularity, the outcome of the procedure might have been different. Where the authority has merely uncorroborated doubts that the invoiced transactions occurred, deduction cannot be refused for want of evidence additional to the invoice. Refusal requires objective evidence that the taxable person knew or should have known of fraud, established by the authority without imposing checks that are not the customer's responsibility. Useful for anyone facing assessments built on suppliers' apparent lack of resources or a more favourable tax status.

C-547/18 Dong Yang Electronics

Judgment · 7 May 2020 · Poland

Whether a subsidiary is a fixed establishment of its foreign parent

A supplier may not infer a fixed establishment from the mere existence of a subsidiary, and is not required to inquire into the contractual relationships between parent and subsidiary. Legal status is not decisive. A subsidiary can be a fixed establishment, but only where the substantive conditions in Article 11 are met, assessed against economic and commercial reality. The Free Trade Agreement reservation restricting Korean investors to Polish corporate forms does not affect that interpretation. Suppliers dealing with EU subsidiaries of third country groups can rely on the Article 22 sequence. Relevant to toll manufacturing and contract processing arrangements.

C-661/18 CTT - Correios de Portugal

Judgment · 30 April 2020 · Portugal

Changing the input tax apportionment method after the final pro rata is fixed

A blanket national prohibition on changing the deduction method after the final proportion has been fixed is compatible with Article 173(2)(c). But Articles 184 to 186 preclude refusing correction where the Member State allows the actual use method, the taxable person was unaware and acting in good faith when choosing its method that a supply treated as exempt was taxable, the general national limitation period has not expired, and the change gives a more precise measure of deductible VAT. Mixed businesses whose output VAT treatment is retrospectively revised, whether by ruling, legislative change or liberalisation, can reopen the apportionment method itself and not merely recompute the turnover pro rata. Relevant to postal, financial, insurance, healthcare and public bodies sectors, and to anyone relying on an outdated binding ruling.

C-401/18 Herst

Judgment · 23 April 2020 · Czechia

Ascribing the intra-Community transport in a fuel chain under duty suspension

Such a person acquires the right to dispose of the goods as owner provided it can take decisions capable of affecting their legal situation, notably the decision to sell. Its initial intention to purchase after release for free circulation is one factor in the national court's overall assessment of which acquisition the single transport is ascribed to. Duty suspension is not decisive. EU law precludes reliance on in dubio mitius to adopt an interpretation the Court has held incompatible with EU law. Confirms and extends AREX CZ for fuel and other excise goods traders.

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-630/19 PAGE International

Order · 26 February 2020 · Portugal

A partial deduction on food costs is compatible with the standstill clause

The Court holds that they do not preclude such legislation. The second paragraph of Article 176 permits a Member State to retain the exclusions in force at the date of its accession, and a measure that narrows an existing exclusion by allowing a partial deduction moves in the direction the directive intends. It therefore falls within the standstill clause rather than outside it. The order confirms the ratchet built into Article 176.

C-292/19 Porr Építési Kft.

Order · 29 January 2020 · Hungary

Definitively irrecoverable debts must give a reduction of the taxable amount

The Court holds that a Member State must allow the reduction where the taxable person can show that the claim is definitively irrecoverable, which is for the referring court to verify. Such a situation is not a case of non payment capable of falling within the derogation in Article 90(2), because that derogation rests on the uncertainty of whether payment will eventually be made, and here that uncertainty is gone. The order draws the line that makes Article 90(2) workable.

C-692/17 Paulo Nascimento Consulting

Judgment · 17 October 2019 · Portugal

Assignment of a position in enforcement proceedings and the credit exemption

The Court held the transaction taxable. An occasional transaction in direct extension of the taxable person's main activity is carried out as a taxable person. It is a single indivisible supply, either a supply of goods (if the taxable person could already dispose of the awarded property as owner, a matter for the national court) or a supply of services assigning intangible property. Neither Article 135(1)(b) nor Article 135(1)(d) applies. There is no capital made available remunerated by interest, and the transaction does not concern debts. Confirms that one-off disposals arising out of a business's litigation, including sales of enforcement positions and rights over attached property, are within scope where they extend the taxable person's activity. Relevant to property agents, distressed debt purchasers and insolvency or enforcement practitioners.

C-189/18 Glencore Agriculture Hungary

Judgment · 16 October 2019

Findings made against suppliers, and the conditions for using them against the customer

The Court held that such legislation or practice is not precluded, subject to three conditions. First, it must not relieve the tax authority of the obligation to disclose to the taxable person the evidence, including evidence originating in the related procedures, on which it intends to base its decision, and the taxable person must not be deprived of the right effectively to challenge those findings of fact and legal classifications in the procedure brought against him. Second, the taxable person must be able to have access, during that procedure, to all the evidence obtained in the related or other procedures on which the authority intends to rely or which may assist the exercise of the rights of the defence, unless objectives of public interest justify restricting access. Third, the court hearing the action against the decision must be able to review the legality of the way that evidence was obtained and used, and the findings in the decisions taken against the suppliers that are decisive for the outcome. The judgment accepts the administrative economy of reusing findings made against suppliers, but attaches to it a set of conditions that operate at three separate stages: disclosure by the authority, access by the taxable person, and review by the court.

C-329/18 Altic

Judgment · 3 October 2019 · Latvia

Food traceability duties and the right to deduct

Deduction cannot be refused on the sole ground of breach of the food traceability identification duty. That duty serves food safety, not fraud detection, and identification by name and address normally suffices. Such a breach may nonetheless be one of several consistent indications of knowledge of fraud, particularly where circumstances should have raised serious doubts about the supplier's existence or identity. Failure to verify suppliers' food business registration is irrelevant. That is a check the purchaser cannot be required to make. Relevant to agri-food, feed and commodity traders and their advisers facing denial of deduction based on sectoral regulatory failings.

C-273/18 Kuršu zeme

Judgment · 10 July 2019 · Latvia

Refusing deduction in a supply chain requires proof of an undue tax advantage

Those two facts, a chain of successive sales and collection from a warehouse of someone other than the invoiced supplier, are not in themselves sufficient to establish an abusive practice. The authority must identify the undue tax advantage obtained by the taxable person or the other participants. Where no such evidence is adduced, deduction cannot be refused. Separately, the national court must still determine to which supply in the chain the single intra-Community transport is ascribed, which governs the extent of the deduction or refund right. Useful for anyone facing a Baltic or wider EU audit where deduction is denied simply because intermediaries appear economically pointless.

C-316/18 The Chancellor, Masters and Scholars of the University of Cambridge

Judgment · 3 July 2019 · United Kingdom

Costs of managing an endowment fund are not deductible overheads

The Court holds that it is not entitled to deduct that input tax. The investment activity falls outside the scope of VAT, and the costs of collecting and placing the donations attach to that non economic activity rather than to the economic activity. The mere fact that the income is then used to fund the whole range of activities does not make the management fees a cost component of the taxable output supplies. The judgment tightens the overheads route opened by Kretztechnik and Cibo.

C-420/18 IO (VAT – Activities of a member of a supervisory board)

Judgment · 13 June 2019 · Netherlands

Whether a supervisory board member acts independently

The activity is economic (permanent, remunerated, continuing), and a flat annual fee or a single term of office does not alter that. But it is not carried out independently. Although there is no employer-employee relationship under Article 10, the member does not act in his own name, on his own behalf or under his own responsibility, acting instead on behalf of and under the responsibility of the board, and bears no economic risk because his fixed fee is unaffected by meetings attended or hours worked. Relevant to non-executive and supervisory board members of foundations, associations and companies, and to the bodies paying them.

C-566/17 Związek Gmin Zagłębia Miedziowego

Judgment · 8 May 2019 · Poland

Apportionment of input tax where national law provides no method

Article 168(a) precludes such a practice. The obligation to apportion follows from the wording of Article 168(a) itself, and the absence of national apportionment rules cannot extend the right of deduction to costs of activities outside the scope of VAT. Fiscal legality, as a general principle of EU law, requires only the essential features of the tax to be laid down by law, not every technical aspect. Apportionment is an ancillary pre-condition, particularly where the taxable person can choose a method or seek a ruling. Relevant to public bodies, associations of municipalities, waste and utilities operators, charities and holding structures carrying on both economic and non-economic activities.

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-9/19 Mitliv Exim

Order · 8 May 2019 · Romania

Reference on ne bis in idem and VAT fraud rejected for want of a factual account

The Court does not answer. It holds the reference manifestly inadmissible under Article 53(2) of its Rules of Procedure. The order for reference gave divergent indications about the periods covered, did not say whether the various measures were criminal in nature or final, set out only a chronology without explaining how the two sets of proceedings interact, and said nothing about the national conditions governing a claim for interest. A reminder of how demanding Article 94 of the Rules of Procedure is where Menci type questions are raised.

C-265/18 Jarmuškienė

Judgment · 2 May 2019 · Lithuania

Small enterprise threshold and a single supply of two properties

Where a supply to the same purchaser comprises two items of immovable property linked by their nature and covered by a single contract of sale, and the turnover limit is exceeded, VAT is due on the value of the entire supply, even though one item alone would not have breached the limit. Separately stated prices do not permit splitting. There is a single supply under Article 14(1) and dividing it would be artificial. The Court expressly left open the treatment of earlier transactions. Relevant to advisers dealing with property developers and occasional builders operating under national small enterprise exemptions.

C-201/18 Mydibel

Judgment · 27 March 2019 · Belgium

Adjustment of input tax on a sale and lease back of buildings

Subject to the national court's verification of the facts and national law, no adjustment is required. Creating an emphyteutic right not subject to VAT is not in itself a change in the factors determining the deduction, and where the emphyteutic right and the leaseback are so closely linked as to form a single transaction, no supply of goods occurs because the institutions cannot dispose of the buildings as owner. Had adjustment been due, it would nevertheless respect neutrality and equal treatment. Relevant to businesses using sale and lease back of real estate as a financing tool, and to their lenders and lessors.

C-434/17 Human Operator

Judgment · 13 February 2019 · Hungary

Retroactive application of a derogation authorising reverse charge

A Member State may not apply the derogating measure before the Council decision has been notified to it. Under Article 297(2) TFEU the decision took effect on notification, and legal certainty precludes retroactivity absent an express provision. The Member State's stated wish, and the Commission's awareness that it had already begun applying the measure, are irrelevant. For the earlier period the general rule in Article 193 applies, is unconditional and sufficiently precise, and can be relied on directly. The suppliers, not the recipients, were liable. Relevant to businesses in Member States that jump the gun on Article 395 derogations, particularly labour supply, staffing and construction sectors.

C-414/17 AREX CZ

Judgment · 19 December 2018 · Czechia

Ascribing the transport in chain supplies of excise goods

Article 2(1)(b)(iii) covers only taxable persons whose other intra-Community acquisitions fall outside VAT under Article 3(1). Other taxable persons are dealt with under Article 2(1)(b)(i). Liability for excise duty in the Member State of destination does not make that trader's acquisition the intra-Community one if the single transport cannot be ascribed to it. Movement under duty suspension is not decisive. The usual global assessment applies, turning on when the power to dispose as owner passed relative to the transport. Fuel, alcohol and tobacco chains are analysed for VAT on exactly the same basis as any other chain transaction. Relevant to energy traders, excise warehousekeepers and their advisers reviewing historic and current supply chain structures.

C-264/17 Mensing

Judgment · 29 November 2018 · Germany

Margin scheme for works of art acquired intra-Community from the artist

The option in Article 316(1)(b) is autonomous and additional to Article 314, so Member States cannot make it conditional on the Article 314 categories. The margin scheme is therefore available on resale of works of art acquired from the creator or successors in title via an exempt intra-Community supply. But a dealer invoking the Directive directly takes the scheme on the Directive's terms. He cannot combine it with deduction of the acquisition VAT precluded by Article 322(b), even if that provision is untransposed. Art dealers, galleries and auction operators buying directly from artists or their heirs in other Member States can rely on Article 316(1)(b) to apply the margin scheme on resale, notwithstanding national rules restricting it to domestic input supplies.

C-648/16 Fontana

Judgment · 21 November 2018 · Italy

Assessing VAT on turnover estimated by sector studies

No objection in principle. Article 273 leaves Member States discretion, and extrapolation from sector studies to assess additional VAT where declared and estimated revenue differ seriously is permissible. The qualification is that the studies must be correct, reliable and up to date, the discrepancy can create only a rebuttable presumption, the taxable person must be able to contest the study's accuracy and its relevance to his situation with any contrary evidence and without an excessive standard of proof, and must still exercise deduction under Title X. Verification is for the national court. Relevant wherever indirect assessment methods, standard margins, sectoral benchmarks or turnover reconstruction are used, notably in Italy but also in other Member States operating similar presumptive tools.

C-664/16 Vădan

Judgment · 21 November 2018 · Romania

Proving input tax without invoices

No deduction may be granted solely on the basis of an assessment resulting from a court-commissioned expert report where the taxable person cannot evidence the input VAT actually paid by invoices or any other document. Formal defects need not be fatal where the authorities have the information to verify the substantive conditions, but the burden of proof rests on the claimant. Objective evidence, including documents held by suppliers, is required. An expert report may supplement or reinforce such evidence, never replace it. Relevant to property developers and any taxable person reconstructing historic input tax after a retrospective registration or assessment, and to advisers arguing substance over form.

C-249/17 Ryanair

Judgment · 17 October 2018 · Ireland

Deduction of deal costs on an abortive takeover

Preparatory acts count as economic activity, so a company intending to acquire shares in order to supply the target with management services subject to VAT acts as a taxable person when it incurs the bid costs. The input VAT is deductible in full even though the intended activity never materialised and produced no taxable output. The qualification is that the exclusive reason for the expenditure must lie in the intended economic activity. If it is partly attributable to exempt or non-economic activity, deduction is only partial. Confirms that failed or partial acquisitions do not of themselves destroy recovery on deal fees, for corporate acquirers, holding companies and their M&A and VAT advisers.

C-69/17 Siemens Gamesa Renewable Energy România

Judgment · 12 September 2018 · Romania

Deduction of VAT on acquisitions made while the taxpayer was declared inactive

The Court held that the Directive precludes such a refusal where it is based on the sole ground that the acquisitions fell within the period of de-activation. Registration and notification duties under Articles 213 and 214 are formal requirements only. Deduction must be allowed provided the substantive conditions of Article 168 are met and the right is not invoked fraudulently or abusively. The date of the return or invoice is not decisive. The national court must verify that the authorities had the data needed to establish the substantive conditions. Businesses whose VAT numbers have been cancelled for non-filing, a common Romanian practice and mirrored elsewhere, can recover input VAT incurred during the inactive period once reactivated, provided the substantive conditions are shown and there is no fraud or abuse.

C-16/17 TGE Gas Engineering

Judgment · 7 August 2018 · Portugal

Head office and branch as a single taxable person for deduction

Those provisions do not permit a company and its branch to be treated as two taxable persons on that ground. A company and its branch in another Member State form a single taxable person unless the branch carries out an independent economic activity bearing its own economic risk, and holding two tax identification numbers does not change that. Deduction cannot be refused solely because one number was used to join the group and the other for the re-invoicing. The referring court must still verify that the substantive conditions in Article 168(a) are met. Useful where a non-resident registers twice in the same Member State, first for an isolated transaction and later as a branch, and the authorities treat the numbers as separate persons.

C-108/17 Enteco Baltic

Judgment · 20 June 2018 · Lithuania

Import VAT exemption where the import is followed by an intra-Community supply

Naming a different purchaser is a formal breach only, so the exemption stands where the substantive Article 138(1) conditions are met and the change was notified, unless the importer knowingly participated in evasion or the breach prevents proof. E-AD drafts and CMR notes presented at importation can prove intended dispatch. E-ROR confirmations and reports of receipt can prove actual dispatch, including to a warehouse rather than the buyer. Good faith protects the importer unless he knew or should have known of the purchaser's fraud. Electronic communication alone proves nothing. Authorities need not gather information themselves. Relevant to fuel and commodity traders using customs procedure 42, and to their customs and excise advisers.

C-566/16 Vámos

Judgment · 17 May 2018 · Hungary

Retroactive election into the small enterprise exemption

EU law does not preclude national legislation refusing the small enterprise exemption to a taxable person who satisfies all the substantive conditions but did not opt for the scheme when declaring commencement of activity. Adopting the scheme is optional for Member States, which may attach procedural conditions under Article 273. Refusing retroactive election is proportionate, since assessing VAT on past sales is recovery of tax due, not a penalty. Allowing late election would give an undue competitive advantage over compliant traders and offend neutrality and legal certainty. Businesses that trade unregistered and are later caught cannot elect into a small enterprise exemption retrospectively, even where turnover was always below the threshold.

C-81/17 Zabrus Siret

Judgment · 26 April 2018 · Romania

Correcting VAT returns for periods already audited

Those provisions and principles preclude such legislation. Where an inspection follows shortly after filing, the shortened window makes deduction impossible or excessively difficult. Refusal of deduction for a remediable formal failure, absent evasion or loss to the exchequer, is disproportionate. Legal certainty cannot be invoked by the authorities here, since the system also permits correction on their initiative and reopening on new information, so it serves the efficiency of inspections rather than taxpayers' rights. Fatorie distinguished. Member States may instead impose administrative fines on negligent taxpayers. Member States may keep a limitation period for claiming deduction, but cannot truncate it by treating a closed audit as a bar to taxpayer-initiated corrections.

C-533/16 Volkswagen

Judgment · 21 March 2018 · Slovakia

Start of the limitation period for refunds where VAT is invoiced years late

EU law precludes a Member State from refusing a refund on the ground that a limitation period running from the date of supply had expired, where the VAT was charged to and paid by the taxable person only several years after the supply. The right arises when the tax becomes chargeable but is exercisable only once an invoice is held. The qualification is that this applies where the claimant showed no lack of diligence and there was no abuse, fraudulent collusion or risk of non-payment. Relevant to non-established businesses making Directive 2008/9 claims and to any taxable person receiving late corrective invoices after a supplier reclassifies an exempt transaction as taxable.

C-387/16 Nidera

Judgment · 28 February 2018 · Lithuania

Reduction of default interest on late VAT refunds

Article 183, read with fiscal neutrality, precludes such a reduction. Interest merely compensates unavailability of funds, so neither its size relative to the principal nor the length of the delay can justify cutting it, and a refusal later shown to be unlawful is no different from ordinary administrative delay. Member States may set a flat rate, which by nature may exceed or fall short of actual loss, but having chosen a flat rate, they cannot then substitute compensation for proven actual loss. Relevant to any business pursuing repayment interest where a Member State has withheld a VAT credit pending inspection or on a ground later found contrary to EU law.

C-672/16 IMOFLORESMIRA - INVESTIMENTOS IMOBILIÁRIOS

Judgment · 28 February 2018 · Portugal

Adjustment of input tax on vacant property held for taxable letting

Those provisions preclude such legislation. Status as a taxable person and an accrued right of deduction cannot be withdrawn retroactively because, for reasons beyond the taxable person's control, the property was not actually used for taxed transactions. Vacancy after termination of a lease is not a change in the factors under Article 185 where the intention to let taxably persists and steps are taken to that end. The qualification is that authorities may still recover deductions retrospectively in cases of fraud or abuse. No limitation of temporal effects. Relevant to property investors and developers in Member States operating an option to tax, and to their advisers dealing with clawback rules keyed to periods of vacancy.

C-182/17 Nagyszénás Településszolgáltatási Nonprofit Kft.

Judgment · 22 February 2018 · Hungary

A municipal company performing public tasks under contract is taxable

The Court holds, subject to verification by the referring court, that the activity is a supply of services for consideration and subject to VAT. Subject to findings of fact and of national law, it does not fall within Article 13(1) where it constitutes an economic activity within the meaning of Article 9(1). Ownership by the municipality and the public character of the tasks do not of themselves make the company a body governed by public law acting as a public authority. The practical companion to Saudacor.

C-628/16 Kreuzmayr

Judgment · 21 February 2018 · Austria

Ascribing the transport in a chain supply and deduction of wrongly invoiced VAT

The transport is ascribed to the second supply where the final purchaser obtained the right to dispose of the goods as owner before the transport began. Article 32 therefore applies to that second supply. The first supplier's misinformed classification and the intermediary's destination-State VAT number are irrelevant, because both the intermediary and the final purchaser knew the objective facts. VAT due only because it appears on an invoice is not deductible, and legitimate expectations cannot be invoked against a supplier. Recovery lies against the invoicing party under national law. Confirms that chain-transaction analysis rests on objective evidence known to the intermediary and final purchaser, not on the first supplier's treatment or the VAT number quoted. Relevant to commodity and fuel traders, distribution chains using collection numbers and ex works terms, and advisers reviewing invoicing positions in triangular sales.

C-374/16 Geissel

Judgment · 15 November 2017 · Germany

Meaning of "address" on an invoice for input tax deduction

Articles 168(a) and 178(a), read with Article 226(5), preclude national legislation conditioning deduction on the invoice stating the address where the issuer carries out its economic activity. "Address" bears its ordinary broad meaning and covers any address, including a letterbox address, at which the issuer can be contacted. Identification of the issuer, principally via name and VAT identification number, is the purpose. The good faith questions were not answered. Member States cannot add invoice content requirements beyond Article 226, and cannot refuse deduction merely because the supplier's stated address is a postal or registered office address with no activity there. Relevant to any business trading with suppliers operating remotely, online or without business premises, and to German taxpayers whose deductions were denied on this basis.

C-507/16 Entertainment Bulgaria System

Judgment · 15 November 2017 · Bulgaria

Deduction where registration is only for cross-border services and the small enterprise exemption applies

The Court distinguishes two situations. Deduction cannot be refused merely because the person is identified for VAT under Article 214(1)(d) or (e). Identification is a formal requirement for control purposes and cannot defeat deduction where the substantive conditions are met. But if the taxable person is eligible for the exemption scheme in its own Member State, Article 289 denies deduction there, so the Article 169(a) condition (that VAT would be deductible had the transactions been domestic) is not satisfied and refusal is lawful. Which situation applies is for the national court. Relevant to small enterprises within a national exemption threshold that nonetheless register because they receive or make cross-border B2B services.

C-441/16 SMS Group

Judgment · 21 September 2017 · Romania

Refund of import VAT where the intended transaction never happens

The refund cannot be refused on that ground. The importer acted as a taxable person because, judged by objective evidence at the time of importation (the advance received and the subcontract concluded), it intended to use the goods for an economic activity, here an eventual export within Article 146. Suspension of the contract was irrelevant. The right, once arisen, is retained where the planned transaction fails for reasons beyond the taxable person's control, absent fraud or abuse. Demanding proof of subsequent movements adds a substantive condition the VAT system does not provide.

C-132/16 Iberdrola Inmobiliaria Real Estate Investments

Judgment · 14 September 2017 · Bulgaria

Deduction on works to infrastructure owned by a third party

Deduction is available where there is a direct and immediate link with the taxable person's taxed output transactions, and the free benefit to the third party does not defeat it. Two qualifications: the works must not exceed what is necessary to enable the taxable person's taxable output transactions, and their cost must be included in the price of those transactions. If the works go further, the link is partially broken and deduction is limited to the objectively necessary part. Article 26 was not engaged. Confirms that a blanket national denial of deduction because a supply is free of charge, or because the improved asset belongs to someone else, cannot stand.

C-386/16 Toridas

Judgment · 26 July 2017 · Lithuania

Ascribing the single intra-Community transport in a chain supply

The first supply is not exempt where the second supply actually took place before the goods left the first Member State and the goods were then transported to the second purchaser. The single transport is ascribed to the second supply alone. The middleman's VAT identification in another Member State is not a criterion for classifying an intra-Community transaction, nor sufficient evidence of one. Processing after the first supply has no bearing, since the substantive conditions of Article 138(1) are exhaustive. A risk of double taxation does not justify exemption. Confirms that in back-to-back chains the decisive point is when the power to dispose as owner passes to the final customer, not who arranges transport or where the middleman is registered. Relevant to food, commodity and distribution chains using intermediaries, and to advisers relying on a customer's foreign VAT number as comfort for zero-rating.

C-254/16 Glencore Agriculture Hungary

Judgment · 6 July 2017 · Hungary

Default interest where a VAT refund is delayed by a tax investigation

EU law precludes such legislation. The refund period may be extended for an investigation, but only so far as necessary to complete it. If its duration is excessive and not attributable wholly to the taxable person, interest cannot be refused. A trader who genuinely obstructed the procedure cannot claim interest for the delay he caused, so the portion of the delay attributable to his conduct must be identified. National courts must interpret domestic law accordingly or disapply conflicting provisions. Relevant to any business in a repayment position facing a protracted verification, particularly in Member States where interest is switched off by a penalty or by the mere opening of an audit.

C-624/15 Litdana

Judgment · 18 May 2017 · Lithuania

Good faith and the second-hand margin scheme

Article 314 precludes refusal in those circumstances, unless the authorities establish that the taxable person did not act in good faith or failed to take every reasonable measure in his power to satisfy himself that he was not participating in tax evasion. The double reference is not obviously such as to arouse the suspicions of a prudent trader who is no VAT expert. Whether good faith existed is for the national court.

C-36/16 Posnania Investment

Judgment · 11 May 2017 · Poland

Transfer of land in settlement of tax arrears is not a supply for consideration

Such a transfer is not a supply of goods for consideration. Although a legal relationship of creditor and debtor exists, payment of tax is unilateral. The public authority provides no performance in return, whether the charge is settled in money or in tangible property. There is therefore no reciprocal performance and no supply for consideration. The Court added that any risk of untaxed final consumption where input tax has been deducted on the property is addressed by Article 16 of the VAT Directive. Relevant wherever a Member State permits tax debts to be settled by transferring assets in kind.

C-37/16 SAWP

Judgment · 18 January 2017 · Poland

Private copying levies are outside the scope of VAT

No supply of services within the Directive. There is no legal relationship involving reciprocal performance. The obligation to pay arises from national law, which also sets the amount, and the fee funds fair compensation linked to the harm caused by unauthorised reproduction rather than being direct consideration for an identifiable service. Whether an assignment of intangible property under Article 25(a) exists was left open, since such a transaction would fall outside the Directive anyway. The second question fell away. Statutory private copying and reprography levies carry no VAT for collecting societies or rightholders in the music, audiovisual, publishing and reprographic sectors, and no invoices with VAT are required either from the society to producers and importers or from rightholders to the society.

C-28/16 MVM

Order · 12 January 2017 · Hungary

Deduction by a holding company managing subsidiaries free of charge

Ruling by reasoned order under Article 99, the Court held that involvement in managing subsidiaries without any remuneration is not an economic activity, so no deduction arises for services relating to transactions outside the Directive. Deduction as general overheads was not excluded in principle, but the referring court must verify the direct and immediate link with the leasing activity, which the Court thought difficult to envisage. Later charging of a margin (from 2015) cannot revive deduction for 2008 to 2010 costs. Confirms that active holding status depends on actually supplying services for consideration, not on de facto management.

C-446/15 Signum Alfa Sped

Order · 15 December 2016 · Hungary

Doubts about who really performed the service do not by themselves defeat deduction

The Court holds that the directive precludes that practice, unless it is established on the basis of objective evidence, and without requiring of the taxable person checks which are not his responsibility, that he knew or should have known that the services were connected with VAT fraud. That is for the referring court to verify. The unreliability of the invoice issuer is not by itself a sufficient ground. A short order that matters because of how common the practice was.

C-378/15 Mercedes Benz Italia

Judgment · 14 December 2016 · Italy

Turnover-based deductible proportion applied to all acquisitions, and identifying incidental financial transactions

The derogation in point (d) necessarily involves a turnover-based proportion, and it covers all goods and services used by the taxable person for taxed and exempt transactions, not only mixed-use inputs. Otherwise it would duplicate the general rule. Member States may therefore impose the single turnover key on all acquisitions. Turnover composition is a relevant factor for identifying incidental transactions, but only if the assessment also considers the link with the taxable activities and the use of VAT-taxed goods and services. Confirms that Italy's blanket pro rata is compatible with EU law, so taxable persons there cannot demand an actual-use apportionment for inputs wholly attributable to taxed activities. Relevant to groups with in-house financing or treasury functions, particularly captive finance and holding structures in Member States using the point (d) derogation.

C-24/15 Plöckl

Judgment · 20 October 2016 · Germany

Exemption of an intra-Community transfer without a destination VAT number

Those provisions preclude such a refusal. The destination VAT identification number is a formal, not substantive, condition. Neutrality requires exemption where the substantive conditions of Article 28a(5)(b) are met. Only two exceptions survive: intentional participation in tax evasion, or non-compliance that actually prevents proof that the substantive conditions are satisfied. Where evasion is ruled out, no "all reasonable measures" test applies. VSTR is confined to establishing non-participation in evasion. Breach may be penalised by a proportionate fine. Confirms that transfers of own goods between Member States are treated like intra-Community supplies for exemption purposes, and that registration in the destination State is evidential rather than constitutive.

C-340/15 Nigl and Others

Judgment · 12 October 2016 · Austria

Independence of associated partnerships and access to the flat-rate scheme for farmers

Each partnership is an independent taxable person. Acting in its own name, on its own behalf and at its own risk is decisive, and cooperation through a shared marketing company or trade mark, or the leading role of one partner, does not defeat that. The flat-rate scheme may nonetheless be refused, even absent an excluded category, if the links with that company or association make the partnerships materially capable of bearing the administrative burden of the normal or simplified arrangements. Refusal may cover earlier periods within the limitation period, but not before the facts relied on arose. Relevant to family and group structures in agriculture, wine and food production where separate partnerships share branding, bottling, central purchasing and a common sales vehicle.

C-576/15 Maya Marinova

Judgment · 5 October 2016 · Bulgaria

Estimated assessment where supplies and revenue are concealed

They do not preclude such legislation. Failure to keep accounts and to record invoices may be treated as tax evasion, and Article 273 leaves Member States discretion to re-establish the position that would have existed absent evasion, estimating the taxable amount as closely as possible to the consideration actually received. Fiscal neutrality cannot be invoked by a taxable person who intentionally concealed transactions. The national court must still verify that the rules go no further than necessary. Article 80 was irrelevant, concerning tied parties. Confirms that estimated or "analogous" assessments based on suppliers' invoices, stock absences and typical margins are compatible with the Directive, even though they depart from Article 73 and identify no customer.

C-332/15 Astone

Judgment · 28 July 2016 · Italy

Deduction refused where formal obligations are fraudulently ignored

The Directive precludes neither of the two national rules. A limitation period is compatible provided the principles of equivalence and effectiveness are respected. A two year period does not in itself make deduction impossible or excessively difficult. Formal breaches normally cannot defeat deduction where the substantive conditions are met, but wholesale non-compliance (no return, no accounts, no registration, no payment) may itself constitute the simplest form of evasion, and deduction may then be refused. Whether fraud is established is for the national court, on objective evidence. Confirms that the Ecotrade line protecting substance over form has a limit. Relevant to advisers handling Italian audits and criminal thresholds, and generally to disputes where late or unrecorded purchase invoices are produced retrospectively.

C-267/15 Gemeente Woerden

Judgment · 22 June 2016 · Netherlands

Full deduction where a building is sold below cost price

The taxable person may deduct all the input VAT on construction. Article 168 imposes only two conditions: the inputs must be supplied by another taxable person and used by the taxable person for its own taxed transactions. The sale for consideration was such a transaction, so the purchaser's subsequent use, including free use by third parties, is irrelevant. A supply price below cost does not restrict deduction proportionately, unless the price is purely symbolic. Confirms that a supplier's deduction right is not policed through the recipient's use, which matters for municipalities and other public bodies transferring schools, sports halls and cultural buildings to foundations at below cost, and for group structures generally.

C-229/15 Mateusiak

Judgment · 16 June 2016 · Poland

Taxation of business assets retained on cessation of activity

A Member State may treat the retained goods as a supply for consideration even after the adjustment period has expired. Article 18(c) imposes no time condition and does not cross-refer to the adjustment rules in Articles 184 to 192. It creates a new taxable transaction on cessation rather than a retroactive correction. Taxation therefore applies whatever the interval since acquisition, provided the goods still have a residual value at cessation, the taxable amount under Article 74 being the value determined at that time. Relevant to sole traders, professional practices and small companies in Member States that have implemented Article 18(c), and to advisers planning cessations, retirements and deregistrations.

C-263/15 Lajvér

Judgment · 2 June 2016 · Hungary

Economic activity of a non-profit company charging modest operating fees

It is an economic activity because neither non-profit status, the ancillary character of the activity, nor public funding matters, provided the fee is charged over a period long enough to constitute income on a continuing basis (eight years suffices). The operation is a supply of services for consideration despite the statutory maintenance obligation and the modest, below cost level of the fee. The national court must still verify the direct link, in particular that the fee is not only partial remuneration and that the arrangement is not wholly artificial. Confirms that non-profit and publicly subsidised entities operating infrastructure for fees are taxable persons with input tax rights, and that below cost or regulated pricing does not itself break the direct link. Relevant to municipal and quasi-public vehicles, water, drainage and road maintenance bodies, and to advisers on EU funded projects where authorities challenge deduction.

C-520/14 Gemeente Borsele and Staatssecretaris van Financiën

Judgment · 12 May 2016 · Netherlands

Municipal school transport and the meaning of economic activity

There were supplies for consideration, since the contributions need not reflect cost price and a direct link can exist even where the price is below cost. But that is not enough because economic activity requires examination of all the circumstances. Recovering only 3% of costs from a third of users showed an asymmetry ruling out a genuine link, and the municipality was not offering services on the general passenger transport market but acting as final consumer of the operators' services. No economic activity, no taxable person. Relevant to public bodies and their advisers dealing with heavily subsidised services supplied for a token or means tested user charge.

C-128/14 Het Oudeland Beheer

Judgment · 28 April 2016 · Netherlands

Valuing a self-supply of an office building held under a long lease

The Court holds that both elements may be included, notwithstanding the earlier payment and full deduction. As to measurement, where the land and the building under construction were acquired through the grant of a right in rem, the value of that right corresponds to the amount payable each year for the remainder of the long lease, corrected or capitalised by the same method used to value the grant of the leasehold. One of the technical anchors of the self supply rules now in Articles 18(a) and 74.

C-419/14 WebMindLicenses

Judgment · 17 December 2015 · Hungary

Offshore licensing of website know-how and abuse of rights

Common ownership, the licensor's founder exercising influence over the know-how and its exploitation, use of subcontractors and the licensor's own motives are not decisive. Abuse requires proof of a wholly artificial arrangement, assessed by whether the licensee genuinely had premises, human and technical resources and acted in its own name, on its own behalf, at its own risk. VAT paid abroad does not bar adjustment. A cooperation request is required where useful or essential. Covert criminal evidence may be used only if lawfully obtained and used, proportionate, and disclosed with a hearing. Otherwise it must be disregarded. Confirms that rate arbitrage through an offshore licensee is not abusive per se. Relevant to digital, gaming and adult content operators using Madeira or similar structures, and to intellectual property licensing generally.

C-174/14 Saudaçor

Judgment · 29 October 2015 · Portugal

When a regional health services company counts as a body governed by public law

The Court holds that the activity may fall within Article 13(1) where it is an economic activity, provided the referring court finds that the company is to be classified as a body governed by public law, that it carries out the activity as a public authority, and that exemption would not lead to significant distortions of competition. The concept must not be interpreted by reference to the procurement definition in Directive 2004/18. The judgment is the standard reference for public sector bodies operating through corporate vehicles.

C-126/14 Sveda

Judgment · 22 October 2015 · Lithuania

Deduction on assets provided free to the public as a means of attracting customers

The input VAT on those capital goods is deductible. A person incurring investment expenditure with an intention, confirmed by objective evidence, of carrying out economic activity acts as a taxable person, and the immediate provision of the assets to the public free of charge neither exempts nor takes the transaction outside VAT. The link may be with a particular output transaction or with the economic activity as a whole. Establishing that link on objective evidence is for the national court. The subsidy condition and adjustment periods do not affect the origin of the right. Useful for any business that constructs infrastructure open to the public without charge as a customer draw.

C-424/14 Balogh

Order · 30 September 2015 · Hungary

Declaring the start of an activity below the small-business threshold, and the fine for not doing so

Ruling by reasoned order, the Court held that Article 213(1) does not preclude such an obligation. The duty to declare the start of an activity is an administrative requirement that Member States may impose on persons within the scope of the tax even where the exemption for small enterprises applies. Nor does EU law preclude a fine for failing to comply. It is for the national court to assess whether the penalty actually imposed complies with the principle of proportionality. A reminder that the small-business exemption relieves the charge, not the registration duties that let an administration monitor who is trading.

C-276/14 Gmina Wrocław

Judgment · 29 September 2015 · Poland

Independence of municipal budgetary entities as taxable persons

Bodies governed by public law cannot be taxable persons unless they independently carry out economic activity within Article 9(1). The test is the same for public and private persons. Whether the entity acts in its own name, on its own behalf and under its own responsibility, and bears the economic risk. Entities acting in the municipality's name, with no liability for damage, no own property and all revenue and costs falling on the municipal budget, form a single taxable person with the municipality. No temporal limitation was granted. Public sector bodies operating through unincorporated arms must test each arm against the employer-employee style independence criteria rather than assume separate registration. Relevant to advisers to local government, schools, cultural and inspection bodies.

C-108/14 Larentia + Minerva and Marenave Schiffahrt

Judgment · 16 July 2015 · Germany

Holding company input tax and the scope of VAT grouping

Where the holding company involves itself in the management of the subsidiaries, the acquisition costs are general overheads and VAT is in principle fully deductible, subject to Article 17(5) if there are exempt outputs. Where it manages only some subsidiaries, deduction is proportionate, on apportionment criteria set by Member States. Restricting grouping to subordinated legal persons is precluded unless necessary and appropriate to counter abuse or evasion, a matter for the national court. Article 4(4) has no direct effect. Confirms full deduction for genuine management holding companies, including on share issue and financing costs, and confines partial restriction to cases where some shareholdings are purely passive. Relevant to shipping, private equity and group holding structures.

C-159/14 Koela-N

Order · 15 July 2015 · Bulgaria

Deduction where goods go straight to the final customer, and what proves knowledge of fraud

Ruling by reasoned order, the Court held that the principle of fiscal neutrality precludes the authorities from denying that a supply took place, and from refusing deduction on that basis, merely because the goods travelled directly to the ultimate customer without passing through the hands of the intermediate acquirers. On the second question, it held that those two circumstances are not by themselves sufficient objective evidence of knowledge or means of knowledge, although both may be taken into account in an overall assessment of all the facts and circumstances. Two points that recur in Bulgarian and Romanian deduction disputes.

C-144/14 Cabinet Medical Veterinar Dr. Tomoiagă Andrei

Judgment · 9 July 2015 · Romania

Retroactive VAT assessment on veterinary services and duty to register a taxable person of the authority's own motion

Article 273 does not require registration of a taxable person's own motion on the basis of non-VAT returns. It is for the taxable person to declare commencement of activity under Article 213(1), and Member States retain discretion. Legal certainty and legitimate expectations do not preclude assessment within the limitation period, provided the rules are clear (removal from the exemption list suffices, VAT being of general application) and the authority's practice gave no precise assurances. Verification is for the national court. Confirms that a Member State's failure to police registration does not transfer the registration burden to the tax authority. Relevant to advisers dealing with retrospective assessments in newer Member States and with professions whose exempt status changed on accession.

C-331/14 Trgovina Prizma

Judgment · 9 July 2015 · Slovenia

Sale of land held as private assets by a sole trader

Allocating goods to private assets does not by itself take a sale outside VAT. The sale must also be made in the course of managing private assets rather than the economic activity. Where plots were acquired over a short period, were all necessary for the construction, and development work was carried out on them, the vendor acts as a taxable person and the sale is taxable. National verification reserved. Relevant to sole traders, property developers and their advisers who rely on holding land outside the business balance sheet.

C-499/13 Macikowski

Judgment · 26 March 2015 · Poland

Obligations of the court enforcement officer as paying agent on compulsory sales

None of these provisions precludes the Polish mechanism. The officer is a mere intermediary collecting tax on the taxable person's behalf, not a person liable, jointly liable or a tax representative under Article 204. The scheme falls within Article 273. Personal liability with all his assets is proportionate only if the officer actually has all the legal means to discharge the obligation in time, which the national court must verify. The supplier retains its right to deduct and may claim repayment of any overpayment. Confirms that Member States may use third party collection agents under Article 273 without engaging the liability rules in Articles 193 to 205. Relevant to enforcement officers, insolvency practitioners and auctioneers in Member States operating similar withholding mechanisms, and to advisers on compulsory sales of land.

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-131/13 Schoenimport Italmoda Mariano Previti and Others

Judgment · 18 December 2014 · Netherlands

Refusing deduction, exemption and refund for known evasion without a national rule

The Court held that it is for the national authorities and courts to refuse those rights even in the absence of any provision of national law providing for refusal, where it is established on objective factors that the taxable person knew or should have known that the transaction relied on formed part of evasion committed in a chain of supplies. It further held that the benefit may be refused notwithstanding that the evasion was carried out in a Member State other than the one in which the rights are claimed, and notwithstanding formal compliance with that State's legislation. The strongest statement of the anti-abuse principle in the VAT field.

C-605/12 Welmory

Judgment · 16 October 2014 · Poland

Fixed establishment of the recipient of services

The place where the recipient has established its business remains the primary point of reference. The fixed establishment rule is an exception. A fixed establishment exists only where there is a structure of sufficient permanence and suitable human and technical resources enabling it to receive the services and use them for its own business. That the two companies' activities form an economic whole benefiting consumers in the same Member State is immaterial. Verification is for the national court. Confirms that Article 44 case law under the Sixth Directive, and the Implementing Regulation definition, apply to recipient side fixed establishments. Relevant to digital platform, e-commerce and outsourcing structures where a local service provider's staff and equipment are used by a foreign principal.

C-92/13 Gemeente ‘s-Hertogenbosch

Judgment · 10 September 2014 · Netherlands

Self-supply charge on a building used mainly for public authority activities

Article 5(7)(a) applies to that situation where the Member State has exercised the option, the condition being that input VAT would not have been wholly deductible had the building been bought from another taxable person. Article 6(2)(a) allocation is not available where economic and non-economic activities are mixed. The full construction VAT is deductible, but the VAT due on the deemed self-supply (on the whole value of land and building) is recoverable only in the proportion used for taxable transactions. Relevant to public bodies and other partly non-taxable persons in Member States that have implemented the self-supply option for goods produced in the course of business, including works built by contractors on the owner's land.

C-589/12 GMAC UK

Judgment · 3 September 2014 · United Kingdom

Direct effect of bad debt relief where national law exempts the resale

Article 11C(1), first subparagraph, is sufficiently precise and unconditional to have direct effect, despite the discretion left to Member States over conditions. A Member State cannot refuse it on the ground that the combined result with national law is one neither system intended. The shortfall stems solely from the national exemption of the auction sale, and a State may not plead its own defective implementation. Whether that national treatment conforms is irrelevant. Abuse remains for the national court, but structuring to limit tax liability is legitimate. Confirms that taxable persons may rely on directly effective Directive provisions transaction by transaction, without the tax authority netting off advantages arising from national rules applied to a linked transaction.

C-337/13 Almos Agrárkülkereskedelmi

Judgment · 15 May 2014 · Hungary

Reduction of the taxable amount where the price is not paid

Article 90 does not preclude national law that omits non-payment of the price, that omission being treated as use of the Article 90(2) derogation, but the legislation must then cover all the other Article 90(1) situations where consideration is not received, which the national court must verify. Article 90(1) is sufficiently precise and unconditional to be relied on directly. Formalities may be imposed to prove that the consideration definitively will not be received, but no more than necessary. Confirms that a Member State may silently derogate for bad debts.

C-366/12 Klinikum Dortmund

Judgment · 13 March 2014 · Germany

Exemption for drugs dispensed during outpatient care

Article 13A(1)(c) contains no reference to closely related activities, so that concept is irrelevant to it. Drugs and other goods are exempt under it only where strictly necessary at the time the care is given and physically and economically indissociable from it. Despite the therapeutic continuum, care from the doctors and drugs from the hospital pharmacy appear to be separate supplies. The national court must assess indissociability. Failing that, the dispensing is taxable. Fiscal neutrality cannot widen an exemption. Relevant to hospitals, hospital pharmacies and oncology day units where outpatient treatment is delivered by independently accredited or self-employed doctors within hospital premises.

C-323/12 E.ON Global Commodities

Judgment · 6 February 2014 · Romania

Effect of a retained tax representative on Eighth Directive refunds

A supplier of electricity to taxable dealers in another Member State may rely on the Eighth Directive there for a refund of input VAT, and that right is not excluded merely by having designated a tax representative identified for VAT purposes in that State. A representative is not an establishment, and identification alone does not show that taxable supplies were actually made there. The national court must still verify that no supplies with a place of supply in Romania were in fact made. The provisions have direct effect. Relevant to energy traders and any business that retained a legacy tax representative or a VAT number in a Member State after reverse charge rules removed the need for one.

C-33/13 Jagiełło

Order · 6 February 2014 · Poland

Deduction refused because the invoice issuer was a front company

The Court holds that it does preclude such a refusal, unless it is established on the basis of objective evidence, and without requiring of the taxable person checks which are not his responsibility, that he knew or should have known that the supply was connected with VAT fraud. Verifying that is for the referring court. The conduct of the invoice issuer is not, on its own, a sufficient ground for refusal. A reasoned order applying Mahageben and David and Bonik to front company arrangements.

C-563/12 BDV Hungary Trading

Judgment · 19 December 2013 · Hungary

Time-limits for goods to leave the EU on export supplies

Articles 146(1) and 131 preclude such legislation. Article 146(1)(b) itself imposes no time-limit, and the exemption applies once the right to dispose of the goods has passed and the supplier shows they physically left the EU. Member States may fix a reasonable export deadline and tax the supply if it is missed, but they must allow the taxable person to prove later departure and to obtain repayment of VAT already paid. A non-remediable deadline is disproportionate. Exporters facing assessments purely because goods crossed the frontier late, especially on ex-works terms where the customer controls transport, can rely on this to obtain the exemption or a refund on producing evidence of actual departure.

C-319/12 MDDP

Judgment · 28 November 2013 · Poland

Exemption for commercial providers of education and the right to deduct

A profit-making aim does not itself bar exemption. Private bodies may qualify. But point (i) of Article 132(1) precludes a general exemption of all educational services irrespective of the provider's objects, which must be similar to those of public law bodies. A taxable person cannot both enjoy the exemption and deduct. It may, however, rely on the Directive to disapply the exemption, and then deduct, only where it could not objectively be regarded as having similar objects, a matter for the national court. Relevant to private training providers, language schools and vocational operators in Member States whose law exempts education by category rather than by provider status.

C-249/12 Tulică and Plavoşin

Judgment · 7 November 2013 · Romania

Whether a price agreed without reference to VAT is treated as VAT inclusive

Where the supplier cannot recover the VAT subsequently claimed from the purchaser, the agreed price must be treated as already including VAT. Otherwise the supplier bears a tax intended for the final consumer and the authorities collect more than the taxable person received. The position is different if national law allows the supplier to add a supplement equal to the tax and recover it from the purchaser. Whether such recovery is possible is for the national court to determine. The answer turns entirely on national contract and tax law. Relevant to property developers and individuals reclassified as taxable persons, and more widely to any silent-contract or undeclared-supply assessment.

C-431/12 Rafinăria Steaua Română

Judgment · 24 October 2013 · Romania

Default interest where set-off decisions blocking a VAT refund are annulled

Article 183 precludes such national law. Where excess VAT is not refunded within a reasonable period, fiscal neutrality requires compensation by default interest, calculated from the date the refund should normally have been made (here, expiry of the 45 day period). From the taxable person's perspective the reason for the delay is irrelevant. There is no material difference between administrative delay in handling a claim and delay caused by measures unlawfully blocking the refund which are later annulled. Confirms and extends Enel Maritsa Iztok 3.

C-440/12 Metropol Spielstätten

Judgment · 24 October 2013 · Germany

Cumulative VAT and gaming tax on slot machines, and the taxable amount

Cumulative levying is permitted provided the special national tax cannot be characterised as a turnover tax. Cash receipts over a set interval are a permissible taxable amount. With statutory limits on stakes, winnings and losses, the consideration is only the proportion of stakes the operator may keep, following Glawe. The hopper performs the same function as the earlier reserve compartment. Full offset of VAT against an unharmonised tax is not precluded. The pass-on questions were hypothetical, since the legislation does allow full pass-on. Confirms the German cash box method and closes the Glawe-based challenge to it, including the argument that new hopper technology distinguishes modern machines. Relevant to gaming advisers in any Member State with sector-specific levies.

C-622/11 Pactor Vastgoed

Judgment · 10 October 2013 · Netherlands

Who bears the clawback on an adjusted deduction

The Directive precludes recovering sums due on adjustment of a deduction from anyone other than the taxable person who applied it. Designating the debtor is a substantive rule, not a procedural detail Member States may fix. Article 21 lists exhaustively when another person can be liable, and the joint and several liability option does not permit a separate liability. Neither Article 20(4) nor the Netherlands reverse charge derogation supports charging the purchaser for an acquisition to which it was extraneous. Relevant to property investors and developers, and to advisers on opted-to-tax land and building transfers, particularly in the Netherlands where the clawback provision was struck down.

C-210/11 Medicom and Maison Patrice Alard

Judgment · 18 July 2013 · Belgium

Rent-free occupation of company property by managers and the letting exemption

Without rent in money there is no letting. The exemption cannot apply, and treatment of the occupation as a benefit in kind for income tax purposes is irrelevant, since it is not shown that the managers gave up salary or that part of their work was consideration. Nor need the taxable person show any direct link between the private use and its taxable transactions. The national court must still verify, on all the evidence, whether the features of a letting are present. Confirms and extends Seeling for corporate owner-occupiers.

C-124/12 AES-3C Maritza East 1

Judgment · 18 July 2013 · Bulgaria

Deduction on costs for hired-in staff and the standstill clause

Deduction cannot be refused merely because the workers are employed by another entity. The link required by Article 168(a) is purely economic, and the legal relationship with the persons working in the undertaking is irrelevant, provided the costs have a direct and immediate link with the taxable person's general costs. The standstill clause does not permit a new exclusion for supplies free of charge introduced on accession. The national court must read domestic law consistently or disapply it. Relevant to any business operating with hired-in, agency or seconded personnel, particularly industrial sites where transport, PPE and workwear are legally required.

C-62/12 Kostov

Judgment · 13 June 2013 · Bulgaria

Occasional transactions by an already registered taxable person

He is a taxable person. Someone already taxable for VAT in respect of his main activity acts as a taxable person for any other economic activity carried out occasionally, provided that activity falls within the second subparagraph of Article 9(1). Article 12(1) concerns only persons not already taxable in respect of their main economic activity, so no separate Member State option is needed here. The Court proceeded on the referring court's classification of the arrangement as an agency contract, that is, a supply of services. Registered taxable persons cannot ring-fence their VAT status by reference to the activity for which they registered.

C-191/12 Alakor Gabonatermelő és Forgalmazó

Judgment · 16 May 2013 · Hungary

Refusal to repay VAT already covered by subsidy

The repayment principle does not preclude refusal to repay the part of the VAT that was subsidised by aid, but only if the economic burden of the deduction refusal has been completely neutralised, which the national court must verify. The test is whether the aid would have been lower had deduction been allowed. Repayment must equal the blocked VAT less any excess aid attributable to it. The source of the funding, EU or national, is irrelevant. Relevant to recipients of grant funding where national rules formerly restricted deduction on subsidised acquisitions, and to advisers running historic recovery claims in Hungary and comparable regimes.

C-444/12 Hardimpex

Order · 16 May 2013 · Hungary

An upstream irregularity does not defeat deduction absent proof of knowledge

The Court holds that it does preclude that refusal, where it has not been established to the requisite legal standard that the taxable person knew or should have known of the irregularity. The mere fact that the company did not check where the goods came from cannot be a ground for refusing deduction. Subject to the verifications for the referring court, no such knowledge had been shown. One of the Hungarian orders that consolidated the Mahageben and David line into settled practice.

C-142/12 Marinov

Judgment · 8 May 2013 · Bulgaria

Taxable amount on retention of goods after deregistration

Article 18(c) covers cessation whatever its cause, including removal from the register by the authorities, subject only to the Article 19 cases. The taxable amount is governed by Article 74, not Article 80 (whose conditions are exhaustive and not met here). It is the residual value of the goods at cessation. An open market value rule is precluded unless in practice it produces that residual value, reflecting the change in value since acquisition. Article 74 has direct effect. Relevant wherever a business is struck off the VAT register while holding assets on which input tax was recovered, in particular vehicle fleets and other depreciating equipment.

C-271/12 Petroma Transports and Others

Judgment · 8 May 2013 · Belgium

Late correction of incomplete invoices and the right to deduct

Correction of defective invoices is not prohibited, but the decisive point is timing. Where the supplementary information reaches the authority only after the refusal decision has been adopted, deduction may be refused. Member States could, under the Sixth Directive, require particulars beyond the listed minimum, provided these are limited to what is necessary and do not make deduction practically impossible. Neutrality gives no right to a refund to the supplier. The services were actually performed, so the VAT was due and correctly paid. Confirms that the Pannon Gép window for regularising invoices closes when the authority takes its decision. Relevant to intra-group service and management charge arrangements, where lump sum invoicing without hours or unit rates remains a common audit target.

C-480/10 Commission v Sweden

Judgment · 25 April 2013 · Sweden

Restricting VAT grouping to the financial and insurance sector

The action was dismissed. Article 11 is not a derogating provision to be read narrowly, and its first paragraph imposes no condition as to type of activity or sector, but the second paragraph allows restrictions to combat tax evasion or avoidance, provided EU law is respected, and the Commission had not convincingly shown Sweden's confinement of grouping to entities under Finance Inspectorate supervision was unfounded. The equal treatment plea was inadmissible, having been raised only after a reasoned opinion based on fiscal neutrality. Sector-limited grouping regimes survive, but on anti-avoidance grounds rather than any inherent Member State discretion over scope. Relevant to financial, insurance and outsourced-services groups in Sweden and in other Member States with similarly narrow schemes.

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-74/11 Commission v Finland

Judgment · 25 April 2013 · Finland

Failure of a Member State to fulfil obligations · Taxation · Directive 2006/112/EC · Articles 9 and 11 · National legislation permitting the inclusion of non-taxable persons in a group of persons which can be regarded as a single taxable person for VAT purposes and restricting the possibility of forming such a group…

C-86/11 Commission v United Kingdom

Judgment · 25 April 2013 · United Kingdom

Non-taxable persons may belong to a VAT group

The Court dismissed the action. The wording of the first paragraph of Article 11 does not confine grouping to taxable persons. It refers to persons established in the territory of the Member State who are closely bound by financial, economic and organisational links. Nor did the objectives of the provision support the narrower reading advanced by the Commission, particularly since the second paragraph of Article 11 already allows Member States to adopt any measures needed to prevent evasion or avoidance through the use of grouping. The Commission was ordered to pay the costs. Decided together with the parallel actions against Ireland and other Member States, and it settles a question of real structural importance.

C-95/11 Commission v Denmark

Judgment · 25 April 2013 · Denmark

Denmark was entitled to allow non-taxable persons into a VAT group

The Court dismisses the action. The Commission had not established that the objectives of Article 11 support an interpretation under which non-taxable persons cannot be included in a VAT group. If that possibility were itself to give rise to abuse, the second paragraph of Article 11 allows Member States to take any measures needed to prevent evasion or avoidance. The Commission was ordered to pay the costs. Read together with the parallel judgments against Ireland, the Netherlands, the Czech Republic, Sweden, Finland and the United Kingdom, this settles that Article 11 does not restrict membership to taxable persons.

C-109/11 Commission v Czech Republic

Judgment · 25 April 2013 · Czechia

Commission fails to prove that Czech VAT grouping admits non-taxable persons

The Court dismisses the action. In the absence of proof, the alleged failure is not made out. An infringement cannot be established on the basis of mere statements by the authorities of a Member State about how they interpret EU law or how they intend to apply it. The Commission was ordered to pay the costs, and the intervening Member States bore their own. Decided the same day as the parallel actions against Ireland, Sweden, Finland, the United Kingdom, Denmark and the Netherlands.

C-138/12 Rusedespred

Judgment · 11 April 2013 · Bulgaria

Refund of VAT invoiced in error where the customer's deduction has been definitively refused

Neutrality precludes refusal of the refund in those circumstances. Article 203 exists to remove the risk of loss of tax revenue. Where deduction has been definitively refused that risk is wholly eliminated, and conditioning the refund on a correction that national law makes impossible goes beyond what is necessary. The obligation is unconditional and sufficiently precise, so the taxable person may rely on the principle against the national provision. Suppliers who wrongly charge VAT on exempt supplies, notably on older buildings and associated works, have a route to recovery once the customer's deduction has been finally refused, even if the domestic correction or credit note mechanism has by then closed.

C-85/11 Commission v Ireland

Judgment · 9 April 2013 · Ireland

Whether non-taxable persons may belong to a VAT group

The Grand Chamber dismissed the action. Article 11 refers to "persons", not "taxable persons", and imposes no condition that each member individually satisfy the Article 9(1) definition. The members taken together may collectively satisfy it. Neither the context of Title III nor the aims of administrative simplification and combating abuse supports the Commission's reading. Where the option is abused, the second paragraph of Article 11 allows Member States to adopt measures to prevent evasion or avoidance. Grouping regimes admitting non-taxable members, notably holding companies and other passive entities, are confirmed as lawful, so Member States need not restrict membership to persons carrying out economic activities.

C-527/11 Ablessio

Judgment · 14 March 2013 · Latvia

Refusal to assign a VAT identification number

A number may not be refused solely because the applicant lacks the material, technical and financial resources for the declared activity, or because its shareholder has repeatedly obtained numbers for companies that never traded and were then transferred. Such refusal requires objective factors amounting to sound evidence that the number will probably be used fraudulently, assessed overall. Those circumstances may feed into that assessment. Whether the evidence was sufficient is for the national court. Relevant to advisers handling start-up and pre-trading registrations, holding structures and businesses whose promoters have incorporated multiple entities.

C-310/11 Grattan

Judgment · 19 December 2012 · United Kingdom

No retrospective reduction of the taxable amount under the Second Directive

Article 8(a) confers no such right. Under Article 5(5) the chargeable event occurred on delivery and the tax debt arose on the basis of assessment fixed at that moment. The Second Directive contained nothing allowing regularisation afterwards. Fiscal neutrality cannot supply what Article 11C(1) of the Sixth Directive later added. Since the sub-customers, as final consumers, paid the unreduced catalogue price and the commission went to the agents, the taxable amount was that full price. Closes off pre-1978 repayment claims resting on post-supply rebates, credits or agents' commission, a Fleming-style claim pattern familiar to UK retailers and their advisers.

C-560/11 Debiasi

Order · 13 December 2012 · Italy

Input tax on exempt medical activities is not deductible and enters the pro rata

The Court holds that those provisions do not preclude such legislation. Denying deduction for inputs used in exempt transactions is the ordinary consequence of the system, since deduction is available only in so far as goods and services are used for taxed transactions, and including exempt supplies in the denominator of the fraction is exactly what Article 19 prescribes. A confirmation of orthodoxy rather than a development.

C-285/11 Bonik

Judgment · 6 December 2012 · Bulgaria

Deduction refused because upstream supplies could not be traced

Deduction may not be refused on the ground that, in view of fraud or irregularities committed upstream or downstream, the supply is deemed not to have taken place, unless it is established on objective evidence that the taxable person knew or should have known that his transaction was connected with VAT fraud in the chain. The national court must still verify that the supplies were actually made and the goods used for taxed output transactions, and whether the authorities have produced that objective evidence. Confirms Mahagében and Dávid for Bulgarian-style "absence of actual supply" reasoning.

C-299/11 Gemeente Vlaardingen

Judgment · 8 November 2012 · Netherlands

Self-supply charge on goods improved by a third party on the taxable person's own land

The self-supply option covers not only goods produced entirely in-house but also goods constructed or improved by a third party using materials, including land, supplied by the business, and VAT may be charged on the aggregate of the transformation costs and the land value, measured by market value at the time of application. But no VAT may be charged on an element of value on which the taxable person has already paid VAT, and the charge cannot apply if the land falls within the exemption for land not built on that is not building land. Relevant to any exempt operator (local authorities, sports and leisure providers, healthcare, education, social housing) that refurbishes or develops its own land using contractors in a Member State applying the self-supply option.

C-318/11 Daimler and Widex

Judgment · 25 October 2012 · Sweden

Fixed establishment and refunds to non-established taxable persons

Such a taxable person has no fixed establishment of that kind. The test is cumulative because there must be a fixed establishment and actual output taxable transactions effected from it. A mere ability to make supplies is insufficient, so testing or research activities alone do not defeat the refund claim and there is no need to decide whether a fixed establishment exists. The presence of a wholly owned subsidiary supplying services for the testing activity does not alter this. The subsidiary is a separate taxable person and did not make the purchases. Tax authorities cannot refuse Eighth Directive or Directive 2008/9 refunds by pointing to permanent premises, staff or equipment alone.

C-525/11 Mednis

Judgment · 18 October 2012 · Latvia

Automatic deferral of part of a VAT refund credit

Article 183 does not authorise such a deferral. Although postponing a refund beyond the period in which the credit arose is not inherently incompatible with Article 183, a wait of a year or more breaches fiscal neutrality, and a generalised, preventive application of a percentage threshold, with no opportunity for the taxable person to show there is no evasion risk, is disproportionate, particularly where other anti-fraud powers already exist. No limitation of temporal effects. Relevant to any business in a structural repayment position, notably exporters and zero-rated suppliers, facing formula-based or automatic withholding of refunds.

C-324/11 Tóth

Judgment · 6 September 2012 · Hungary

Deduction where the subcontractor's trading licence was withdrawn and its workers undeclared

No refusal on any of those grounds alone. Status as a taxable person under Article 9(1) turns on facts, not on any licence or registration, so deduction stands where the invoice carries the Article 226 particulars. Undeclared workers by the supplier, and the customer's failure to check the workforce, do not of themselves show knowledge of fraud absent material grounding suspicion. Where the authority produces specific evidence of fraud, the national court may examine whether the issuer performed the supply, but refusal still requires objective evidence of knowledge. Confirms and extends Mahagében and Dávid to services and to withdrawn trading licences.

C-334/10 X

Judgment · 19 July 2012 · Netherlands

Deduction on permanent alterations made for temporary private use

Deduction is available on the alteration expenditure notwithstanding that the alterations were made with temporary private use in mind, and irrespective of whether VAT was charged and deducted on acquiring the underlying item. The alterations may constitute a separate capital item, and initial private followed by business use is mixed use. But deduction depends on the national court finding, on objective evidence (nature of the goods, later business use, lifespan), an intention to use the item for business purposes. Private use is then taxed under Article 6(2)(a), not (b). Relevant wherever fit-out or conversion works on business premises serve a temporary private or non-business purpose before reverting to business use, including owner-managed businesses, farms and mixed residential/commercial property.

C-160/11 Bawaria Motors

Judgment · 19 July 2012 · Poland

Margin scheme where the previous supplier had only partial input VAT deduction

The margin scheme is not available on such a resale. Article 314 lists exhaustively and must be construed narrowly. The exemption in Article 136(b) covers only goods on whose acquisition VAT was not deductible at all. A national restriction limiting the deductible amount is not non-deductibility. What the listed cases share is that the supplier bore the input tax in full. Resulting partial double taxation is for the national legislature to remedy, not a ground for a different reading. For motor dealers and other second-hand goods traders what decides the point is the previous owner's deduction position, not merely whether the incoming invoice is marked exempt.

C-80/11 Mahagében and Dávid

Judgment · 21 June 2012 · Hungary

Refusal of deduction for the supplier's misconduct and the buyer's duty of enquiry

The Directive precludes both national practices. Where the substantive and formal conditions for deduction are met, refusal requires the authority to establish, on objective evidence, that the taxable person knew or ought to have known that the transaction was connected with fraud by the invoice issuer or an earlier trader in the chain. No strict liability. General verification duties cannot be imposed where the trader holds no material giving grounds to suspect irregularities. Where there are such indications, enquiries may reasonably be required. The authority, not the taxpayer, bears the burden of proving knowledge or means of knowledge, and cannot shift its investigative function onto customers.

C-621/10 Balkan and Sea Properties and Provadinvest

Judgment · 26 April 2012 · Bulgaria

Open market value as the taxable amount for supplies between connected persons

The conditions in Article 80(1) are exhaustive. National legislation may not rely on that provision to make open market value the taxable amount outside the listed cases, in particular where the taxable person has a full right of deduction, since no evasion or avoidance risk arises there. Member States remain free to impose other anti-evasion obligations under Article 273. Article 80(1) may be relied on directly, and incompatible national provisions must be disapplied, leaving Article 73 to apply. Member States operating blanket connected-party valuation rules cannot apply them where both parties have full deduction rights.

C-414/10 Véleclair

Judgment · 29 March 2012 · France

Deduction of import VAT without prior payment

A Member State may not make the deduction conditional on prior payment. The wording covers VAT "due or paid", so the right to deduct extends to import VAT still owed, and Article 18(1)(b) requires only an import document identifying the importer and showing or permitting calculation of the tax due. Conditioning deduction on payment would impose an economic burden contrary to neutrality. Evasion concerns are met by the burden of proof on the claimant, retroactive recovery and refusal of the right where fraud is objectively established. Relevant to importers and their advisers in any Member State whose domestic law ties recovery of import VAT to proof of payment, particularly where duty and import VAT are assessed retrospectively after an origin or classification challenge.

C-436/10 BLM

Judgment · 29 March 2012 · Belgium

Private use of company property by staff and the letting exemption

The Court held that those provisions preclude such national legislation where the characteristics of a letting are absent. Seeling is not confined to natural persons. Article 6(2)(a) expressly covers use by a taxable person's staff and draws no distinction by legal form. Without rent, an agreed duration of enjoyment, a right of occupation and the exclusion of third parties, there is no exempt letting. It remains for the national court to verify whether a letting exists on the facts. Member States cannot deny deduction on mixed use immovable property held by companies by recharacterising rent free occupation by directors or employees as an exempt letting. Relevant to corporate property holdings, family companies granting usufructs, and advisers handling director accommodation.

C-500/10 Belvedere Costruzioni

Judgment · 29 March 2012 · Italy

Automatic conclusion of long-running tax appeals

The provisions do not preclude such a measure. The obligation to collect VAT effectively cannot override the reasonable time requirement in Article 47 of the Charter and Article 6(1) ECHR. Unlike the amnesty measures condemned in Commission v Italy, this was not a general and indiscriminate waiver of verification shortly after payment deadlines, but an exceptional rule closing the oldest cases (in practice over 14 years old) after two adverse judgments, so it did not breach fiscal neutrality. Confirms that Member States may legislate to close ancient tax litigation without infringing their VAT collection duties, provided the measure is exceptional, defined by objective age and procedural criteria, and not a substitute for audit.

C-594/10 van Laarhoven

Judgment · 16 February 2012 · Netherlands

Flat-rate taxation of private use of business cars

Article 6(2)(a) read with Article 11A(1)(c) of the Sixth Directive precludes legislation which allows immediate full deduction on mixed use cars but then taxes private use annually on a flat-rate basis that does not reflect, proportionally, the actual extent of private use. Flat-rate methods remain permissible because Member States retain a margin of discretion, provided the outcome is proportionate to actual private use and gives the taxable person no advantage over a final consumer. The national court must test the Dutch method against that standard. Relevant to any business allocating mixed use cars wholly to business assets and to advisers dealing with private use charges.

C-25/11 Varzim Sol

Judgment · 16 February 2012 · Portugal

Untaxed subsidies cannot be forced into the pro rata for a wholly taxable sector

The Court holds that those provisions preclude it. Where a Member State allows deduction based on use, the sector in which only taxable transactions are carried out gives a full right of deduction, and untaxed subsidies cannot be brought into the denominator of a fraction for that sector. Doing so would restrict a right of deduction that the directive intends to be complete. The judgment protects the integrity of the use based method in Article 173(2).

C-118/11 Eon Aset Menidjmunt

Judgment · 16 February 2012 · Bulgaria

Deduction on leased and finance-leased cars used for home to work travel

For an ordinary lease (a supply of services), deduction requires a direct and immediate link with the economic activity, assessed at the expiry of the period to which each payment relates. Where a finance lease transfers substantially all risks and rewards, or ownership at the end, it is the acquisition of capital goods. If allocated wholly to business assets, input VAT is fully and immediately deductible, with private or staff use taxed under Article 26(1). Such national exclusions are permissible, but not where capital goods are allocated to the business. Relevant to fleet operators, leasing companies and advisers handling company car deductions.

C-499/10 Vlaamse Oliemaatschappij

Judgment · 21 December 2011 · Belgium

Joint and several liability of the tax warehouse-keeper

Article 21(3) does not authorise such unconditional liability. Joint and several liability is permissible in principle, but strict liability, with no possibility for the person concerned to escape by proving he had nothing to do with the acts of the person liable, breaches proportionality, even for an authorised tax warehouse-keeper under Directive 92/12. It remains legitimate to require that person to take every step reasonably expected to ensure he is not participating in evasion. Good faith and due diligence are decisive factors for the national court to assess. Confirms that national secondary liability provisions in warehousing regimes must include an exculpatory route based on good faith and reasonable diligence.

C-69/11 Connoisseur Belgium

Order · 9 December 2011 · Belgium

No VAT on amounts that could have been charged but were not

Ruling by order, the Court held that in circumstances such as those of the main proceedings VAT is not due on such amounts. The taxable amount is the consideration actually obtained by the supplier, not the consideration it might have obtained had it exercised a contractual entitlement. A charge that was never made forms no part of what was received in return for the supply. Short but pointed, and it settles an argument administrations occasionally run from the terms of a contract rather than from what was invoiced and paid.

C-259/10 Rank Group

Judgment · 10 November 2011 · United Kingdom

Fiscal neutrality and the gambling exemption for slot machines and mechanised bingo

A difference in treatment of supplies identical or similar from the consumer's viewpoint, meeting the same needs, suffices. No separate proof of competition or distortion is needed. Licensing categories, regulatory regimes, legality, operator identity, venue and unharmonised taxes are irrelevant. For two slot machine types, comparability is judged from the average consumer's perspective, notably stakes, prizes and chances of winning. No repayment where the comparator exemption was merely an unlawful administrative practice. No due diligence defence. Operators of gaming machines and similar gambling products can challenge selective taxation without economic evidence of competition, and cannot be answered by pointing to different gambling licensing regimes. Relevant to gambling operators, betting shops and advisers handling historic overpayment claims.

C-421/10 Stoppelkamp

Judgment · 6 October 2011 · Germany

Meaning of a taxable person not established in the territory of the country

It is sufficient that the seat of the economic activity is established outside the country. Personal residence, domicile or normal place of residence are secondary connecting factors, relevant only where there is no information on the seat or a fixed establishment from which transactions are effected. That applies where the seat is known and genuine, not fictitious or a mere letter-box presence, in which case other factors may be examined. Confirms that customers applying the reverse charge need not investigate where their supplier personally lives once the supplier's business seat is demonstrably in another Member State.

C-180/10 Słaby and Others

Judgment · 15 September 2011 · Poland

Sales of building land by private landowners and the boundary of economic activity

Mere management of private property remains outside VAT. The number and scale of sales, division into plots, the period involved and the income earned are not decisive. The seller becomes a taxable person only if he takes active steps to market the land by mobilising resources similar to a trader, for example preparatory development works or proven marketing measures. Article 12(1) applies only if the Member State has actually exercised the option, which the national court must verify. Article 16 does not apply where no input VAT was deductible. Flat-rate farmer status is irrelevant. The reference point for land disposals by individuals and farmers is qualitative, not quantitative. Relevant to landowners, farmers and property developers.

C-438/09 Dankowski

Judgment · 22 December 2010 · Poland

Deduction where the supplier is not registered for VAT

Deduction is available: the supplier's failure to declare commencement of activity under Article 22(1) cannot defeat the recipient's right under Article 17(2), provided the invoices contain all the Article 22(3)(b) particulars, in particular enough to identify the issuer and the nature of the services. A tax identification number sufficed here. Article 17(6) does not save a general exclusion of deduction covering all transactions of an unregistered supplier. Such standstill derogations must be specific and are construed strictly. Confirms that registration is a formality on the supplier's side and cannot be turned into a substantive condition for the customer's deduction where the supply is real and used for taxed outputs.

C-385/09 Nidera Handelscompagnie

Judgment · 21 October 2010 · Lithuania

Deduction denied for want of prior VAT registration

Identification under Article 214, like the notification duty in Article 213, is a formal requirement for verification purposes, not a condition constituting the right of deduction. The only formal condition under Article 178(a) is holding a compliant invoice. Where the substantive conditions are met, deduction cannot be refused merely because the person was not identified before using the goods in his taxed activity, provided he identifies himself within a reasonable period. Member States may still impose reasonable time limits and administrative penalties. Relevant to exporters and traders established in one Member State buying locally for zero-rated export or intra-Community supply, who are not obliged to register locally but must do so to recover input VAT.

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.

C-582/08 Commission v United Kingdom

Judgment · 15 July 2010 · United Kingdom

Refunds to non-EU businesses for exempt insurance and financial supplies

The Court dismissed the action. Article 2(1) of the Thirteenth Directive is lex specialis in relation to Articles 170 and 171 of the VAT Directive, so the generally worded refund entitlement in Article 170 cannot override its clear and precise wording, which covers only Article 169(a) and (b) transactions. Even if the Commission were right that the legislature erred, and that the reading is inconsistent with the logic of the VAT system, it is not for the Court to correct the provision or extend Member States' obligations. Confirms that non-EU insurers, banks and other financial services providers have no directive-based right to a Thirteenth Directive refund of input VAT attributable to exempt insurance and financial supplies, even though EU-established competitors recover under the Eighth Directive (now Directive 2008/9).

C-536/08 X and fiscale eenheid Facet-Facet Trading

Judgment · 22 April 2010 · Netherlands

No deduction of VAT on a fallback intra-Community acquisition

No immediate right of deduction. Where the goods were not actually brought into the Member State of identification, the deemed acquisition cannot be regarded as giving rise to a right of deduction under Article 17, because the goods are not used for the taxable person's taxed transactions there. The remedy is the specific corrective mechanism in the second subparagraph of Article 28b(A)(2), reducing the taxable amount once the acquisition is shown to have been taxed in the Member State of arrival, not the general deduction regime. Confirms that the fallback taxation in the identification State is a sanction-like charge with no input credit.

C-433/08 Yaesu Europe

Judgment · 3 December 2009 · Germany

Signature on a non-established trader's VAT refund claim

"Signature" is a concept of Community law with the same meaning in all Member States. It does not require signature by the taxable person itself. The signature of an authorised agent suffices. Annex A requires only a "signature", without the qualifier "of the applicant" used for other entries, and Article 6 bars Member States from imposing obligations beyond Articles 3 and 4, so a national requirement of an original handwritten signature by the taxable person is precluded. The Directive does not exclude appointing an agent. Refund agents, law firms and advisers filing cross-border reclaims for non-established businesses can sign in the client's name under a power of attorney. Relevant to any refund refused on that formal ground, and a reminder that formalities not appearing in the harmonised form cannot be added nationally.

C-154/08 Commission v Spain

Judgment · 12 November 2009 · Spain

Land registrars acting as tax settlement agents as taxable persons

The Court declared that Spain had infringed Article 2 and Article 4(1) and (2) of the Sixth Directive by treating those services as not subject to VAT. The registrars act on their own account and at their own risk, remunerated out of the sums collected, and are therefore independent taxable persons. They are not integrated into the public administration so as to fall outside the scope of the tax. The Court also confirmed that an infringement of Community law attributable to a national court engages the Member State's responsibility. Confirms that VAT liability turns on the substance of how a professional is engaged and remunerated, not on the public-law label of the function performed or the public character of the recipient.

C-244/08 Commission v Italy

Judgment · 16 July 2009 · Italy

A fixed establishment does not force a non-resident into the refund procedure

The Court finds the infringement established. A taxable person with a fixed establishment in the Member State concerned, which makes supplies there, is not a person not established in that State for the purposes of those directives. It must therefore recover the input tax by deduction through its Italian return, and it cannot be pushed into the refund procedure merely because the purchase was made directly by the principal establishment. A practically important judgment for groups with branches.

C-483/08 Régie communale autonome du stade Luc Varenne

Order · 9 July 2009 · Belgium

Limitation for recovering wrongly deducted VAT may run from the first claim

The Court holds that Article 10 does not preclude such a rule. That provision defines the chargeable event and the chargeability of the tax. It does not govern limitation periods for the recovery of tax wrongly deducted, which in the absence of EU rules fall within the procedural autonomy of the Member States, subject to the principles of equivalence and effectiveness. Useful whenever a client argues that a national recovery period runs from an event other than the deduction claim.

C-377/08 EGN

Judgment · 2 July 2009 · Italy

Input VAT recovery on cross-border telecommunications supplies

The Court held that such supplies are "carried out abroad" within Article 17(3)(a), so the supplier may deduct or be refunded input VAT in its own Member State provided the same services would have generated a right of deduction had they been supplied domestically. For 1999 the shift of place of supply to the customer's establishment derived not from Article 9(2)(e) itself but from Council Decision 97/207 authorising Italy to derogate. Directive 1999/59 only applied from a later date. Confirms that a deemed foreign place of supply is enough to trigger recovery under Article 17(3)(a).

C-460/07 Puffer

Judgment · 23 April 2009 · Austria

Full deduction on mixed-use buildings and the scope of the standstill clause

Articles 17(2)(a) and 6(2)(a) do not breach equal treatment. Any cash-flow advantage flows from the taxable person's status and economic activity, so different rules apply to different situations. Article 87(1) EC does not apply, since the restriction of deduction to taxed transactions derives from the Directive itself, not State intervention. The standstill clause does not cover new rules based on a different logic and new procedures, even where the outcome is equivalent and even if the legislature misread Community law. Whether an unamended parallel exclusion survives depends on its autonomy, for the national court. Confirms that a taxable person allocating a mixed-use building wholly to the business may deduct all input VAT immediately, with private use taxed under Article 6(2)(a). Relevant to property owners and advisers handling mixed-use construction, and to any challenge to grandfathered domestic input tax blocks.

C-74/08 PARAT Automotive Cabrio

Judgment · 23 April 2009 · Hungary

Restriction of input tax deduction on publicly subsidised purchases

The Court held that Article 17(2) and (6) precludes such legislation. The standstill derogation is to be read strictly and, in light of the first subparagraph, permits retention only of exclusions for certain goods or services, not a general restriction applying to any expenditure on acquisition of goods irrespective of nature or purpose. Article 17(2) is sufficiently clear and precise to be invoked directly. The taxable person may recalculate his VAT liability accordingly. Confirms that pro rata deduction rules keyed to grant funding, rather than to the taxable use of the goods, are unlawful, and that accession states cannot shelter blanket exclusions under the standstill clause.

C-515/07 Vereniging Noordelijke Land- en Tuinbouw Organisatie

Judgment · 12 February 2009 · Netherlands

Input tax on goods used for non-economic activities of an association

Articles 6(2)(a) and 17(2) do not apply to the use of business goods and services for transactions other than the taxable person's taxed transactions. Input VAT attributable to those transactions is not deductible. Unlike private use of a capital asset (Charles and Charles-Tijmens), non-economic activities falling outside the scope of VAT are not purposes "other than those of the business" where, as here, they constitute the association's principal object. The second question did not require an answer. Confirms Securenta for mixed economic and non-economic actors.

C-502/07 K-1

Judgment · 15 January 2009 · Poland

Additional tax charge for overstated VAT refund claims

The Court held that the charge is not a tax at all but an administrative penalty. It is not triggered by any transaction and is not proportionate to the price received. The common VAT system does not preclude Member States from penalising irregularities in VAT declarations. Such measures fall under Article 22(8) of the Sixth Directive. Consequently it is not a special derogating measure under Article 27(1), and Article 33, which concerns taxes, duties and charges, does not preclude it. Confirms that domestic penalties for overstated refund claims sit outside the harmonised VAT system and need no Council authorisation, provided they are genuinely penalties rather than levies proportionate to turnover or price. Relevant to advisers challenging automatic percentage-based surcharges in any Member State.

C-291/07 Kollektivavtalsstiftelsen TRR Trygghetsrådet

Judgment · 6 November 2008 · Sweden

Taxable person status of a mixed activity recipient of consultancy services

Such a recipient is a taxable person for the purposes of those provisions even where the consultancy is acquired solely for activities falling outside the scope of the Directives, because Article 9(2)(e) says nothing about the services having to be acquired for the recipient's economic activity. It follows that the recipient is liable for the VAT under Article 21(1)(b) (now Article 196), regardless of the use made of the services. Relevant to any mixed activity body established in the EU.

C-162/07 Ampliscientifica and Amplifin

Judgment · 22 May 2008 · Italy

VAT grouping distinguished from simplified group declaration and payment

Applying the single taxable person option requires prior consultation of the VAT Committee and national rules under which the linked persons cease to be separate taxable persons, holding a single VAT identification number and alone able to file returns. Legislation merely simplifying declaration and payment while companies remain separate taxable persons is different in kind. A minimum holding period (one to two years) for that simplified regime offends neither neutrality, nor proportionality, nor the prohibition of abuse. Classification is for the national court. The note draws the line advisers still rely on. Relevant to groups using domestic consolidation regimes to net debit and credit positions, and to anyone assessing whether a national regime was validly introduced.

C-456/07 Mihal

Order · 21 May 2008 · Slovakia

A self-employed bailiff is a taxable person despite exercising public powers

Ruling by order, the Court held that the activity is not exempted from VAT merely because it consists in acts falling within the rights and powers of a public authority. Even assuming that a bailiff performs such acts, under legislation of the kind at issue he does not exercise his activity in the form of a body governed by public law, since he is not integrated into the organisation of the public administration but acts as an independent economic operator in a self-employed capacity. He therefore falls outside the exclusion. The rule that matters here is cumulative.

C-442/05 Zweckverband zur Trinkwasserversorgung und Abwasserbeseitigung Torgau-Westelbien

Judgment · 3 April 2008 · Germany

Mains connections as part of the supply of water

The connection is essential to making water available and therefore forms part of the supply of water for both Annex D and Annex H. A body governed by public law acting as a public authority is consequently a taxable person on that transaction. Member States may apply the reduced rate selectively, to concrete and specific aspects of water supplies such as mains connections, provided fiscal neutrality is respected so that similar competing supplies are not treated differently. Water undertakings and municipal bodies charging separate connection fees must account for VAT on them even where they act under public law powers, and the connection is rateable as water supply rather than as construction work. Relevant to advisers on utilities, local authority trading activities and to any reduced rate scoping argument built on category-wide application.

C-124/07 Beheer

Judgment · 3 April 2008 · Netherlands

A sub-agent services can qualify as exempt insurance intermediation

The Court holds that the absence of a direct relationship does not prevent the exemption from applying. Its earlier case law had not defined the nature of the required relationship, and nothing in the wording precludes the intermediation activity from being broken down into separate services. Fiscal neutrality means traders must be free to choose the form of organisation that best suits them commercially without losing the exemption. A significant widening of the insurance intermediation exemption, now Article 135(1)(a) of the VAT Directive, for chains of brokers and sub agents.

C-437/06 Securenta

Judgment · 13 March 2008 · Germany

Input VAT on share issue costs where economic and non-economic activities are mixed

Input VAT on capital-raising costs is deductible only to the extent the costs are attributable to the taxable person's economic activity. VAT on costs linked to activities falling outside the Directive because they are non-economic gives no right of deduction. Articles 17(5) and 19 govern only the split within economic activity. The choice of method and criteria for apportioning between economic and non-economic activity is for Member States, which must adopt a calculation objectively reflecting the actual attribution to each. An investment-based, transaction-based or other suitable criterion may be used. Confirms a two-stage apportionment for holding and investment vehicles, funds and any business with genuinely non-economic activity: first strip out the non-economic share of general costs, only then apply the Article 17(5) pro rata. Relevant to advisers on IPO, share issue and fundraising costs, where full deduction cannot be claimed simply because capital strengthens the business generally.

C-98/07 Nordania Finans and BG Factoring

Judgment · 6 March 2008 · Denmark

Sales of leased vehicles in the deductible proportion

The expression does not cover such goods. The exclusion targets sales that are unusual in relation to the taxable person's normal activities and so do not consume mixed-use goods and services in proportion to the turnover generated. Where, as here, sale of the vehicles on termination of the leases is an integral part of the undertaking's usual business, that turnover must be included in the fraction. The concept is autonomous and uniform. The Member States' power to define capital goods under Article 20(4) applies only to adjustments. For a leasing or hire company with mixed taxable and exempt turnover, end-of-lease disposal proceeds enter both the numerator and the denominator of the pro rata, which normally improves recovery on overheads where the disposals are taxable. Relevant to vehicle leasing, equipment rental and asset finance groups with exempt financial activities.

C-401/06 Commission v Germany

Judgment · 6 December 2007 · Germany

Place of supply of an executor's services

The Court dismissed the action. Article 9(1) has no precedence over Article 9(2), and the third indent of Article 9(2)(e) describes categories of services, not professions. However, an executor does not represent or defend a person's interests. He neutrally carries out crystallised wishes, and his work is predominantly economic (valuing, distributing, managing the estate), whereas a lawyer's services aim primarily at the success of a legal claim. Different purposes, so neither a lawyer's service nor similar to one. Confirms that executors' fees remain taxable where the executor is established, even for beneficiaries outside the EU or business customers elsewhere, and that lawyers acting as executors cannot assume their usual place of supply treatment follows.

C-355/06 van der Steen

Judgment · 18 October 2007 · Netherlands

Sole shareholder-director as a taxable person

He is not a taxable person. Where the individual works in the name and on behalf of the company under a contract of employment, an employer and employee relationship exists. The company sets his remuneration, he does not act in his own name or under his own responsibility, and he bears no economic risk. Heerma is distinguished because there the partner let property in his own name. Asscher, concerning free movement, does not apply to the VAT concept of taxable person. The Dutch practice of grouping an owner-manager with his own company collapses.

C-284/04 T-Mobile Austria and Others

Judgment · 26 June 2007 · Austria

Auctioning of mobile telephony spectrum rights by a regulator

Allocation by auction of spectrum use rights by the regulator is not an economic activity under Article 4(2) and falls outside the Directive. Issuing such authorisations is a precondition for market access, exclusively within State competence, not participation in the market. Only the licensees exploit the rights for continuing income. The subsequent transferability of the rights, itself subject to regulatory control, and the existence of a payment do not alter this. Article 4(5) presupposes an economic activity, so the remaining questions fell away. No input VAT arises on spectrum auction proceeds and regulators cannot be required to issue VAT invoices for them, closing off recovery claims by mobile operators across the Member States.

C-168/06 Ceramika Paradyż sp. z oo

Order · 6 March 2007 · Poland

No jurisdiction over Polish additional VAT liability for pre-accession facts

The Court does not answer. By reasoned order under the first subparagraph of Article 104(3) of its Rules of Procedure it declares that it has no jurisdiction to reply, because the facts of the dispute predate Polish accession and its power to interpret EU law runs only from the date of accession onwards. The substantive question, whether the Polish additional VAT liability is compatible with the directive, was answered later in Profaktor Kulesza and in Grupa Warzywna, which treated an automatic sanction with no regard to the nature of the irregularity as disproportionate.

C-435/05 Investrand

Judgment · 8 February 2007 · Netherlands

Deduction of advisory costs on a pre-taxable-person share sale claim

The input tax on those advisory services is not deductible. Neither the share sale nor steps taken by a person on his own behalf to recover or quantify his own claim is an economic activity. Any gain flows from holding the claim, not from exploitation of property. Nor were the costs general overheads. The company would have taken the advice regardless of its later taxable activity, so the exclusive reason for the cost lay outside that activity. Deduction would follow only on evidence that the economic activity was the exclusive reason for the services. Confirms that holding a claim in the business's assets does not by itself make related professional fees deductible overheads.

C-401/05 VDP Dental Laboratory

Judgment · 14 December 2006 · Netherlands

Exemption for dental prostheses supplied by an intermediary

The exemption does not apply. Its wording, consistent across all language versions, defines it by reference both to the goods and to the status of the supplier, so an intermediary who is neither a dentist nor a dental technician is outside it, whatever the objective of reducing healthcare costs or fiscal neutrality might suggest. Such supplies are taxable under Article 2(1) with a corresponding right of deduction, and the directive may be relied upon directly. The second question needed no answer. For dental trading companies, laboratories acting as resellers and importers of prostheses, the question is whether national law extends the exemption beyond dentists and dental technicians. Relevant to advisers on healthcare supply chains and to the status conditions attaching to other Article 132 exemptions.

C-72/05 Wollny

Judgment · 14 September 2006 · Germany

Taxable amount for private use of a building held wholly in business assets

Article 11A(1)(c) does not preclude fixing the taxable amount at a portion of the acquisition or construction costs determined by reference to the length of the Article 20 adjustment period. Member States have a margin of discretion, provided the aims of Article 6(2), equal treatment with final consumers and correspondence between input deduction and output tax, are respected. Enkler's reference to depreciation does not confine them to national depreciation rules. Land acquisition costs must be included where that acquisition bore VAT which was deducted. Confirms Member States may accelerate the output charge on private use of mixed use immovable property by aligning it with the adjustment period rather than slower depreciation rates, reducing the cash-flow benefit of full allocation to business assets and limiting untaxed final consumption on a later VAT free disposal. Relevant to owner occupiers, professionals and family businesses constructing mixed use buildings, and to advisers modelling the cost of full allocation.

C-228/05 Stradasfalti

Judgment · 14 September 2006 · Italy

Cyclical economic derogations from the right to deduct, company cars

The Court held that Member States must tell the VAT Committee they intend to derogate and give it enough information to examine the measure fully. The Committee may simply take note, as no particular outcome is required. Consultation must precede adoption, and a measure with no time limit, or forming part of structural budgetary adjustment, falls outside Article 17(7). Such a derogation cannot be invoked against taxable persons, who may recalculate their VAT debt for goods used for taxable transactions. No limitation of temporal effects. Businesses in Italy carrying company cars in the period covered could recover input VAT restricted by the invalid national cap. Relevant to fleet-heavy sectors and to anyone auditing long-standing national deduction exclusions.

C-439/04 Kittel and Recolta Recycling

Judgment · 6 July 2006 · Belgium

Deduction where the purchase is connected with carousel fraud

Where the purchaser did not and could not know that the transaction was connected with the seller's fraud, Article 17 precludes loss of deduction because national civil law renders the contract incurably void for unlawful basis attributable to the seller. It is irrelevant whether the nullity stems from VAT evasion or other fraud. By contrast, where objective factors show the purchaser knew or should have known that his purchase was part of a transaction connected with VAT evasion, the national court must refuse deduction. This is the origin of the "knew or should have known" test now applied across the EU to missing trader and carousel chains. Relevant to anyone advising on high risk goods sectors (electronics, vehicles, wholesale commodities) and to challenging assessments based on chain fraud alone.

C-430/04 Feuerbestattungsverein Halle

Judgment · 8 June 2006 · Germany

Reliance by a private competitor on the public bodies rule

Because Article 4(5) clearly defines the bodies and activities covered, it has direct effect, and a private person competing with a public body may invoke the second subparagraph in proceedings against the tax authorities where it alleges that the body is untaxed or undertaxed on activities engaged in as a public authority. Whether the economic circumstances actually give rise to significant distortions of competition, and so displace non-taxable treatment, remains for the national court. Operators competing with municipalities and other public bodies (crematoria, waste, leisure, parking, transport, utilities) have standing to challenge a competitor's non-taxation directly, rather than waiting for the tax authority to act.

C-384/04 Federation of Technological Industries and Others

Judgment · 11 May 2006 · United Kingdom

Joint and several liability of traders for another's unpaid VAT

Article 21(3) allows such joint and several liability, in all the situations covered by Article 21(1) and (2), provided the legislation respects legal certainty and proportionality. Presumptions are permitted but must not be practically impossible or excessively difficult to rebut, otherwise they amount to strict liability. Traders taking every precaution reasonably required of them must be able to rely on the legality of their transactions. Article 22(8) cannot found either the liability or a security requirement, but security may be demanded from someone already made jointly liable under Article 21(3). Confirms the legal basis for missing trader joint and several liability regimes and, read with Optigen, sets the boundary.

C-210/04 FCE Bank

Judgment · 23 March 2006 · Italy

Supplies between a head office and its foreign branch

A fixed establishment which is not a legal entity distinct from its company is not a taxable person merely because costs are imputed to it for services received from that company. The decisive point is independence. The branch had no endowment capital and bore none of the economic risk of the banking business, so it forms a single taxable person with the head office. The OECD Convention is irrelevant (direct taxation), as is any cost sharing agreement not negotiated between independent parties. No need to consider Article 43 EC. Confirms that internal recharges between a head office and its branch fall outside VAT, which matters most to exempt sectors such as banking and insurance where output VAT on internal charges sticks as a cost.

C-246/04 Turn- und Sportunion Waldburg

Judgment · 12 January 2006 · Austria

Restricting the option to tax letting of immovable property by category of taxable person

Member States may differentiate by type of transaction or category of taxable person when granting the option to tax, but only if they respect the general objectives and principles of the Sixth Directive, in particular fiscal neutrality and the correct, straightforward and uniform application of the exemptions. Whether a blanket exemption of all transactions of non-profit-making sports clubs, denying them the option, exceeds that discretion is for the national court to decide. Confirms wide but not unlimited Member State discretion in shaping option-to-tax regimes for immovable property.

C-354/03 Optigen and Others

Judgment · 12 January 2006 · United Kingdom

Deduction where an unconnected party in the supply chain commits carousel fraud

Such transactions are supplies of goods and an economic activity where they meet the objective criteria of those definitions, irrespective of the intention of another trader in the chain or the fraudulent nature of another transaction of which the taxable person had no knowledge and no means of knowledge. The right to deduct cannot be affected in those circumstances. The qualification is knowledge. The protection turns on the trader neither knowing nor having any means of knowing of the fraud. Tax authorities cannot deny recovery by treating an entire carousel chain as outside the scope of VAT.

C-434/03 Charles and Charles-Tijmens

Judgment · 14 July 2005 · Netherlands

Full allocation of mixed-use capital goods to the business

Those provisions preclude such legislation. The derogation in the second subparagraph of Article 6(2) allows Member States to refrain from treating certain private uses as supplies for consideration for simplification purposes, but cannot be used to deny immediate deduction in full where the taxable person has opted for full allocation, nor generally to waive taxation of private use. The Article 17(6) standstill does not save the rule, since Article 11(4) of the Second Directive permitted exclusions for certain goods only, not a general exclusion of all private use. Confirms and hardens the Lennartz/Seeling line.

C-378/02 Waterschap Zeeuws Vlaanderen

Judgment · 2 June 2005 · Netherlands

Adjustment of input tax on capital goods bought by a public authority

The public body cannot adjust in order to deduct that VAT. Only a person acting as a taxable person at the time of acquisition acquires a right to deduct under Articles 2 and 17. Article 20 merely governs the calculation of adjustments and cannot create a deduction or convert non-taxable input tax into deductible tax. A public authority is not comparable to a taxable person with mixed taxable and exempt activities. The capacity in which it acted on acquisition is decisive. The second question therefore did not need answering. Confirms Lennartz for the public sector.

C-25/03 HE

Judgment · 21 April 2005 · Germany

Deduction for a home office in a jointly owned house

He acts as a taxable person and may deduct under Article 17 to the extent he allocates the office to his business. Where the marital community has no legal personality and carries out no economic activity, the co-owners are the recipients. He may deduct all input VAT attributable to the part used exclusively for business, capped by his interest in the co-ownership (here 25%). A joint invoice without apportionment suffices. National extra invoicing particulars cannot defeat deduction where there is no fraud risk. Confirms that co-ownership under national civil law does not dictate who is the recipient of a supply or the extent of deduction.

C-32/03 Fini H

Judgment · 3 March 2005 · Denmark

Deduction on costs incurred after cessation of business

Such a person remains a taxable person and may deduct the VAT on the rent and charges, because the continuing obligation is a direct consequence of the business actually carried on in those premises and expenditure on terminating a business cannot be distinguished from expenditure on starting or running it. Two conditions: a direct and immediate link between the payments and the former economic activity, and no fraud or abuse, for example continued private use of the premises. The second question was not answered. Confirms that winding-up costs sit inside the deduction system, mirroring the treatment of preparatory acts.

C-8/03 BBL

Judgment · 21 October 2004 · Belgium

Taxable person status of open-ended investment companies and the place of supply

Such SICAVs are taxable persons. Assembling and managing portfolios of transferable securities on behalf of subscribers for a fee goes beyond the mere acquisition and sale of securities, which alone is not an economic activity, and aims to produce income on a continuing basis. Services falling within Article 9(2)(e) supplied to SICAVs established in another Member State are therefore supplied where the SICAV has established its business. Both consultancy and banking and financial services are covered, including services involving decision-making powers. The exemption question fell away. Suppliers of advisory, information and financial services to cross-border funds can rely on the customer-location rule regardless of how the fund's own Member State treats it. Relevant to banks, asset managers and fund administrators supplying UCITS-type vehicles, and to any adviser facing assessments premised on the customer's non-taxable status abroad.

C-68/03 Lipjes

Judgment · 27 May 2004 · Netherlands

Place of supply of intermediary services where the underlying transaction is between private individuals

Article 28b(E)(3) is not limited to intermediary services supplied to taxable persons or non-taxable legal persons. Its wording draws no distinction and it is irrelevant whether the underlying transaction is itself taxable, since the provision only fixes a place of supply. The second subparagraph, dealing with customers identified by a VAT number, is a specific exception that does not narrow the general rule. The place of the underlying transaction is determined under Article 28b(A) and (B), not Article 8. Confirms that Article 9(1) has no priority over the intra-Community place of supply rules.

C-137/02 Faxworld

Judgment · 29 April 2004 · Germany

Input tax recovery by a pre-formation partnership

The Court held that the partnership is a taxable person. Status under Article 4 depends solely on that article and is unaffected by whether a Member State has used the Article 5(8) option. Although it made no taxable transactions of its own, unlike in Abbey National, the inputs were acquired for the purposes of the company's planned taxable transactions. Since the recipient is treated as successor to the transferor, the transferor may take the recipient's taxable transactions into account and deduct. Confirms that costs of a pre-incorporation vehicle do not fall into a VAT black hole where a no-supply transfer of a business intervenes.

C-152/02 Terra Baubedarf-Handel

Judgment · 29 April 2004 · Germany

Tax period in which input tax must be deducted

Deduction must be made in respect of the tax period in which both conditions are met: the goods have been delivered or the services performed, and the taxable person holds the invoice, or the document which under the criteria set by the Member State concerned serves as an invoice. There is no retrospective deduction back to the period in which the right arose. Immediacy and neutrality are preserved because payment, and so input VAT, is normally not made before the invoice arrives. Confirms the practical rule for businesses receiving late invoices, particularly across a year end or period end.

C-395/02 Transport Service

Order · 3 March 2004 · Belgium

Recovery of VAT after an incorrectly exempted intra-Community supply

By reasoned order, the Court held that neutrality does not preclude subsequent recovery of VAT from a taxable person who has wrongly invoiced a supply as exempt, and it is irrelevant whether VAT on the later sale to the end user reached the Treasury. It is for the national court to verify whether the exemption conditions were in fact met. Recovery rules are for Member States, but measures to secure collection and prevent fraud must not exceed what is necessary. Confirms that a supplier whose zero-rating fails carries the output tax itself, and cannot point to tax collected further down the chain as an answer.

C-269/00 Seeling

Judgment · 8 May 2003 · Germany

Private use of a building held wholly as business assets

Those provisions do not allow that treatment. The private use of a dwelling in a building fully allocated to business assets is a taxable deemed supply of services, not an exempt letting. There is no rent, no agreed duration of the right of occupation and no right to exclude third parties. Article 13B(b) cannot be applied by analogy. Any resulting untaxed final consumption, given the limited adjustment period, is a deliberate legislative choice and does not justify a broad reading of the exemption.

C-184/00 Office des produits wallons

Judgment · 22 November 2001 · Belgium

Subsidies directly linked to the price in the taxable amount

Only subsidies which constitute the whole or part of the consideration for a supply of goods or services, paid by a third party to the seller or supplier, are directly linked to the price. It is immaterial whether a distinct service is rendered to the grantor. Merely affecting the cost price is insufficient. The subsidy must be paid specifically to enable particular supplies, with the purchaser's price falling in proportion. The national court must decide on the facts. The note matters for subsidised bodies in culture, agriculture, promotion and the wider non-profit sector, and for their advisers dealing with grant funding.

C-338/98 Commission v Netherlands

Judgment · 8 November 2001 · Netherlands

Deduction on mileage allowances paid to employees

The Netherlands had failed to fulfil its obligations. An employee acting for his employer is not a taxable person, and use of his own car is not a supply to the employer, so Article 17(2)(a) is not satisfied even though reimbursement is made. Intiem was distinguished because there the employer contracted for and was invoiced for the goods. The Court accepted the result may sit awkwardly with neutrality and double taxation concerns, but only the legislature can create such a right. Article 18(1)(a) is consequently breached too. Employers cannot recover VAT embedded in mileage or expense allowances paid to staff who buy the goods in their own name. Relevant to fleet and travel policy in any sector with employees using private cars, and equally to fuel cards, subsistence and tools bought by staff.

C-102/00 Welthgrove

Order · 12 July 2001 · Netherlands

Holding company involvement in subsidiary management as an economic activity

By reasoned order, the answer being clear from existing case law, the Court held that involvement of a holding company in the management of its subsidiaries is an economic activity within Article 4(2) only in so far as it entails carrying out transactions subject to VAT under Article 2. Mere involvement in management without such transactions is not an economic activity. The exemption question therefore did not need answering. Confirms that active management of subsidiaries, of itself, does not confer taxable person status or a deduction right.

C-415/98 Bakcsi

Judgment · 8 March 2001 · Germany

Allocation of mixed-use capital goods to private assets

A taxable person may keep a mixed-use capital item wholly within his private assets, excluding it entirely from VAT. Actual business use matters only if input deduction on acquisition is claimed, and deducting VAT on repairs does not itself allocate the item. If the item is wholly allocated to the business, its sale is fully taxable even though no residual VAT was deductible. But withdrawal under Article 5(6) is untaxed where no deduction arose, and a later sale is then made privately and outside VAT. Confirms the taxpayer's free choice of allocation for mixed-use capital goods, and separates the treatment of the asset from deduction on running and repair costs.

C-408/97 Commission v Netherlands

Judgment · 12 September 2000 · Netherlands

Road tolls charged by public bodies and the public authority exclusion

The Court confirmed that providing road access for a toll is an economic activity and a supply of services for consideration, there being a direct link between access and the toll. However, it rejected the Commission's narrow reading of Article 4(5). Activities pursued "as public authorities" are those carried out under the special legal regime applicable to public bodies, not those carried out under the same legal conditions as private traders. As the Commission had not shown the toll operators were subject to private trader conditions, the action was dismissed. Confirms that tolls are consideration for a taxable service, so private and non-public operators of roads, bridges and tunnels are within the scope of VAT.

C-136/99 Monte Dei Paschi Di Siena

Judgment · 13 July 2000 · France

Partial refund of VAT to a partly exempt bank established abroad

A partial refund is available. The amount is calculated in two stages: first identify the transactions giving rise to deduction in the Member State of establishment under Articles 17(5) and 19. Then adjust that proportion by counting only those transactions which would also give a right to deduct if carried out in the Member State of refund, and apply it to expenditure that is deductible in the refund State. Both sets of rules therefore apply, cumulatively. Relevant to partly exempt businesses, especially banks, insurers and financial groups, incurring foreign VAT on representative offices and other costs serving mixed activity.

C-98/98 Midland Bank

Judgment · 8 June 2000 · United Kingdom

Direct and immediate link, deduction on litigation costs following an output transaction

A direct and immediate link is in principle required, both for entitlement and for its extent, and the test is the same whichever of Article 17(2), (3) or (5) governs the output. Applying it is for the national court. Services used as a consequence of, and after, a deductible output transaction generally lack that link. They are general costs, deductible only in part, unless the taxable person shows by objective evidence that the expenditure forms part of the cost components of that output transaction.

C-23/98 Heerma

Judgment · 27 January 2000 · Netherlands

Letting of property by a partner to his own partnership, independence

Such a letting is an independent economic activity. There is no employer and employee relationship of the kind in the first subparagraph of Article 4(4). The partner acts in his own name, on his own behalf and under his own responsibility, even if he manages the lessee partnership, and the lease was not granted by its management. That his activity is confined to that one letting is irrelevant to independence. The Court did not examine the VAT grouping option in the second subparagraph of Article 4(4), which had not been invoked. Confirms that partners, members and directors letting property or other assets to their own vehicle are separate taxable persons, so rent is a taxable supply between them and the option to tax the letting (and the associated input tax recovery on construction) is available. Relevant to farming and family partnerships, professional practices and owner managed structures where a building is held privately and let to the operating entity.

C-305/97 Royscot and Others

Judgment · 5 October 1999 · United Kingdom

General exclusion from deduction on car purchases under the standstill clause

The Court held that such general exclusions were lawful under Article 11(4) of the Second Directive and may be retained under Article 17(6). The words "in particular" show the exclusion was never confined to goods capable of private use, so strictly business expenditure, including means of transport constituting the very tool of the trade, may be blocked. The discretion is not unlimited, but excluding a category such as cars does not negate the deduction system. The standstill survives the Council's inaction indefinitely. The ruling confirms that pre-existing national blocking orders on car purchases stand, whatever the commercial necessity of the vehicles and however impossible private use may be.

C-349/96 CPP

Judgment · 25 February 1999 · United Kingdom

Single or multiple supplies and the insurance exemption for block policy holders

Procuring insurance cover for customers under a block policy, in one's own name and account, is itself an insurance transaction. "Insurance" includes the listed assistance categories. Each supply is normally distinct, but a single economic supply must not be split artificially. A single supply exists where elements are ancillary, not an aim in themselves but a means of better enjoying the principal service. A single price is not decisive. If two distinct services are bought, the insurance part must be apportioned by the simplest method. Classification is for the national court. Restricting the exemption to authorised insurers is unlawful. The source of the composite supply test now applied across the board.

C-43/96 Commission v France

Judgment · 18 June 1998 · France

Standstill exclusions from deduction on business vehicles

The Court dismissed the action. The words "all the exclusions" in the second subparagraph of Article 17(6) plainly cover expenditure which is strictly business expenditure. The reference to expenditure that is not strictly business expenditure describes what the Council must in any event exclude, not the limit of the standstill. France was therefore entitled to keep its pre-directive exclusion, even for vehicles that are the taxable person's working tool, pending Council rules that have not been adopted. Confirms that grandfathered blocks on input tax recovery are not confined to non-business or private-use expenditure, so businesses cannot challenge national vehicle blocks simply by showing that the car, boat, aircraft or helicopter is essential to their trade. Relevant to transport, aerial work, leisure marine and driving-related sectors, and to advisers testing the scope of domestic blocking orders.

C-361/96 Grandes Sources d'Eaux Minérales Françaises v Bundesamt für Finanzen

Judgment · 11 June 1998 · Germany

Refund claims supported by a duplicate invoice where the original is lost

Refund applications must in principle be accompanied by originals, since the Eighth Directive aims to stop re-use of documents for further claims. However, Article 3(a) does not preclude Member States from accepting a duplicate in exceptional circumstances. The transaction must be established, the loss must not be attributable to the claimant and there must be no risk of further refund applications. Where established businesses may use duplicates or photocopies in such circumstances, non-discrimination requires the same treatment for non-established claimants on the same conditions. Relevant to any business claiming VAT refunds in a Member State where it is not established, and to advisers handling cross-border refund files where original invoices have been lost in transit or destroyed.

C-37/95 Ghent Coal Terminal

Judgment · 15 January 1998 · Belgium

Retention of input tax deduction where investment goods are never used

The deduction is allowed and, once it has arisen, remains acquired where circumstances beyond the taxable person's control mean the goods or services are never used for taxable transactions. In such cases there is no risk of fraud or abuse justifying retrospective recovery. Repayment may still be claimed where the claimed intention was a pretext for fraud or abuse. A supply of the capital goods during the adjustment period may trigger adjustment under Article 20(3). Confirms that intention at the time of acquisition, not eventual use, fixes the right to deduct, and that abandoned or displaced projects do not of themselves justify clawback.

C-60/96 Commission v France

Judgment · 3 July 1997 · France

Extension of the immovable property letting exemption to movable property

The Court declared that France had failed to fulfil its obligations under Article 2 of the Sixth Directive. The Article 13B(b) exemption is restricted exclusively to the letting of immovable property and cannot be extended to movable property. The infringement was assessed by reference to the position at the expiry of the reasoned opinion period, so the later rescission of the circular and the 1995 legislation could not be taken into account. France paid the costs. Confirms that the letting exemption cannot be stretched to cover movable items, however residential their use in practice. Relevant to campsite, holiday park, houseboat and mobile home operators and their advisers.

C-63/96 Skripalle

Judgment · 29 May 1997 · Germany

Minimum taxable amount for supplies between associated persons

Such an authorisation does not cover cases where the agreed consideration represents the market rate but falls short of the minimum basis of assessment. Anti avoidance derogations must be strictly construed and may depart from Article 11 only so far as strictly necessary. Where objective facts show the taxable person acted properly, no risk of evasion or avoidance arises. The need for abstract drafting does not save the rule, and an authorisation granted to prevent avoidance cannot be re-justified as a simplification measure. Confirms that cost based minimum valuation rules for connected party supplies cannot be applied where the price charged is demonstrably at market rate.

C-85/95 Reisdorf v Finanzamt Köln-West

Judgment · 5 December 1996 · Germany

Proof of the right to deduct, original invoice or copies

Member States may treat as an invoice not only the original but also any other document serving as an invoice which meets criteria they themselves set. They may equally decide that no other document qualifies where an original was drawn up and is held by the recipient. Separately, since Article 18 governs only exercise of the right, not later proof of it, Member States may require the original on inspection and, where the taxable person no longer holds it, may admit other cogent evidence that the transaction actually took place. The judgment separates exercise of the deduction right from its proof on subsequent audit, and leaves both largely to national rules. Relevant to construction and property projects with long invoice trails and to anyone advising on document retention and audit defence.

C-155/94 Wellcome Trust

Judgment · 20 June 1996 · United Kingdom

Share sales by a charitable trustee and the scope of economic activity

It is not an economic activity. Mere exercise of ownership rights, including the sale of holdings, falls outside Article 4(2), and this trustee, forbidden to trade and from taking majority holdings, confined itself to managing a portfolio like a private investor. Neither the size of the sale nor the use of professional advisers is a distinguishing criterion. Classification cannot turn on the investor's skill. Transactions in securities do fall within VAT where effected as part of commercial share dealing or to secure involvement in managing the investee companies. Charities, trusts, endowments and comparable passive investors in the United Kingdom and elsewhere cannot register or recover input VAT on transaction costs of disposing of investments, however large the deal or elaborate the execution.

C-110/94 INZO

Judgment · 29 February 1996 · Belgium

Preparatory acts and retroactive withdrawal of taxable person status

Where the authority has accepted taxable person status on the basis of a declared intention to carry out taxable transactions, commissioning a technical and economic viability study is itself an economic activity, even though its purpose is to test profitability, and the input VAT is in principle deductible. Except in cases of fraud or abuse, for example a false declaration of intention masking acquisition of private assets, that status and the deductions cannot be withdrawn retroactively merely because the operational phase was never reached. Confirms that feasibility and profitability studies for aborted projects carry a right of deduction, and that authorities cannot claw back refunds simply because the venture failed. Relevant to start-ups, project vehicles, infrastructure and energy joint ventures, and any special purpose company liquidated before trading.

C-144/94 Italittica

Judgment · 26 October 1995 · Italy

Receipt of payment as the moment tax becomes chargeable on services

Member States may provide that receipt of the price triggers chargeability for all supplies of services. Services form a homogeneous sub-set of the transactions covered, and the legislature intended a wide margin of discretion. A State using that option need not fix a period from the chargeable event for issuing the invoice, that possibility attaching only to the invoice-based derogation, nor lay down detailed documentation and recording rules, subject to the general accounting duty in Article 22(2) and the discretion under Article 22(8). Confirms the validity of cash-based chargeability regimes for services, then in Italy and France, against arguments from strict construction of derogations, from Article 11(C)(1) bad debt relief and from the invoicing duty in Article 22(3)(a).

C-291/92 Armbrecht

Judgment · 4 October 1995 · Germany

Retaining part of a mixed-use building in private assets on sale

A taxable person may keep part of an asset devoted to private use outside the VAT system. On sale of that part he does not act as a taxable person under Article 2(1), and a national option to tax under Article 13(C) cannot bring a supply outside the tax within it. Correspondingly, only the part assigned to the business counts for Article 17(2), and the Article 20(2) adjustment is limited to that part. Apportionment must follow the proportions of private and business use in the year of acquisition, not a geographical split, and the private intention must be maintained throughout ownership. Confirms the taxable person's choice, alongside Lennartz full allocation, to keep the privately used share of mixed-use immovable property wholly outside the VAT system, with deduction and capital goods adjustment restricted accordingly. Relevant to hoteliers, guesthouses, professionals and any trader occupying part of business premises as a dwelling, and to advisers structuring acquisitions and later disposals.

T-13/94 Century Oil Hellas v Commission

Order · 4 July 1994 · Greece

No individual right to force Commission infringement proceedings over a national tax

By reasoned order, the action was dismissed as inadmissible in its entirety. The Commission has a discretion whether to open Article 169 proceedings and individuals cannot compel it. Any act it might adopt would be addressed to the Member State, not to the complainant, who would also have no standing to seek its annulment. Only the Commission and other Member States may seek a declaration of infringement. Invoking the right to property under the ECHR does not change that. A reminder for advisers who have exhausted domestic remedies on a VAT or turnover tax point. Relevant to businesses facing sectoral consumption taxes alongside VAT, and to anyone tempted to treat a Commission complaint as a substitute for litigation strategy.

C-193/91 Mohsche

Judgment · 25 May 1993 · Germany

Taxable amount for private use of a business car

The expression "use of goods" must be construed strictly, covering only use of the goods themselves, because private use is taxed only exceptionally to prevent non-taxation of assets on which input tax was deducted. Ancillary services for maintenance or use, acquired without deduction of input tax, therefore fall outside Article 6(2)(a) and cannot be brought into the taxable amount. The prohibition is unconditional and sufficiently precise, so it may be invoked directly before national courts. Confirms that the deemed self-supply charge on private use of business assets is limited to the asset itself, so costs bearing no deductible input tax, insurance, road tax, garage and parking charges, must be stripped out of the taxable amount.

C-20/91 De Jong

Judgment · 6 May 1992 · Netherlands

Private land and self-supply of a dwelling built in the course of business

Only the house, not the land, is regarded as applied for private use. Land acquired solely for private requirements is acquired in a private capacity and never becomes a business asset, whatever national law says about land and buildings being inseparable. The equal treatment purpose of Article 5(6) confirms this. An ordinary consumer engaging a third party builder would bear VAT only on the house. The taxable amount is therefore the value of the building alone. Remaining questions not answered. Fixes the boundary between private and business assets for self-build and own-use construction by builders, developers and tradespeople.

C-97/90 Lennartz

Judgment · 11 July 1991 · Germany

Capacity at the time of acquisition and the de minimis threshold for business use

Article 20(2) applies only where the goods were acquired by a person acting as a taxable person and allocated to his economic activity. It creates no right to deduct and cannot convert tax on non-taxable transactions into deductible tax. Immediate use is not required. Whether acquisition was for business purposes is a question of fact, judged on all circumstances including the nature of the goods and the interval before business use. Deduction is available however small the genuine business use, subject only to an authorised Article 27 derogation. The point of acquisition is decisive.

C-60/90 Polysar Investments Netherlands

Judgment · 20 June 1991 · Netherlands

Pure holding company as a taxable person and the right to deduct

A holding company whose sole purpose is to acquire holdings in other undertakings, without direct or indirect involvement in their management (its rights as shareholder aside), is not a taxable person and has no right to deduct. Dividends are merely the result of ownership, not exploitation of property for income on a continuing basis. Membership of a worldwide group under a single name is irrelevant. Single taxable person treatment requires establishment in the same Member State. Establishes the baseline for holding company VAT recovery. Relevant to private equity and corporate holding structures, and to management charge arrangements.

C-4/89 Comune di Carpaneto Piacentino and Others

Judgment · 15 May 1990 · Italy

When local authorities act as public authorities

Activities pursued "as public authorities" are those carried out by public law bodies under the special legal regime applicable to them, not those pursued under the same legal conditions as private traders. Classification of the particular activities is for the national court, and a national label of "administrative functions" is at most an indication. Member States must ensure taxation where non-taxation would significantly distort competition with private operators, but need not copy that wording or set quantitative limits, nor transpose the negligible scale criterion for Annex D. Confirms the judgment of 17-10-1989 in the parallel Carpaneto Piacentino references. Relevant to municipalities, cemetery, land development and utility activities.

C-93/88 Wisselink and Others v Staatssecretaris van Financiën

Judgment · 13 July 1989 · Netherlands

Special consumption tax on cars and the prohibition on other turnover taxes

The Court held that the directives do not preclude such a tax. The reasons for and the legislative history of a national tax are irrelevant. Only its objective characteristics count. The tax is not general (two product categories only), is levied once, is not deductible, is passed on in the cost price and sits alongside rather than in place of VAT, so it lacks the features of a turnover tax. Concurrent taxation, including double taxation of the same transaction, is permitted. The deduction question fell away. Confirms that Member States may levy product-specific consumption or registration taxes on vehicles on top of VAT, and that the resulting double taxation is not itself objectionable.

C-50/88 Kühne v Finanzamt München Iil

Judgment · 27 June 1989 · Germany

Private use of business goods bought from a non-taxable person

Depreciation of business goods cannot be taxed on private use where no VAT on the acquisition was deductible, including where the goods came from a non-taxable person. That is unaffected by the fact that VAT on maintenance and running costs was deductible, those two regimes being distinct. The Article 6(2) derogation cannot be used to tax such use. Taxing the maintenance and use expenses on which tax was deducted remains consistent with the system. Article 6(2) may be relied on directly before national courts. Confirms the split treatment of mixed-use assets acquired without deductible input tax.

C-122/87 Commission v Italy

Judgment · 24 May 1988 · Italy

VAT exemption for veterinary services

Veterinary services are taxable. Without deciding whether veterinary surgeons could count as a medical or paramedical profession, the Court held that all language versions bar the English and Italian confine the exemption to care administered to persons, which unambiguously excludes care given to animals. Article 28(3)(b), permitting Member States already exempting veterinary services to continue during a transitional period (Italy was not among them), confirms this. Italy therefore failed to fulfil its obligations. Confirms that Article 13(A)(1)(c) is limited to human healthcare, so veterinary practices, animal clinics and mixed practices supplying treatment to animals fall within the normal VAT charge unless covered by the transitional derogation.

C-391/85 Commission v Belgium

Judgment · 4 February 1988 · Belgium

List price as taxable amount recast as a registration tax

The Court declared Belgium in breach. It had not taken the measures necessary to comply with the 1984 judgment. The offsetting mechanism created a direct link making the registration tax supplementary to, not independent of, VAT. It covered the same goods, at the same rate, on the list price. That different persons are formally liable and that registration is a distinct legal event are matters of pure fiscal technique. Anti-evasion justification was again rejected as disproportionate. Confirms that the taxable amount rules cannot be circumvented by relabelling a charge as a non-VAT tax where its base, rate and scope shadow VAT and it is offset against VAT. Relevant to motor vehicle registration and similar national charges, and to advisers assessing whether a domestic levy is an independent tax or a supplement to VAT.

C-39/85 Bergeres-Becque v Service interrégional des douanes

Judgment · 23 January 1986 · France

Residual VAT relief on a second-hand car imported as a gift

No distinction is to be made between transactions for consideration and gifts. The chargeable event on importation is entry of the goods, whether or not there is any transaction. The taxable amount excludes the export State VAT still embodied in the value of the goods, and that value is determined on the basis of data valid in the Member State of export, not the importing State's second-hand price levels. The residual amount equals the VAT actually paid on export, reduced proportionately where the value has depreciated, in full where it has increased. Confirms that customs authorities cannot value privately imported second-hand goods by reference to domestic market quotations, and cannot deny residual VAT relief because the importer paid nothing. Relevant to advisers handling private cross-border movements of used vehicles and to any assessment practice that equates the VAT base with a domestically derived customs value.

C-16/84 Commission v Netherlands

Judgment · 10 July 1985 · Netherlands

Trade-in allowances and the taxable amount for second-hand goods

The application was dismissed. The scheme neither aimed at nor had the effect of exempting part of the consideration for the new goods. Its object and effect were to offset residual VAT already borne by the traded-in goods so that they could be taxed normally on resale. It was therefore covered in principle by Article 32 and did not infringe Article 11. Further Commission complaints about the scheme's scope were not examined, having been raised only after rejecting the Netherlands' offer of adjustments. Confirms that a margin-equivalent relief may be given at the trade-in stage rather than at resale, provided it merely neutralises residual VAT embedded in the used goods.

C-268/83 Rompelman

Judgment · 14 February 1985 · Netherlands

Preparatory acts and the start of economic activity

Such an acquisition may be regarded as an economic activity. Preparatory acts, including the acquisition of assets, are themselves economic activity, and fiscal neutrality requires that first investment expenditure be treated as such rather than awaiting the point at which the property yields taxable income. The legal form of the preparatory act is irrelevant. However, the burden of proof lies with the claimant, and the authorities may require the declared intention to be supported by objective evidence, for instance that the planned premises are specifically suited to commercial exploitation. The foundational authority on pre-trading input tax.

C-5/84 Direct Cosmetics

Judgment · 13 February 1985 · United Kingdom

Notification of derogating measures under Article 27

Deleting the revenue protection condition was a substantial change, since it severed the visible link with the derogations permitted by Article 27(1) and widened the authorities' powers indefinitely. It therefore required fresh notification to the Commission. A Member State which failed to notify such a derogation from Article 11A(1)(a), and so obtained no Council authorisation, cannot rely on it against a taxable person invoking the national provisions implementing Article 11A(1)(a). Establishes that derogations must be notified in the precise terms adopted.

C-255/81 Grendel

Judgment · 10 June 1982 · Germany

Direct effect of the exemption for credit negotiation

The Court, applying its earlier ruling in Becker (Case 8/81), held that from 01-01-1979 a credit negotiator could rely on the exemption in Article 13B(d)(1) in the absence of implementation, provided he had refrained from passing the tax on to persons following him in the chain of supply. The State could not plead its own failure to implement against him. The Becker judgment was annexed by way of supplement. Confirms Becker for a second fact pattern and settles the point for German credit intermediaries assessed for 1979.

C-89/81 Hong-Kong Trade

Judgment · 1 April 1982 · Netherlands

Taxable person status where all supplies are made free of charge

A person who habitually supplies services to businesses exclusively free of charge is not a taxable person within Article 4 of the Second Directive. Where there is no direct consideration there is no taxable amount, and the supplier is to be treated as a final consumer because the production and distribution chain ends with him. The second question therefore did not need to be answered, so no deduction issue arose. The foundational authority for the proposition that an entity whose output consists solely of gratuitous supplies falls outside the VAT system altogether and cannot recover input tax.

C-51/76 Verbond nederlandse ondernemingen v Inspecteur der invoerrechten en accijnzen

Judgment · 1 February 1977 · Netherlands

Meaning of capital goods and the direct effect of the deduction right

Capital goods is a Community concept. Goods used for business purposes, distinguishable by their durable nature and value, whose acquisition costs are normally written off over several years rather than treated as current expenditure. The individual undertaking's own accounting choices are not decisive. Normal sectoral practice is. Member States retain a margin of discretion over durability, value and write-off rules, provided they respect the essential difference between capital goods and goods used in day to day running. National courts must police that limit when Article 11(1) is invoked. The foundational ruling on the boundary between capital goods and general costs, and an early statement that a taxable person may invoke a directive to test whether national derogations stay within their permitted limits.