Source Curia
Judgment of 31 May 2018 in Joined Cases C‑660/16 and C‑661/16, (Achim Kollroß (C‑660/16) and Erich Wirtl (C‑661/16))
Decision
1. Articles 65 and 167 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that, in circumstances such as those at issue in the cases in the main proceedings, a potential buyer may not be refused the right to deduct the value added tax relating to a payment on account in respect of the goods in question where that payment has been made and received and where, at the time that payment was made, all the relevant information concerning the future supply could be regarded as known to that buyer and the supply of those goods appeared to be certain. However, that buyer may be refused that right if it is established, having regard to objective elements, that, at the time the payment on account was made, he knew or should reasonably have known that that supply was uncertain.
2. Articles 185 and 186 of Directive 2006/112 must be interpreted as not precluding, in circumstances such as those at issue in the cases in the main proceedings, a national law or practice which has the effect of making adjusting the value added tax relating to a payment on account for the supply of an item conditional upon that payment being refunded by the supplier.
Facts:
Case C‑660/16
Mr Kollroß ordered a combined heat and power unit from G-GmbH (‘GA’). GA confirmed the order and issued an advance invoice for EUR 30 000 in respect of the item to be supplied, in which the amount of VAT payable, namely EUR 5 700, was stated separately. At the same time, Mr Kollroß registered a business engaged in the production of renewable energies and made the requested payment on account to GA. GA issued a second invoice for payment on account. The date of delivery had not yet been fixed.
The unit was never delivered.
The persons acting for GA were convicted of 88 counts of fraudulent trading practices and conspiracy to defraud and of intentional bankruptcy to the detriment of buyers of combined heat and power units. By contrast, it is not apparent from the order for reference that tax evasion took place.
Mr Kollroß requested that the input tax relating to the payment he had made on account be deducted for VAT purposes. The Tax Office refused him the right to deduct that tax, arguing that there never was a taxable supply as the goods were never delivered to Mr. Kollroß.
Case C‑661/16
Mr Wirtl, with a view to producing electricity professionally, ordered a combined heat and power unit from the Gesellschaft zur Förderung erneuerbarer Energien mbH (‘GB’) for the price of EUR 30 000, plus EUR 5 700 of VAT. He made the advance payment of EUR 35 700 and received an invoice from GB for delivery of a combined heat and power unit.
Subsequently, Mr Wirtl submitted a provisional VAT return and claimed a deduction of EUR 5 700 in respect of his purchase of that combined heat and power unit. He also informed the Göppingen Tax Office that he intended to rent out that item to GB.
That combined heat and power unit was, however, never delivered.
The Tax Office rejected Mr Wirtl’s annual VAT tax return, in which he had deducted EUR 5 700 for the input tax paid for the combined heat and power unit sold by GB.
Judgment:
The Court rules:
1. A potential buyer may not be refused the right to deduct the VAT relating to a payment on account in respect of the goods in question where that payment has been made and received and where, at the time that payment was made, all the relevant information concerning the future supply could be regarded as known to that buyer and the supply of those goods appeared to be certain.
However, that buyer may be refused that right if it is established, having regard to objective elements, that, at the time the payment on account was made, he knew or should reasonably have known that that supply was uncertain.
2. Member States may implement a national law or practice which has the effect of making adjusting the value added tax relating to a payment on account for the supply of an item conditional upon that payment being refunded by the supplier.
Source: Curia
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