Preliminary questions asked to the ECJ on 11 June 2018 in case C-273/18 – Kursu zeme
Facts:
- SIA Kursu zeme (Latvia) processes and preserves fish, crustaceans and molluscs. It purchased fishery products from ‘ KF Prema’ and deducted the input tax on those purchases.
- The tax authorities found that the transaction chain prior to the purchase by Kursu zeme was set-up to obtain tax benefits and was artificial. The complete supply chain started with the Lithuanian company UAB “Baltfisher” selling the goods to SIA “SL Industry” and SIA “Forest Management”, companies established in Latvia, which resold them to SIA “Viva”, which sold them to SIA “KF Prema”, which the goods at issue were ultimately sold to the applicant. The tax authorities found that SIA “SL Industry”, SIA “Forest Management”, SIA “Viva” and SIA “KF Prema“. These companies did not in any way participate in the execution of that transaction chain, although they officially did, and that each of them did nothing but draw up the accompanying documents in their own name. The tax authorities could not find any logical explanation for entering into these transactions.
- The tax authorities therefore denied the deduction of input VAT with Kursu zeme.
- Kursu zeme pointed out that it had met all the conditions for deduction of the input tax and stated that it did not derive any tax advantage from the transactions with KF Prema.
The questions asked to the ECJ are:
Can an EU country deny the deduction of input VAT, if this is based only on the taxpayer’s intentional involvement in the setting up of transaction simulations, but it does not indicate how the transactions in question have resulted in a disadvantage for the Treasury due to non-payment of VAT or in the form of an incorrect request for the refund of that tax, in comparison with a situation where those transactions are in conformity with the actual conditions?
Source: MinBuza (Dutch)
