The ECJ received questions from the German Court in Case C-388/18 (“B”), regarding the VAT Margin Scheme and Small Entrepreneur scheme.
Simplified facts:
- The German company “B” carried out taxable transactions on the used car market which were subject to the VAT margin scheme. The taxable amount was determined on the basis of the profit margin.
- “B” assumed that he was a small entrepreneur, based on guidelines from 2009. However, the German federal Ministry of Finance determined that from 2010 onwards the payments received must be taken as the starting point for determining the total turnover, which resulted in “B” no longer being allowed to use the small entrepreneur scheme.
- “B” disagreed with this approach and appealed to the German Court. In appeal, the tax court ruled that in the margin scheme the amount of payments received that exceeds the profit margins can not be taken into account for the determination of the total turnover.
- The main question is how the ‘threshold’ for the small entrepreneur scheme must be calculated when the margin scheme is applied: According to the EU law, the turnover which serves as a yardstick for the application of the small enterprises scheme is the amount of goods delivered and the services, provided and as far as they are taxed. When applying the margin scheme, only the prfit margins are taxed and not the total turnover, and (thus) only the profit margins can be taken into account for the calculation of the turnover limit.
Preliminary questions:
Does the first sentence of Article 288 (1) of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax (Directive 2006/112 / EC) apply in cases where the profit margin scheme of the Articles 311 et seq. of that directive, it must be interpreted that the determination of the turnover which must be used as a criterion for the supply of goods within the meaning of Article 314 of Directive 2006/112 / EC by virtue of that provision must be based on the difference between the requested sales price and the purchase price (profit margin)?
Source: MinBUZA (Dutch)
