On 26 June 2018, the ECJ has been asked questions in Case C-329/18 (Altic), regarding the deduction of input VAT on purchases that have not been delivered, and whereby the customer acted in good faith.
Simplified facts:
- SIA “Altic”, established in Latvia, bought rapeseed from SIA “Sakorex” and SIA “Ulmar”, which was received and stored in a warehouse (silo) of the company SIA “Vendo”. Altic deducted the input VAT charged on those purchases.
- The Latvian tax authorities denied the input VAT deduction, believing that these transactions had not taken place.
- The national Court is of the opinion that there is no doubt that the product in question in the silo from SIA “Vendo” was stored in the quantity and on the dates specified in the transport and storage documents. From the file of the case and the explanations, it appears that Altic acted in good faith and completely relied on the capacity of the companies involved to deliver the products.
- It is not clear from the file itself, but apparently the Latvian tax authorities found differences in the purchase documentation and the actual goods stored at SIA Vendo. They are of the opinion that Altic should have checked all the deliveries, and neglected doing so, and thus knowingly and willingly accepted the risk that not all goods were received.
- The Latvian tax authorities argue that the origin of the purchased goods needs to be clarified. This applies to all food business operators, and to any substance intended for incorporation into, or likely to be, processed in a food or feed. To this end, these operators had to have systems and procedures in place to provide this information on request to the competent authorities.
- The Latvian tax authorities are of the opinion that Altic was obliged to closely monitor its co-contractors, given their involvement in the food chain. By failing these checks, Altic not only violated the Food and Commodities Act, but also shows that Altic knew or ought to have known that these transactions were part of VAT fraud.
- Altic considers that the rules invoked by the tax authorities do not apply, since the purchased seed was destined for the production of fuels and was not related to any kind of food. As a result, the regime applicable to food business operators can not be applied to it.
Preliminary questions:
1) Is Article 168 (a) of Directive [2006/112 / EC], having regard to the purpose Regulation (EC) No 178/2002, namely to ensure the food safety (achieved, among other things, by the traceability of foodstuffs), to be interpreted as not being object to the refusal of deduction of input tax when a taxpayer who is part of the food chain, when choosing his co-contractor does not require greater care (than in commercial practice customary) has shown – what essentially boils down to that he should have carried out checks on that contractor – but has checked the quality of the food and in that sense meets the purpose of Regulation No 178/2002?
2) Mandatory the requirement laid down in Article 6 of Regulation No 852/2004 and Article 31 of Regulation No 882/2004, concerning the registration of a food business, when this is explained in the light of Article 168 (a) of Directive 2006/112 / EC, the this company contracting party checks whether that company is registered, and is that check relevant to determine whether that party, taken into account the details of the transaction, knew or should have known that they was involved in a transaction with a fictitious company?
Source: MinBuza (Dutch)
