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ECJ C-855/19 – Dyrektor Izby Administracji Skarbowej w Bydgoszczy vs. PL – Questions – Intra-Community acquisitions of motor fuels, payment of VAT within five days of each of the 20 transactions (Polish details)

Previously we posted a summary/unofficial translation.  This is the order from the Polish Supreme Court with more details.

Question of the Supreme Administrative Court in case I FSK 2248/18 (reference number before the CJEU C-855/19 Director of the Chamber of Tax Administration in Bydgoszcz)

Order of the Supreme Administrative Court of October 17, 2019 in case I FSK 2248/18

Unofficial translation:

Preliminary questions:

I. Can a Member State implement a provision in its national law  stipulating that in the case of intra-Community acquisition of motor fuels the taxpayer is obliged, without requesting the head of a customs office, for calculating and paying the amounts of tax to the account of the customs chamber competent for excise duty payments:

1) within 5 days from the day on which these goods were introduced to the place of receipt of excise goods – if the goods are acquired within the Community

2) within 5 days from the date of introduction of these goods from the territory of a Member State other than the territory of the country to the tax warehouse;

3) upon the movement of these goods within the territory of the country – if the goods are moved outside the excise duty suspension arrangement in accordance with the provisions on excise duty?

II. Is art. 69 of Directive 2006/112 / EC does not preclude a provision such as Art. 103 item 5a of the law stipulating that in the case of intra-Community acquisition of motor fuels, the taxpayer is obliged, without requesting the head of the customs office, to calculate and pay the amounts of tax to the account of the customs chamber competent for excise duty payments: 1) within 5 days from the day on which the goods these were introduced to the place of receipt of excise goods specified in the relevant authorization – if the goods are acquired within the Community within the meaning of the provisions of the Act of 6 December 2008 on excise duty by a registered consignee using the excise duty suspension arrangement in accordance with the provisions on excise duty; 2) within 5 days from the date of introduction of these goods from the territory of a Member State other than the territory of the country to the tax warehouse; 3) upon the movement of these goods within the territory of the country – if the goods are moved outside the excise duty suspension arrangement in accordance with the provisions on excise duty – with the interpretation that the above amounts do not constitute VAT advances within the meaning of Art. 206 of Directive 2006/112 / EC?

III. Is an advance on VAT within the meaning of art. 206 of Directive 2006/112 / EC, not paid on time, loses its legal existence at the end of the tax settlement period for which it is to be paid? 2) pursuant to art. 124 § 1 item 5 of the Act of 30 August 2002 – Law on proceedings before administrative courts (Journal of Laws of 2018, item 1302, as amended

II. Facts.

Proceedings before tax authorities.

1. The tax authorities determined that in the period from December 1 to December 31, 2016, the Party – G. Sp. z o. o. in B. – intra-Community acquired 3,190,874 m3 of diesel oil with CN code 2710 19 43, as a result of which she was obliged to pay the goods and services tax in accordance with art. 103 item 5a uptu, within 5 days from the date of each entry of these goods on the territory of the country, in total – from 20 transactions – in the amount of PLN 1,530,766 – which the Party has not done.

In addition, despite the fact that in accordance with art. 99 clause 11a uptu, in the case of intra-Community acquisition of goods referred to in art. 103 item 5a, the taxpayer is obliged to submit to the head of the customs office competent for settling excise tax declarations on the amounts of tax due for monthly periods, by the 5th day of the month following the month in which the obligation to pay arose – the Party did not submit a VAT-14 declaration period covered by this proceeding.

As a consequence, it was decided that the amount of tax on goods and services in the amount of PLN 1.530.766 is a tax arrears for December 2016, which, together with interest due for delay, calculated from the day following the date of expiry of the payment deadline, should be paid immediately to the bank account The Tax Office.

Judgment of the Court of First Instance (WSA).

2. The party filed a complaint against the decision of the Director of the Tax Administration Chamber in Bydgoszcz of 6 April 2018 regarding the tax on goods and services for December 2016 to the Provincial Administrative Court in Bydgoszcz, which dismissed it by the judgment of 10 July 2018 in the case reference number act I SA / Bd 365/18.

The first instance court first of all shared the view of the appeal body that, in a situation where, during the period covered by the proceedings, the applicant acquired intra-Community diesel oil with the CN code 2710 19 43, the production of which, and the marketing of which requires a license pursuant to the provisions of art. 32 section 1 point 1 and art. 32 section 1 point 4 of the Energy Law of 10 April 1997 (Journal of Laws of 2012, item 1059, as amended, hereinafter: the Energy Law), the applicant should have settled the tax on goods in accordance with art. 103 item 5a of the Act, according to the Court, it is irrelevant whether the applicant de facto had such a license, and that the purchased oil was not offered for sale or used to power internal combustion engines (it was intended for the manufacture of non-motor fuel products ).

The court also stated that the amounts payable pursuant to art. 103 item 5a ups are not tax advances but are amounts of tax (they constitute a “separate tax structure” according to this Court). He also found no contradiction to Art. 103 item 5a of the Act from Art. 206 of Directive 2006/112 / EC.

The Provincial Administrative Court did not see the contradiction of Art. 103 item 5a of the Act from Art. 110 TFU.

Proceedings before the Supreme Administrative Court (NSA).

3. The Company appealed against the above judgment in its entirety, accusing the Provincial Administrative Court in its cassation appeal, inter alia infringement:

1) art. 110 paragraph 1 TFU, through incorrect application of this provision, consisting in its non-application and application of the provisions of Art. 103 item 5a in connection from art. 86 section 2 and in relation with Annex 2 to the Act of 6 December 2008 on excise duty (Journal of Laws of 2019, item 864, as amended; hereinafter: the “Excise Tax Act”), although the provisions of national law are contrary to art. 110 paragraph 1 of the Treaty on the Functioning of the European Union, because they establish a tax discriminatory against goods coming from other Member States of the European Union,

2) art. 103 item 5a uptu, by its erroneous interpretation, consisting in the assumption that it does not regulate advance payments for goods and services tax, but a separate tax structure.

In view of the above, the applicant requested that the judgment under appeal be set aside in its entirety and the case of the Provincial Administrative Court in Bydgoszcz be re-examined and that the costs of the proceedings be awarded, with the costs of legal representation, in accordance with prescribed standards.

4. The director of the Tax Administration Chamber in Bydgoszcz, in response to a cassation appeal, requested that the complaint be dismissed and that the costs of the proceedings be awarded according to prescribed standards.

III. Reasons for referring a question for a preliminary ruling.

5. In the opinion of the Supreme Administrative Court, the resolution of the Company’s cassation complaint referred to above requires the answer of the Court of Justice of the European Union (hereinafter: the CJEU) to questions regarding the interpretation and rules of application of the provisions of the Treaty on the Functioning of the European Union and Directive 2006/112 / EC , provisions indicated in the operative part.

6. In the cassation appeal, allegations were made indicating the contradiction of Art. 103 item 5a of the Act from Art. 110 TFU and art. 69 and art. 206 of Directive 2006/112 / EC.

In accordance with art. 267 TFU, where the issue of interpretation of the provisions of the Directive is raised in a case pending before a national court, whose decisions are not subject to appeal in accordance with internal law, that court is required to bring the case before the Court.

On the questions referred for a preliminary ruling.

Ad. I. On August 1, 2016, the Act of July 7, 2016 amending the Act on tax on goods and services and some other acts (Journal of Laws of 2016, item 1052, as amended) entered into force. ), regulating the so-called “fuel package”, i.e. a catalog of changes, aimed at “sealing” the collection of VAT on intra-Community acquisitions of motor fuels and thus preventing tax fraud in the trading of these fuels abroad.

By adding under art. 103 of the new provisions of para. 5a-5d, a solution was introduced according to which VAT on intra-Community acquisition (WNT) of motor fuels listed in Annex 2 to the Excise Duty Act, the production or circulation of which requires a license in accordance with the Energy Law is paid:

1) within 5 days from the day on which the goods were introduced to the place of receipt of excise goods specified in the relevant authorization – if the goods are acquired within the Community within the meaning of the provisions of the Act of 6 December 2008 on excise duty by a registered consignee using the procedure suspension of excise duty collection in accordance with the provisions on excise duty;

2) within 5 days from the date of introduction of these goods from the territory of a Member State other than the territory of the country to the tax warehouse;

3) upon the movement of these goods within the territory of the country – if the goods are moved outside the excise duty suspension arrangement in accordance with the provisions on excise duty.

This constitutes a significant change to the Act on tax on goods and services, because in accordance with the provisions in force until 31 July 2016, intra-Community acquisition of motor fuels did not require payment of VAT at the time of its implementation (within a specified period from the introduction of fuel into the territory of the country), since the active taxpayer VAT accounted for this acquisition basically – in terms of input and output tax – in the submitted VAT-7 declaration, by the 25th day of the month following each subsequent accounting period (month or quarter). The same declaration included VAT due for intra-Community acquisition of fuels, as well as input tax in the same amount as that due, provided that the acquisition was obviously associated with taxed sales.

The cassation complaint alleged that the new regulation of art. 103 item 5a uptu is contrary to Art. 110 TFU, because it establishes a tax discriminating against goods originating in other Member States of the European Union.

In accordance with art. 110 TFU, no Member State imposes, directly or indirectly, on the products of other Member States any internal taxation of any kind higher than that which it imposes, directly or indirectly, on similar domestic products. In addition, no Member State imposes on the products of other Member States internal taxes which indirectly protect other products.

Discrimination is the worse treatment of certain entities that are comparable (similar) to other non-discriminated entities. Less favorable treatment is possible only in relation to entities with legal capacity, i.e. the attribute of having rights and obligations. Worse treatment means depriving a discriminated entity of certain rights or imposing additional obligations compared to a non-discriminated entity (treated on general principles). Less favorable treatment may occur in the sphere of rights and obligations, regarding both actual and legal actions.

In its cassation appeal, the applicant indicated that in its case law the CJEU had interpreted this provision at least twice in the context of establishing earlier payment dates for taxes on goods imported from other Member States of the European Union. First, he interpreted this in his judgment of 27 February 1980 in case 55/79, […] (ECR 1980, p. 481). He stated that in the event that domestic entities trading in a particular type of goods benefit from a longer payment period for value added tax than entities purchasing similar goods but coming from other Member States, this constitutes discriminatory treatment of goods.

Another judgment in which the Court of Justice interpreted this provision was the judgment of 17 June 1998, C-68/96 (ECR 1998, pp. 1-3797). In paragraph 25 of that judgment, the Court held that Art. 95 of the Treaty (now Article 110 TFU) should be considered as violated when in the case of imported goods the obligation to pay the fee to the customs office arises at the time of importation, whereas in the case of domestic goods it arises only when the domestic producer makes a declaration to the tax authorities within the month following the quarter in which the goods were placed on the market, which gives rise to a charge that occurs when a product intended for consumption is placed on the domestic market. Consequently, the Court found that Art. 95 of the Treaty should be interpreted as

Therefore, it was pointed out that in these judgments the Tribunal ruled that the provision of Art. 95 of the Treaty (now Article 110 TFU) should be understood as contradicting national regulations providing for a shorter payment period for the tax on goods coming from other Member States than the payment period for the tax on similar domestic goods, which should be binding on the court national.

The Court of Justice of the European Union has recognized that the accelerated tax payment date for goods from other Member States discriminates against these goods, which is logical, because as a result of delaying the payment of the tax, the entrepreneur obtains a certain economic benefit, and if the tax payment date is accelerated, he is in a worse situation financial. It is closely related to the concept of the value of money over time.

This situation, according to the applicant, is the case when Article 103 item 5a uptu, since this provision applies only to the dates of payment of the tax on goods and services from motor fuels coming from other Member States, specifying the accelerated date of payment of this tax. It should be noted that the right to deduct tax in this respect arises in accordance with art. 86 section 2 point 4 lit. c) in connection from paragraph 10 and paragraph 10b point 2 uptu – in the settlement for the period in which a tax obligation arose with respect to goods and services acquired by the taxpayer (Article 20 (5) of the upt), provided that the taxpayer:

a) receives an invoice documenting the delivery of goods, constituting his intra-Community acquisition of goods, within three months of the expiry of the month in which the tax obligation arose in respect of the goods purchased,

b) include the amount of tax due on intra-Community acquisition of goods in the tax declaration in which he is obliged to settle this tax, not later than within 3 months from the end of the month in which the tax obligation arose in respect of the goods purchased.

Divergence of the obligation to pay tax within the periods specified in art. 103 item 5a of the Act, and the period of obtaining the right to deduct tax for intra-Community acquisition of fuels, undoubtedly results in the need for greater involvement of own funds on the part of the buyer, in order to accelerate VAT settlement.

Meanwhile, entities that trade this type of domestic goods pay tax by the 25th day of the month following the month in which the delivery was made.

Thus, the provision of art. 103 item 5a uptu – according to the applicant – is in conflict with the abovementioned provision of the Treaty.

It should be noted that in accordance with art. 273 of Directive 2006/112 / EC, Member States may impose other obligations they deem necessary to ensure proper collection of VAT and to prevent tax evasion, provided that national transactions and transactions between Member States are treated equally by taxable persons, and provided that such obligations, in trade between Member States, they will not lead to formalities connected with crossing borders.

Although in art. Pursuant to Article 258 of Directive 2006/112 / EC, Member States shall lay down detailed rules for the submission of VAT returns in respect of intra-Community acquisitions of new means of transport as referred to in Article 2 clause 1 lit. b) point (ii), as well as for intra-Community acquisitions of products subject to excise duty, referred to in Art. 2 clause 1 lit. b) point (iii), but – first of all, this situation applies to intra-Community acquisitions of excise goods by entities which are not obliged to settle VAT for other intra-Community acquisitions, and secondly – this standard refers to submitting declarations and not rules for the collection of VAT, as concerns the dispute in this case.

However, while Member States are free to set the time limits for VAT payments, also in the case of the title at issue, the requirements arising in this respect from Article 273 of Directive 2006/112 / EC, i.e.

– they must be necessary to ensure correct VAT collection and to prevent tax evasion,

– they must ensure equal treatment of domestic and intra-Community transactions,

– they must not create formalities related to the crossing of borders.

In the event of disputed Art. 103 item 5a, there is doubt as to whether he meets the last two criteria.

Ad. II. If the Tribunal finds that the regulation of accelerated VAT payments specified in art. 103 item 5a uptu is not contrary to art. 110 TFU and art. 273 of Directive 2006/112 / EC, the second contentious issue in the present case against the provisions of the VAT Directive is the nature of those payments in the context of the moment when the tax obligation arises.

The disputed issue is whether the tax payments referred to in art. 103 item 5a of the Act have the character of a separate structure of accelerated VAT collection, or constitute tax advances, in the sense of Art. 206 of Directive 2006/112 / EC.

First of all, it should be noted that pursuant to art. 69 of Directive 2006/112 / EC (from January 1, 2013), in the case of intra-Community acquisition of goods, VAT becomes chargeable upon the issue of an invoice or, if no invoice was issued before that date, on the expiry of the period referred to in art. 222 first paragraph.

In the light of this provision, the tax obligation arises upon the issue of an invoice, and if no invoice was issued before the date of the intra-Community acquisition, the tax obligation arises on the 15th day of the month following the month in which the event giving rise to the tax obligation took place.

This regulation is special, and therefore there are no exceptions to it.

This means that VAT on intra-Community acquisition of goods becomes payable from the taxpayer only from the time of the abovementioned circumstances.

Art. 69 of Directive 2006/112 / EC has been implemented in Art. 20 clause 5 of the Act, which stipulates that in the intra-Community supply of goods, the tax obligation arises upon the invoice being issued by the taxpayer, but no later than on the 15th day of the month following the month in which the delivery was made.

Against the background of these regulations, there is the question of whether it is possible to collect VAT for intra-Community acquisition of motor fuels, as defined in art. 103 item 5a uptu, before the tax obligation set out in Art. 69 of Directive 2006/112 / EC (Article 20 (5) of the Act).

If we assume that the tax payments referred to in art. 103 item 5a of the Act have the character of a separate structure of accelerated VAT collection, it should be considered that the obligation to pay them before the date of tax liability pursuant to art. 69 of the Directive (Article 20 (5) of the Upt) is in conflict with these provisions, as there are no grounds to require the taxpayer to pay VAT before the tax obligation arises.

Therefore, it seems that only when these payments are considered tax advances, in the light of art. 206 of Directive 2006/112 / EC, it would be possible to state their inconsistency with the above standards.

In accordance with art. 206 of Directive 2006/112 / EC, each taxable person liable for payment of VAT must pay the net VAT amount at the time of submitting the VAT declaration provided for in Article 250. Member States may, however, set a different date for payment of this amount or take advance payments on this amount.

The first sentence of this provision refers to the obligation to pay the net VAT amount at the time of submitting the VAT declaration provided for in Article 250.

Meanwhile, the payment regulated in art. 103 item 5a uptu, calculated as the product of the price of intra-Community purchased motor fuels and the relevant tax rate, without deducting this amount by input tax, constitutes gross payment.

It is required to be paid within 5 days of the introduction of motor fuel on the territory of the country, i.e. before the obligation to submit a VAT-14 declaration specific for these transactions, which requires showing all intra-Community acquisitions of motor fuels in the past month with them with tax (already paid within the time limits specified in Article 103 (5a) of the Act). It should be submitted to the competent authority by the 5th day of the month following the month in which the obligation to pay tax under Article 103 item 5a uptu, with the amount of tax for a given month shown being the sum of partial amounts for individual transactions in that period, which should be paid in accordance with art. 103 item 5a and 5b of the Act.

Aside from the fact that there is no cassation appeal, from doubts as to the legitimacy of the VAT-14 declaration in Directive 2006/112 / EC (it is difficult to consider that it is based in Article 258 of the Directive, which regulates the declaration regarding intra-Community acquisitions of excise goods by entities, which are not obliged to settle VAT for other intra-Community acquisitions), it should be indicated that the net amount, pursuant to art. 206 sentences the first Directive 2006/112 / EC, the taxpayer only shows in the VAT-7 declaration (submitted after the expiry of the settlement period), in which it takes into account paid in pursuant to art. 103 item 5a of the tax in the given settlement period, tax due on intra-Community acquisition of fuel,

As indicated by the CJEU in its judgment of 26 March 2015 in case C-499/13 […], Art. 206 and 250 of Directive 2006/112 / EC that the amount of VAT paid to the Treasury should be the net amount, i.e. the amount including deductions to be made, and that all these deductions should be made in relation to the accounting period in which they arose.

So in the case when in the provision of art. 206 sentences 2 of Directive 2006/112 / EC provides for the possibility of “setting a different date for payment of this amount”, which means that it is the amount referred to in the first sentence, i.e. the net VAT amount, not the gross amount. Thus, when a Member State introduces an obligation to pay a gross amount, for a given intra-Community acquisition of goods, as referred to in Article 103 item 5a uptu, it seems that it cannot be VAT with a different payment date, but an advance referred to in art. 206 sentences 2 in fine directive.

The Tribunal in the abovementioned of the judgment of 26 March 2015 in case C-499/13 […], although in the case of the payer, stated that his payment of VAT due on the transaction indicated in the declaration by the taxpayer has its basis in art. 206 second sentence of Directive 2006/112 / EC, which authorizes Member States to collect advance payments.

In this situation, it seems that to recognize the taxpayer’s payments referred to in art. 103 item 5a uptu, not contradictory to art. 69 and art. 206 of Directive 2006/112 / EC, they should be treated as tax advances within the meaning of Art. 206 of Directive 2006/112 / EC.

Ad. III. If we assume that the taxpayer’s payments referred to in art. 103 item 5a ups are tax advances, the next question is whether the advance on VAT within the meaning of Art. 206 of Directive 2006/112 / EC, not paid on time, loses its legal existence at the end of the tax settlement period, for which it is to be paid, which is important to determine whether after the end of the settlement period the advance payments are made and the time to determine which should be calculated as interest on unpaid advances.

In the advance payment system, payments are made throughout the entire settlement period, which will only be determined in the future (after the end of the settlement period). Only then is the final settlement of the taxpayer with the budget by means of an additional payment or the return of overpaid amounts, including – in the case of VAT – input tax, which results in determining the net amount of tax to be paid (or the amount of VAT refund). For this reason, after the end of the tax period, it seems that tax advances should not be calculated in the gross amount and their tax arrears should be determined, because the tax liability in this form has been specified in the net tax liability for the entire period for which advances were downloaded.

Separation of the tax liability due to gross advances, and hence their legal independence, does not mean the absence of normative relations with the net tax liability for a given tax period for which the gross advances are due.

Advance tax liability is one form of tax liability, but its essence is that after the end of the tax period, the advance liability ceases to exist as the amount of tax for that period is specified. This is due to the temporary nature of the advances, as a result of which the right to set advances should disappear at the end of the reference period.

This would mean that the unpaid advance becomes a tax arrears, but only until it expires as a legal entity, i.e. until the expiry of the accounting period for which it is due.

Therefore, after the end of the VAT settlement period, it would be pointless for the tax authority to determine the gross tax advance due in the event of incorrect payment, which should not, however, release the taxpayer from the obligation to pay interest on unpaid advance payments – in part exceeding the amount of tax due for a given settlement period.

7. The above doubts, related to the interpretation of the above-mentioned provisions of EU law and the national practice of applying them based on these provisions, justify asking the Court of Justice of the European Union the questions referred for a preliminary ruling.