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ECJ C-57/20 Commission action against Germany on flat rate scheme for farmers

 


Article in the EU VAT Directive

296(1) and 299 of Council Directive 2006/112/EC

Article 296
1. Where the application to farmers of the normal VAT arrangements, or the special scheme provided for in Chapter 1, is likely to give rise to difficulties, Member States may apply to farmers, in accordance with this Chapter, a flat-rate scheme designed to offset the VAT charged on purchases of goods and services made by the flat-rate farmers.

Article 299
The flat-rate compensation percentages may not have the effect of obtaining for flat-rate farmers refunds greater than the input VAT charged.


Facts

The applicant claims that the Court should:

declare that, by applying the flat-rate scheme to all farmers as a rule regardless of whether the application of the normal VAT arrangements or the special scheme for small enterprises would give rise to difficulties for them, and by applying a flat-rate compensation tax rate which leads to a structural over-compensation of the input tax paid, the Federal Republic of Germany has infringed its obligations under Articles 296(1) and 299 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax; 1


Questions

First plea in law — Infringement of Article 296(1) of Directive 2006/112/EC

By its first plea in law, the Commission claims that, by applying the flat-rate scheme to all farmers regardless of any difficulties encountered by them in applying the normal VAT arrangements or the special scheme for small enterprises, the Federal Republic of Germany infringed Article 296(1) of Directive 2006/112.

According to Article 296 of Directive 2006/112, farmers who could benefit from the flat-rate scheme must be selected appropriately. Accordingly, as an eligibility criterion, eligible farmers would have to encounter difficulties in applying the normal VAT arrangements or the special scheme under Chapter 1. The Federal Republic of Germany failed to select eligible farmers on the basis of that eligibility criterion.

By its second plea in law, the Commission claims that the Federal Republic of Germany infringed Article 299 of Directive 2006/112 in that the flat-rate compensation tax rate applied by it results in a structural over-compensation of the input tax actually paid by flat-rate farmers.

In the calculation, the agricultural services provided by commercial contractors are deducted from the turnover of the whole agricultural sector, on the one hand, whilst only the input tax burden on farmers subject to the normal VAT arrangements, and not the input tax burden on commercial contractors, is deducted from the input tax burden on the whole agricultural sector, on the other. This leads to a structural over-compensation due to the reimbursement at a flat rate of the flat-rate farmers’ input tax.


AG Opinion


Decision


Personal comments/VATupdate 


Source


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