VATupdate

ECJ C-276/19 (Commission vs UK) – Judgment – UK should have notified the expansion of its commodity markets VAT simplification to the Commission

On May 14, 2020, the ECJ issued his decision on the case C-276/19 (Commission vs UK)


Article in the EU VAT Directive

Article 395(2) of Council Directive 2006/112/EC

Article 395
1. The Council, acting unanimously on a proposal from the Commission, may authorise any Member State to introduce special measures for derogation from the provisions of this Directive, in order to simplify the procedure for collecting VAT or to prevent certain forms of tax evasion or avoidance.
Measures intended to simplify the procedure for collecting VAT may not, except to a negligible extent, affect the overall amount of the tax revenue of the Member State collected at the stage of final consumption.
2. A Member State wishing to introduce the measure referred to in paragraph 1 shall send an application to the Commission and provide it with all the necessary information. If the Commission considers that it does not have all the necessary information, it shall contact the Member State concerned within two months of receipt of the application and specify what additional information is required.
Once the Commission has all the information it considers necessary for appraisal of the request it shall within one month notify the requesting Member State accordingly and it shall transmit the request, in its original language, to the other Member States.


Facts

On 28 December 1977, the United Kingdom notified special measures including the Value Added Tax (Terminal Markets) Order 1973 that permits commodity futures to be traded on certain markets in the United Kingdom free of VAT and of the recording requirements of VAT subject to certain conditions. The Value Added Tax (Terminal Markets) Order 1973 was amended several times to add to its scope a number of commodities markets that were not listed in the original notification. The Commission claims that the amendments made to the Value Added Tax (Terminal Markets) Order 1973 enlarge the scope of the original derogation that the United Kingdom had notified in 1977. They should consequently have been notified to the Commission pursuant to Article 395 (1) of the VAT Directive but they were not.


Questions

The applicant claims that the Court should:

declare that by introducing new simplification measures that extend the zero-rating and the exception to the normal requirement of keeping Value Added Tax records provided for by the original Terminal Markets Order 1973 without applying to the Commission with a view to seek the Council’s authorisation, the United Kingdom of Great Britain and Northern Ireland has failed to fulfil its obligations under Article 395 (2) of Council Directive 2006/112/EC1 of 28 November 2006 on the common system of value added tax (“VAT Directive”);

order the United Kingdom of Great Britain and Northern Ireland to pay the costs.


AG Opinion

None


Decision

1.      Declares that by introducing new simplification measures that extend the zero-rating and the exception to the normal requirement to keep value added tax records which were provided for in the Value Added Tax (Terminal Markets) Order 1973, as amended by the Value Added Tax (Terminal Markets) (Amendment) Order 1975, without submitting an application to the European Commission with a view to seeking the authorisation of the Council of the European Union, the United Kingdom of Great Britain and Northern Ireland has failed to fulfil its obligations under Article 395(2) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax;

2.      Orders the United Kingdom of Great Britain and Northern Ireland to pay the costs.


Personal comments/VATupdate 


Source: Curia


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