On November 15, 2017, the ECJ issued its decision in the joint cases C-374/16 & C-375/16 (Geissel and Butin) on the question whether the supplier address is crucial for input VAT deduction … it is not!!!
Article in the EU VAT Directive
Article 168(a), 178(a) and 226(5) of Council Directive 2006/112/EC
Article 168
In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay:
(a) the VAT due or paid in that Member State in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person;
Article 178
In order to exercise the right of deduction, a taxable person must meet the following conditions:
(a) for the purposes of deductions pursuant to Article 168(a), in respect of the supply of goods or services, he must hold an invoice drawn up in accordance with Sections 3 to 6 of Chapter 3 of Title XI;
Article 226
Without prejudice to the particular provisions laid down in this Directive, only the following details are required for VAT purposes on invoices issued pursuant to Articles 220 and 221:
(5) the full name and address of the taxable person and of the customer;
Facts
German companies purchased cars for resale. The tax authorities questioned the right to deduct input tax from invoices documenting purchases of these cars. The reason for the refusal of the deduction was that the invoices indicated, as addresses of the sellers, their correspondence addresses (“mailbox addresses”) and not their business addresses.
The question was if it is possible to refuse the deduction of VAT on the grounds that the address given on the invoice received is the address of the “mailbox” and not the address of the place where the contractor’s business is conducted?
Questions
Does an invoice required by Article 168(a) in conjunction with Article 178(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 1 in order to exercise a right of deduction contain a ‘full address’ within the meaning of Article 226(5) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax if, in the invoice he issues in relation to the supply, the taxable person making the supply gives an address by which he may be reached by post but where he does not carry out any economic activity?
Having regard to the principle of effectiveness, does Article 168(a) in conjunction with Article 178(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax preclude a national practice which takes into account good faith on the part of the recipient of a supply in the satisfaction of the requirements for the right to deduct input tax only outside the tax assessment procedure, within the framework of a special equitable procedure? In that regard may Article 178(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax be relied upon?
AG Opinion
– Article 226(5) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (‘the VAT Directive’) precludes national legislation that subjects the right to deduction of value added tax to the indication on the invoice of the address where the issuer carries out its economic activity.
– Article 168(a) and Article 178(a) of the VAT Directive preclude national legislation according to which, where the formal conditions of invoices are not fulfilled, deduction is granted only if the taxable person proves that he took every measure that could reasonably be required of him in order to satisfy himself that the content of the invoice was correct.
– It is for the national court to assess whether the national procedural rules under which a taxable person may invoke his good faith regarding the integrity of the invoice are compatible with the principle of effectiveness, in the light in particular of the length, complexity and costs associated with the relevant procedures.
Newsletter
Decision
Article 168(a) and Article 178(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in conjunction with Article 226(5) thereof, must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which makes the exercise of the right to deduct input VAT subject to the condition that the address where the issuer of an invoice carries out its economic activity must be indicated on the invoice.
VATupdate comments
The ECJ rules that the deduction of VAT cannot be refused on the grounds that the address given on the invoice received is the “mailbox” address and not the address of the place where the contractor’s business is conducted.
Arguments
- According to Art. 178.a VATD, the taxpayer must have an invoice drawn up in accordance with the provisions of the VATD in order to exercise the right of deduction. 226 indicates that the invoice should include the address of the taxpayer and the buyer (30-31).
- When interpreting EU regulations, one should take into account not only its wording, but also the context of its placement and the objectives of the regulation of which it is part (32).
- Some language versions of the VATD refer to the “address” and in some to the “full address”. However, this does not determine whether it should be the address of the place where the business is carried out (33-34).
- As is commonly understood, the concept of address means that any type of address is meant, as long as the addressee can be contacted there.
- 226 of the VATD indicates that only the data listed in the VATD have to be compulsorily included in the invoices, it follows that these obligations should be interpreted strictly and therefore MS cannot impose more stringent requirements. Therefore, MS cannot make the right to deduct dependent on elements of the invoice content that are not expressly provided for in the VATD (36-38).
- Secondly, in terms of context, the right to deduct VAT cannot, in principle, be limited.
- The right to deduct should apply even if taxpayers have not complied with certain formal requirements (40).
- Thirdly, as regards the purposive interpretation, the purpose of including data on an invoice is to enable the tax authorities to control the payment of the tax due. The indication of the data on the invoice serves to determine who issued the invoice. The most important here is the VAT identification number (41-45).
- It should also be recalled that the deduction system is intended to relieve the trader entirely of the burden of VAT. In order to achieve these objectives, it is not necessary to provide for the address of the place where the issuer is established (46).
- The Court has also held that the impossibility of operating at a given address does not preclude activities from being carried out elsewhere (47).
Source
Similar ECJ cases
How did countries implement the case? Your feedback appreciated! Let us know
Newsletters
