On Dec 20, 2017, the ECJ issued its decision on the case C-276-16 (Prequ’ Italia Srl). While this decision is not flagged as a VAT decision, it definitely has an impact on VAT contingency.
Facts
- Prequ ‘Italia imports goods with VAT suspension. In completing customs formalities, it made use of the option not to pay VAT by committing itself in its import declarations to place the purchased goods in a specific VAT warehouse. However, the imported goods were never physically placed in that warehouse.
- After establishing that Prequ ‘Italia had used the VAT warehouse purely on a virtual basis, on 13 November 2009 the Italian customs authorities imposed 10 rectification notices on Prequ’ Italia for additional VAT on importation.
- In each assessment it was indicated that the taxpayer could lodge an objection, after which this taxpayer had the option to lodge an appeal. In the same notices it was stated that it was possible to obtain a deferment of payment by submitting a request to the customs authorities to do so, together with a security sufficient in view of the additional customs duties that have been imposed.
- After objection (?), Appeal and appeal, Prequ ‘Italia lodged an appeal in cassation with the Corte suprema di cassazione, which is submitting a preliminary question to the CJEU.
Decision
The right of any person to be heard before the adoption of a decision likely to adversely affect his interests must be interpreted as meaning that the rights of defence of the addressee of an amended tax assessment adopted by the customs authorities, in the absence of a prior hearing of the person concerned, are not infringed if the national legislation which allows the person concerned to contest that measure in the context of an administrative review merely provides the possibility to request the suspension of the implementation of that measure until its possible amendment by referring to Article 244 of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code, as amended by Regulation (EC) No 2700/2000 of the European Parliament and of the Council of 16 November 2000 without the initiation of an administrative appeal automatically suspending the implementation of the contested measure, since the application of the second paragraph of Article 244 of that regulation, by the customs authorities, does not restrict the grant of a suspension of implementation where there are reasons to doubt the conformity of the contested decision with the customs legislation or that irreparable damage is to be feared for the person concerned.
Analysis
The CJEU states that the right of any person to be heard prior to the adoption of a decision likely to prejudice his interests should be interpreted as meaning that the rights of defense of the addressee of a rectification notice issued by the customs authorities without the person concerned has been heard beforehand, have not been infringed where the national legislation giving the person concerned the possibility of challenging that act in an administrative appeal, with reference to Article 244 of the Customs Code, only provides for the possibility of requesting suspension of the request implementation of this act until its possible revision,and does not provide that the execution of the contested act is automatically suspended in the event of an administrative appeal, to the extent that the application of the second paragraph of Article 244 of the Customs Code by the customs authorities does not restrict the granting of suspension of enforcement where there are reasons to have doubts as to whether the contested decision complies with customs legislation or if the person concerned is in danger of suffering irreparable damage.the granting of suspension of operation is not limited if there are reasons to doubt that the contested decision complies with customs legislation or if the party concerned is in danger of suffering irreparable damage.the granting of suspension of operation is not limited if there are reasons to doubt that the contested decision complies with customs legislation or if the party concerned is in danger of suffering irreparable damage.
Source Curia
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