On December 15, 2011, the ECJ issued its decision in the case C-624/10 (Commission v France).
Context: Failure of State – Taxation – Directive 2006/112 / EC – Articles 168, 171, 193, 194, 204 and 214 – Regulation of a Member State providing for the obligation for the seller or service provider established outside the national territory to appoint a fiscal guarantor and to identify himself for VAT in this Member State – Regulation allowing compensation between deductible VAT borne by the seller or service provider established outside the national territory and that collected by him in the name and on behalf of of its customers
Article in the EU VAT Directive
Article 168, 171, 193, 194, 204 and 214 in the EU VAT Directive
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;
(b) the VAT due in respect of transactions treated as supplies of goods or services pursuant to Article 18 (a)and Article 27;
(c) the VAT due in respect of intra-Community acquisitions of goods pursuant to Article 2(1)(b)(i);
(d) the VAT due on transactions treated as intra-Community acquisitions in accordance with Articles 21 and 22;
(e) the VAT due or paid in respect of the importation of goods into that Member State.
Article 171
1. VAT shall be refunded to taxable persons who are not established in the Member State in which they purchase goods and services or import goods subject to VAT but who are established in another Member State, in accordance with the detailed rules laid down in Directive 2008/9/EC.
2. VAT shall be refunded to taxable persons who are not established within the territory of the Community in accordance with the detailed implementing rules laid down in Directive 86/560/ EEC. © Copyright 2014 IBFD. All rights reserved. 53 Disclaimer. IBFD is not liable for the information on this Site or for consequences of the use. See www.ibfd.org. The taxable persons referred to in Article 1 of Directive 86/560/EEC shall also, for the purposes of applying that Directive, be regarded as taxable persons who are not established in the Community where, in the Member State in which they purchase goods and services or import goods subject to VAT, they have only carried out the supply of goods or services to a person designated in accordance with Articles 194 to 197 or Article 199 as liable for payment of VAT.
Article 193
VAT shall be payable by any taxable person carrying out a taxable supply of goods or services, except where it is payable by another person in the cases referred to in Articles 194 to 199b and Article 202.
Article 194
1. Where the taxable supply of goods or services is carried out by a taxable person who is not established in the Member State in which the VAT is due, Member States may provide that the person liable for payment of VAT is the person to whom the goods or services are supplied.
2. Member States shall lay down the conditions for implementation of paragraph 1.
Article 204
1. Where, pursuant to Articles 193 to 197 and Articles 199 and 200, the person liable for payment of VAT is a taxable person who is not established in the Member State in which the VAT is due, Member States may allow that person to appoint a tax representative as the person liable for payment of the VAT.
Furthermore, where the taxable transaction is carried out by a taxable person who is not established in the Member State in which the VAT is due and no legal instrument exists, with the country in which that taxable person is established or has his seat, relating to mutual assistance similar in scope to that provided for in Directive 76/308/EEC10 and Regulation (EC) No 1798/200311, Member States may take measures to provide that the person liable for payment of VAT is to be a tax representative appointed by the non-established taxable person. However, Member States may not apply the option referred to in the second subparagraph to a non-established taxable person, within the meaning of point (1) of Article 358, who has opted for the special scheme for electronically supplied services. 2. The option under the first subparagraph of paragraph 1 shall be subject to the conditions and procedures laid down by each Member State.
Article 214
1. Member States shall take the measures necessary to ensure that the following persons are identified by means of an individual number:
(a) every taxable person, with the exception of those referred to in Article 9(2), who within their respective territory carries out supplies of goods or services in respect of which VAT is deductible, other than supplies of goods or services in respect of which VAT is payable solely by the customer or the person for whom the goods or services are intended, in accordance with Articles 194 to 197 and Article 199;
(b) every taxable person, or non-taxable legal person, who makes intra-Community acquisitions of goods subject to VAT pursuant to Article 2(1)(b) and every taxable person, or non-taxable legal person, who exercises the option under Article 3(3) of making their intra-Community acquisitions subject to VAT;
(c) every taxable person who, within their respective territory, makes intra-Community acquisitions of goods for the purposes of transactions which relate to the activities referred to in the second subparagraph of Article 9(1) and which are carried out outside that territory.
(d) every taxable person who within their respective territory receives services for which he is liable to pay VAT pursuant to Article 196;
(e) every taxable person, established within their respective territory, who supplies services within the territory of another Member State for which VAT is payable solely by the recipient pursuant to Article 196.
2. Member States need not identify certain taxable persons who carry out transactions on an occasional basis, as referred to in Article 12.
Facts
Questions
- By its action, the Commission claims that the French legislation derogating from a VAT reverse charge scheme is, in a number of respects, contrary to the law of the European Union.
- Firstly, the taxable persons who wish to benefit from the scheme introduced by Title IV of Administrative Instruction 3 A-9-06 are obliged to designate a tax representative, which is not in accordance with Article 204 of the VAT Directive. That article allows Member States to impose such an obligation only in the case where no instrument exists, with the country in which the taxable person is established, organising mutual assistance in indirect taxation matters similar to that provided for within the European Union.
- Secondly, the administrative concession is also subject to the obligation for the seller to identify him or herself for VAT purposes in France, which is not in accordance with Article 214(1) of the VAT Directive. Under that provision the duty to identify oneself for VAT purposes does not apply to those taxable persons who carry out, in the territory of a Member State in which they are not established, supplies of goods or services subject to reverse charge by the customer, in particular in application of Article 194 of the VAT Directive.
- Thirdly and finally, the scheme provides for the offsetting of the deductible VAT of the seller or provider against the VAT collected by one or more of his or her customers. That is not in accordance with the provisions of Articles 168 and 171 of the VAT Directive, which provide that the set-off between deductible VAT and collected VAT is to apply on an individual level to each taxable person. Such a derogating scheme also cannot be based upon Article 11 of that directive.
AG Opinion
None
Decision
1) By providing in Title IV of Administrative Instruction 3 A-9-06 n ° 105, of 23 June 2006, an administrative tolerance derogating from a reverse charge regime for value added tax and involving the designation of a fiscal guarantor by the seller or the service provider established outside France, the identification of the latter with the value added tax in France and the compensation between the deductible value added tax that he has borne and that he has collected in the name and on behalf of its clients, the French Republic has failed to fulfill its obligations under Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax , and, in particular, Articles 168, 171, 193, 194, 204 and 214 thereof.
Summary
ECJ ruled that by providing for an administrative concession derogating from a VAT reverse charge scheme and necessitating the designation of a tax representative by a seller or provider established outside of France, the VAT identification of the latter in France and the offsetting of the deductible VAT of the seller or provider against the VAT collected by one or more of his or her customers the French Republic has failed to fulfil its obligations under the VAT Directive
Source:
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