Flashback on ECJ Cases – C-106/10 (Lidl & Companhia) – Taxable amount includes Tax on motor vehicles

On July 28, 2011, the ECJ issued its decision in the case C-106/10 (Lidl & Companhia).

Context: Taxable amount – Tax payable on the manufacture, assembly, admission or import of vehicles

Article in the EU VAT Directive

Article 78 in the EU VAT Directive 2006/112/EC

Article 78 (Taxable amount)

The taxable amount shall include the following factors:

(a) taxes, duties, levies and charges, excluding the VAT itself;
(b) incidental expenses, such as commission, packing, transport and insurance costs, charged by the supplier to the customer.

For the purposes of point (b) of the first paragraph, Member States may regard expenses covered by a separate agreement as incidental expenses.

Facts

On 28 September 2007, Lidl & Companhia bought two motor vehicles. The invoices issued by the supplier and paid by that undertaking included the basic price, the ISV and miscellaneous expenses. VAT was applied to the total amount at the rate of 21%.
On 25 January 2008, Lidl & Companhia brought an administrative appeal against the notice of assessment of liability for the VAT charged on the two abovementioned invoices, the amounts of VAT assessed coming to EUR 8 601.23 and EUR 4 554.33, respectively. On 7 April 2008, the director of the Sintra Region 1 tax office rejected that appeal, by order of which the appellant was notified.
The Tribunal Administrativo e Fiscal de Sintra having dismissed in its entirety the action brought by Lidl & Companhia against the notice of assessment to VAT, that undertaking appealed to the Supremo Tribunal Administrativo. Before this court, the appellant maintains that the decision of the Tribunal Administrativo e Fiscal de Sintra, in accepting the argument that the ISV charged and paid on the import of vehicles into national territory must be included in the calculation of the taxable amount for VAT, infringes Article 16(6)(c) of the CISV and point (c) of the first paragraph of Article 79 of Directive 2006/112. Lidl & Companhia argues that, although it is not the taxable person in respect of the ISV imposed on the vehicles it purchased, that tax was passed on to it and gave rise to the payment of an excessive amount of VAT, of which it claims repayment.
The Ministério Público (State Counsel’s office) for the national court takes the view that ISV is a ‘single-stage’ tax, payable once only, when, on its first registration in Portugal, the vehicle is first brought onto the Portuguese market. It has argued that this tax, the chargeable event for which is the bringing of the vehicle onto the Portuguese market on its first registration in Portugal, possesses features similar to those of the registration duty giving rise to the judgment in Case C‑98/05 De Danske Bilimportører [2006] ECR I‑4945. In consequence, it suggests that a reference should be made to the Court of Justice seeking a preliminary ruling.

Questions

Is point (a) of the first paragraph of Article 78, read in conjunction with point (c) of the first paragraph of Article 79, of Directive 2006/112/EC of 28 November 2006 to be interpreted as prohibiting, in the case of intra-Community purchases, the inclusion in the taxable amount for VAT of the vehicle tax introduced by Law No 22-A/2007 of 29 June 2007?

AG Opinion

None

Decision

1. A tax such as vehicle tax (imposto sobre veículos), at issue in the main proceedings, the chargeable event for which is linked directly to the supply of a vehicle falling within the ambit of that tax and which is paid by the supplier of that vehicle, is covered by the definition of ‘taxes, duties, levies and charges’ for the purpose of point (a) of the first paragraph of Article 78 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and must, pursuant to that provision, be included in the taxable amount for value added tax on the supply of that vehicle.

Summary

Tax on motor vehicles falls under the concept of taxes, duties and levies and should therefore be included in the taxable amount.

A tax such as the tax on motor vehicles, the chargeable event of which is directly related to the supply of a motor vehicle within the scope of that tax and which is paid by the supplier of that vehicle, falls within the concept of ‘taxes, duties and charges’ within the meaning of the first paragraph of Article 78(a) of the VAT Directive and must, pursuant to that provision, be included in the taxable amount for VAT on the supply of the vehicle concerned.

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