On July 16, 2009, the ECJ issued its decision in the case C-244/08 (Commission vs. Italy).
Context: Failure to fulfill obligations – Sixth VAT Directive – Article 17 – Eighth Directive 79/1072 / EEC – Article 1 – Thirteenth Directive 86/560 / EEC – Article 1 – Reimbursement or deduction of VAT – Taxable person established in another Member State or in a third country, but having a permanent establishment in the Member State concerned
Article in the EU VAT Directive
Article 17 in the Eighth VAT Directive 79/1072/EEC (Articles 167-177 of the EU VAT Directive 2006/112/EC)
2. Insofar as the goods and services are used for the purposes of his taxed transactions, the taxable person is authorized to deduct from the tax for which he is liable:
- a) value added tax due or paid within the country for goods which are or will be delivered to it and for services which are or will be rendered to it by another taxable person;
- b) value added tax due or paid for goods imported into the country;
- (c) the value added tax due in accordance with Article 5 (7) (a), Article 6 (3) and Article 28a (6);
- (d) the value added tax due in accordance with Article 28a (1) (a).
3. Member States shall also grant to any taxable person the deduction or reimbursement of value added tax referred to in paragraph 2 to the extent that the goods and services are used for the purposes of:
- (a) its transactions relating to the economic activities referred to in Article 4 (2) carried out abroad, which would give rise to the right of deduction if these transactions were carried out within the country;
- (b) its exempt transactions in accordance with Article 14 (1) (g) and (i), Article 15, Article 16 (1), points B, C, D and E (2), and in Article 28c, points A and C;
- c) its operations exempted in accordance with Article 13, Title B, points a) and d) 1 to 5, when the customer is established outside the Community or when these operations are directly linked to goods which are intended to be exported outside the Community.
4. The refund of the value added tax referred to in paragraph 3 shall be made:
- – in favor of taxable persons who are not established within the country but who are established in another Member State, in accordance with the implementing rules determined by Directive 79/1072 / EEC,
- – in favor of taxable persons who are not established in the territory of the Community, in accordance with the implementing rules determined by Directive 86/560 / EEC.
Facts & Questions
AG Opinion
None
Decision
1) The Italian Republic has failed, with regard to the reimbursement of value added tax to a taxable person residing in another Member State or in a third country but having a permanent establishment in the Member State concerned, in fulfilling its obligations obligations under article 1 st of the eighth Directive 79/1072 / EEC of 6 December 1979 on the harmonization of the laws of Member States relating to turnover taxes business – reimbursement of tax value to taxable persons not established inside the country, and Article 1 stof the thirteenth Council Directive 86/560 / EEC of 17 November 1986 on the harmonization of the laws of the Member States relating to turnover taxes – Procedures for reimbursement of value added tax to non-taxable persons established in the territory of the Community, by obliging a taxable person established in another Member State or in a third country, but having a permanent establishment in Italy and who, during the period in question, made supplies of goods or provision of services in Italy,to request the reimbursement of the value added tax paid upstream in accordance with the procedures provided for by the said directives rather than deducting it when the acquisition for which the refund of this tax is requested is effected not through the intermediary of this permanent establishment, but directly through the principal establishment of this taxable person.
2. Orders the Italian Republic to pay the costs.
Summary
Italy has failed to fulfill its obligations under Article 1 of the Eighth Directive and Article 1 of the Thirteenth Directive, by requiring a taxable person who is established in another Member State or in a third country but who has a permanent establishment in Italy and who, during the period concerned, supplied goods or services in Italy to use the procedures provided for in those directives for the refund of the VAT paid as input tax, instead of simply being able to deduct that VAT when the acquisition in respect of which the refund of that tax is requested,not through the permanent establishment in Italy, but directly through the principal place of business of this taxable person.
Source
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