VATupdate

ECJ VAT C-519/21 (DGRFP Cluj) – Questions – Cooperation agreement, VAT arrears, right to deduct

 


Article in the EU VAT Directive

Articles 9, 12, 14, 62, 63, 65, 73, 78,  167, 168(a), 178(a) and 179


Facts

The applicant and her sister (PP) each own half of a plot of land. On 14-11-2006, the applicant and PP entered into a cooperation agreement with the partners BP and MB for the construction of a real estate complex consisting of apartments intended for sale. That agreement provides that the applicant and PP provide the land, while BP and MB supply the building materials and bear the construction costs. The other decisions were taken by mutual agreement of the four parties. Each amount received would be divided in a proportion of 40% for the applicant and PP, and 60% for BP and MB. After repayment of the profits, the applicant and PP would each receive 16.67%, while BP and MB would each receive 33%. The agreement has not been registered with the tax authorities before the start of the activity. In the purchase agreements drawn up concerning the apartments, only the applicant and PP are mentioned as owners. No reference is made to the cooperation agreement, to BP and MB or to VAT. According to the inspection bodies, the sale of the apartments was a taxable transaction, carried out by a taxable person in the form of a partnership with a commercial purpose, without legal personality. A tax assessment was imposed on both the applicant and PP. The applicant was also fined for overdue VAT payments. Both have appealed. The applicant contested, inter alia, its status as a taxable person, the method of calculating the VAT due, the right to deduct and the proportionality of the additional tax obligations. The applicant also indemnified BP and MB to order them to pay two-thirds of the amount of the assessment. Most of the applicant’s complaints, including those relating to its status as a taxable person, have been definitively accepted.

Consideration:

The referring court must rule on the notice of indemnification, re-examine the right to deduct VAT and clarify the relevance of the cooperation agreement. The referring court notes that the tax authorities took the cooperation agreement as the basis for reaching their conclusion. BP and MB were not regarded as parties to the tax legal relationship at the time of taxation and they were not issued any VAT assessments in respect of the supply of immovable property. According to the referring court, the exclusive taxation of the applicant and PP goes beyond what is necessary to ensure the correct collection of VAT and to prevent fraud, since it may also lead to the loss of the VAT collected in the event of the insolvency of one of the persons classified as taxable persons. In addition, according to the referring court, it is necessary to clarify whether the right to deduct can be refused on the ground that the applicant did not mention the partners BP and MB or the partnership agreement at the time of the sale of the apartments. as this may also lead to the loss of the VAT collected in the event of the insolvency of one of the persons classified as taxable persons. In addition, according to the referring court, it is necessary to clarify whether the right to deduct can be refused on the ground that the applicant did not mention the partners BP and MB or the partnership agreement at the time of the sale of the apartments. as this may also lead to the loss of the VAT collected in the event of the insolvency of one of the persons classified as taxable persons. In addition, according to the referring court, it is necessary to clarify whether the right to deduct can be refused on the ground that the applicant did not mention the partners BP and MB or the partnership agreement at the time of the sale of the apartments.


Questions

1) Can the VAT Directive (2006/112) in general and Articles 9, 12, 14, 62, 63, 65, 73 and 78 thereof in particular, in a specific context such as that at issue in the main proceedings , shall be interpreted as meaning [that]: with regard to the occurrence of the chargeable event in taxable transactions relating to the supply of immovable property and the manner in which the relevant taxable amount is determined, natural persons who are united by agreement in a partnership without legal personality with the taxpayer who is obliged to pay the tax on the transactions performed at a later stage, which he should have collected,also have the status of taxpayer, since the cooperation agreement was not registered with the tax authorities before the start of the activity, but was submitted to them before the adoption of the tax administrative acts?

2) Can the VAT Directive (2006/112) in general and Article 167, Article 168(a), Article 178(a) and Article 179 thereof, as well as the principles of proportionality and neutrality, a specific context such as that at issue in the main proceedings, be interpreted as meaning that:

a) the possibility of granting a taxable person the right to deduct is recognized if he is not the person liable for payment of the tax and has not personally paid the input tax on goods and services used for taxable transactions, and the input tax is due/ paid by natural persons who have not been established as taxable persons, but who have joined by agreement in a partnership without legal personality with the taxpayer who is obliged to pay the tax on the transactions performed at a later stage,which he should have collected, as the cooperation agreement was not registered with the tax authorities before the start of the activity?

(b) the possibility of granting a taxable person the right to deduct is recognized in a specific context such as that at issue in the main proceedings if he is not the person liable for payment of the tax and has not personally paid input tax on transactions used for taxable purposes goods and services, and the input tax is due/paid by a natural person who has been established as a taxable person, who is party to an agreement on a partnership without legal personality and who, together with the taxable person, has his right to deduct also want or could exercise,and the latter are liable to pay the tax on the subsequent transactions which they should have collected, since the contract was not registered with the tax authorities before the activity commenced?

3) If the answer is in the negative and/or also in the light of the principle of legal certainty:

the taxable person who is under the obligation to pay the VAT and the associated charges can recover from natural persons who have not been established as taxable persons and who have joined by agreement in a partnership without legal personality with the taxable person who is liable to pay the tax on the subsequent transactions, which he should have collected, since the contract was not registered with the tax authorities before the activity started,in order to obtain the share of the profit-sharing accruing to those persons under the cooperation agreement in view of his obligation to pay the VAT and the associated charges?


AG Opinion


Decision

 


Summary

 


Source


Similar ECJ cases

  • Cited (recent) case law: C-368/09; C-280/10; C-85/11 Commission v Ireland; C-324/11; C-271/12; C-424/12; C-183/14; C-664/16

Reference to the case in the EU Member States

 


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