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Flashback on ECJ Cases – C-259/12 (Rodopi-M 91) – Heavy Fine For Belated VAT Adjustments

On June 20, 2013, the ECJ issued its decision in the case C-259/12 (Rodopi-M 91).

Context: Taxation – VAT –Directive 2006/112/EC– Principles of fiscal neutrality and proportionality – Belated recording in the accounts and declaration of the cancellation of an invoice – Remedying of the omission – Payment of the tax – State budget – No harm suffered – Administrative penalty

Article in the EU VAT Directive

Articles 242, 273 of the EU VAT Directive 2006/112/EC.

Article 242 (Accounting)
Every taxable person shall keep accounts in sufficient detail for VAT to be applied and its application checked by the tax authorities.

Article 273
Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirement of equal treatment as between domestic transactions and transactions carried out between Member States by taxable persons and provided that such obligations do not, in trade between Member States, give rise to formalities connected with the crossing of frontiers.
The option under the first paragraph may not be relied upon in order to impose additional invoicing obligations over and above those laid down in Chapter 3.


  • Rodopi is a Bulgarian company liable to VAT.
  • In the tax period corresponding to the month of December 2009, Rodopi entered in its purchase ledger, and in the return which it submitted, an invoice issued by Moda Shport EOOD dated 30 December 2009. The VAT indicated on the invoice amounts to BGN 161 571.12 (roughly EUR 82 800).
  • That invoice should not have been issued. In accordance with the national legislation, a memorandum dated 15 October 2010 cancelled it.
  • Rodopi did not take account of the memorandum in its accounts or its return for October 2010. It did so for December 2010, rectifying the deduction made in respect of that invoice by payment in full of the amount of VAT initially deducted for the cancelled invoice and of the interest thereon.
  • On 22 February 2011 a notice establishing an administrative offence was issued, in which it is stated, in essence, that the infringement was established by the Teritorialna direktsia in November 2010. On 17 June 2011 the Teritorialna direktsia imposed upon Rodopi a fine equivalent to the amount of VAT stated on the invoice at issue.
  • That penalty was challenged at first instance in the Rayonen sad (district court).
  • Before that court, Rodopi contended that Annex 12 to the Regulation implementing the ZDDS, which requires in the case in point that cancellation of the invoice at issue be entered in the accounts in October 2010, contradicts Article 124(4) of the ZDDS, which provides that the taxable person must enter tax documents received in his purchase ledger no later than during the 12th tax period following the period during which those documents were issued, but in any event before the end of the last tax period in which he may exercise his right of deduction, that is to say 12 months after the period in which that right arose.
  • The Rayonen sad held that the cancellation of the invoice should have been entered by Rodopi in the accounts in October 2010, whereas it was not entered until December 2010. It considered, however, that the decision taken by the Teritorialna direktsia imposing a penalty was vitiated by an infringement of material procedural rules, because it did not comply with the period prescribed by the Zakon za administrativnite narushenia i nakazania (Law on administrative offences and penalties) for drawing up the notice establishing the offence.
  • The Teritorialna direktsia brought an appeal on a point of law before the Administrativen sad Plovdiv (Administrative Court, Plovdiv).
  • Rodopi contends before that court that the fine imposed upon it is contrary to European Union law, and more specifically to the principles of fiscal neutrality and proportionality.
  • According to the Administrativen sad Plovdiv, it is necessary in the case before it to determine whether the penalty imposed upon Rodopi on the ground that it declared the cancellation of the invoice at issue belatedly is consistent with the principles of neutrality and proportionality, given that Rodopi paid the tax together with the interest thereon.


[1.] 1. Does the principle of VAT neutrality permit a Member State to impose a fine for failure to show cancellation of an invoice on time even though that cancellation is later shown in the accounts and the party concerned has paid the VAT resulting from cancellation plus the interest thereon?
[1.] 2. Are the following circumstances of significance in connection with the first question:
–    The period within which cancellation of an invoice should supposedly be shown is 14 days from the end of the calendar month in which the cancellation takes place;
–    Cancellation of the invoice was in fact shown one month after the end of the period within which cancellation should supposedly have taken place;
–    The VAT owed plus interest thereon was forwarded to the Treasury?
2.    Do Articles 242 and 273 of Directive 2006/112/EC  permit the Member States to impose a fine on taxpayers who have allegedly failed to fulfil on time their duty to show circumstances in their accounts that are of significance to the calculation of VAT where that fine amounts to the VAT not paid on time if that default is later remedied and the VAT owed is paid in full plus interest thereon?
3.    Is significance to be attributed to the fact that the Treasury has not been adversely affected as the party concerned later showed cancellation of the invoice and paid all of the VAT plus interest thereon?
4.    Does the imposition of a fine in the full amount of VAT already paid plus interest thereon contravene the principle of proportionality?

AG Opinion



The principle of fiscal neutrality does not preclude the tax authorities of a Member State from imposing upon a taxable person who has not fulfilled within the period prescribed by national legislation his obligation to record in the accounts and to declare matters affecting the calculation of the value added tax for which he is liable a fine equal to the amount of the value added tax not paid within that period where the taxable person has subsequently remedied the omission and paid all the tax due, together with interest. It is for the national court to determine, in view of Articles 242 and 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, whether in the light of the circumstances of the main proceedings – in particular the period within which the irregularity was rectified, the seriousness of that irregularity, and the presence of any evasion or any circumvention of the applicable legislation that is attributable to the taxable person – the amount of the penalty imposed goes beyond what is necessary to attain the objectives of ensuring the correct collection of tax and preventing evasion.

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