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Flashback on ECJ Cases – C-169/12 (TNT Express Worldwide (Poland)) – VAT liability for transport and shipping services

Om May 16, 2013, the ECJ issued its decision in the case C-169/12 (TNT Express Worldwide (Poland)).

Context: Value added tax – Directive 2006/112/EC – Article 66(a) to (c) – Transport and shipping services – Chargeability – Date on which payment is received and no later than 30 days from the date on which the services are supplied – Invoice issued earlier


Article in the EU VAT Directive

Article 66 of the EU VAT Directive 2006/112/EC

Article 66 (Chargeable Event and chargeability of VAT)

By way of derogation from Articles 63, 64 and 65, Member States may provide that VAT is to become chargeable, in respect of certain transactions or certain categories of taxable person at one of the following times:
(a) no later than the time the invoice is issued;
(b) no later than the time the payment is received;
(c) where an invoice is not issued, or is issued late, within a specified time no later than on expiry of the time-limit for issue of invoices imposed by Member States pursuant to the second paragraph of Article 222 or where no such time-limit has been imposed by the Member State, within a specified period from the date of the chargeable event.
The derogation provided for in the first paragraph shall not, however, apply to supplies of services in respect of which VAT is payable by the customer pursuant to Article 196 and to
supplies or transfers of goods referred to in Article 67.


Facts

  • In the course of its economic activity, TNT – a limited liability company established in Warsaw (Poland) – carries out supplies of courier, postal, transport and shipping services.
  • TNT issues VAT invoices to its customers once a week. For certain customers, who purchase numerous services, the frequency at which invoices are issued is a matter of agreement. In that case, the invoices cover all the services supplied to that specific customer in a particular taxable period. The deadline for payment of the amount due stated in the invoices is normally given as 7, 14 or 21 days after the date on which the invoice is issued. TNT takes account of the turnover arising from a given invoice in the taxable period in respect of which the invoice was issued.
  • Accordingly, for the purposes of establishing the time at which the liability to pay the tax arises, TNT does not divide the services covered by the invoice into courier/postal services and transport/shipping services. Since the invoices are issued no later than the final days of the taxable period, the tax on the services supplied in a given month is included in the registers and the VAT return is drawn up for the month of supply.
  • In the light of the above situation, TNT asked the Minister Finansów to issue an individual interpretation concerning the provisions of tax law applicable in the area of the tax on goods and services and, inter alia, on the question whether TNT had the right under Article 19(13)(2) of the VAT Law to take account of turnover in the taxable period in which the invoice was issued, even though it did not receive any payment in that period and 30 days had not elapsed since the service was supplied; and whether, if the first question is answered in the negative, TNT had the right to consider that the date on which the liability to pay the tax arose was the date on which the invoice was issued, in accordance with Article 19(4) of the VAT Law, without taking into account the requirements under Article 19(13)(2) of the VAT Law, contrary to Article 66 of Directive 2006/112.
  • In his individual interpretation of 14 December 2009, the Minister Finansów stated that TNT’s view was incorrect. As regards the courier and postal services supplied by TNT, the Minister Finansów considered that the liability to pay the tax arises under the general rules laid down in Article 19(1) and (4) of the VAT Law. In relation to the other services (transport and shipping services), the time when the liability to pay the tax arises must be fixed in accordance with Article 19(13)(2) of the VAT Law. In the case of those services, the tax due must be indicated in the VAT return for the month in which the liability to pay the tax arises and not in the return for the month in which the invoice documenting supply of the service is issued.
  • TNT subsequently brought an action before the Wojewódzki Sąd Administracyjny (Regional Administrative Court) in Warsaw. In support of its action, it claimed that it was entitled, in respect of all services supplied – whether mail delivery services or transport and shipping services – to take into account for VAT purposes turnover in the taxable period in which the invoice documenting the relevant services was issued, even though it did not receive any payment in that period and 30 days had not elapsed since the service was supplied.
  • By its judgment of 30 September 2010, the Wojewódzki Sąd Administracyjny dismissed the action brought by TNT, which then brought an appeal on a point of law before the Naczelny Sąd Administracyjny (Supreme Administrative Court).
  • By its appeal, TNT claims that the Wojewódzki Sąd Administracyjny erred in its interpretation of Article 19(13)(2)(a) and (b) of the VAT law, as it failed to take into account Articles 63 to 66 of the VAT Directive. TNT argues that, under Article 66 of the VAT Directive, the liability to pay VAT arises in relation to a particular event, but no later than the date on which the payment is received. The provisions of national law, however, provide – wrongly, according to TNT – that receipt of payment gives rise to the liability to pay VAT, but that such liability arises at the latest at a particular time (30 days) from the date on which the service is supplied.
  • During the examination of the appeal, the referring court has expressed doubts concerning the interpretation of Article 66 of the VAT Directive and considered that the substance of the pleas put forward by TNT should be assessed in the light of the interpretation of the provisions of that directive.

Questions

Are the provisions of Article 66(a), (b) and (c) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L347, p. 1, as amended) (‘Directive 2006/112’) to be interpreted as meaning that where a taxable person issues an invoice documenting the supply of a service covered by the power conferred on Member States by that article (derogation from Articles 63, 64 and 65 of Directive 2006/112), it is possible to determine the chargeability of the tax (liability to pay the tax) on the basis of Article 66(b) of Directive 2006/112 as arising on the date of payment, but no later than 30 days from the date on which the service is supplied?
Are the provisions of Article 66(a) and (b) of Directive 2006/112 to be interpreted as precluding the Polish national provisions in Article 19(13)(2)(a) and (b) of the Ustawa o podatku od towarów i usług (Law on the tax on goods and services) of 11 March 2004 (Dziennik Ustaw No 54, item 535, as amended) under which the time when the liability to pay the tax arises (the event on whose occurrence the tax becomes chargeable in respect of certain transactions) occurs in respect of transport and shipping services on receipt of payment in full or in part, but no later than 30 days from the date on which those services are supplied, even where an invoice laying down a later deadline for payment is issued and presented to the purchaser no later than seven days after the service is supplied and the purchaser of the service has the right to deduct input tax during the period in which he received the invoice, irrespective of whether or not he has paid for the service?

AG Opinion

None


Decision

Article 66 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2008/117/EC of 16 December 2008, is to be interpreted as precluding national legislation which provides that, in respect of transport and shipping services, value added tax is to become chargeable on the date on which payment is received in full or in part, but no later than 30 days from the date on which those services are supplied, even where the invoice has been issued earlier and specifies a later deadline for payment.


 

Source:


Summary

VAT liability for transport and shipping services.

A national scheme according to which VAT on transport and dispatch services becomes chargeable on the date of receipt of all or part of the price, but at the latest on the thirtieth day from the day on which those services are provided, even if the invoice is earlier issued and provides for a later payment term is not permitted.


 

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