On July 9, 2015, the ECJ issued its decision in the case C-144/14 (Cabinet Medical Veterinar Dr. Tomoiagă Andrei).
Context: Reference for a preliminary ruling — Value added tax (VAT) — Directive 2006/112/EC — Articles 273 and 287 — Obligation to register a taxable person for VAT purposes — Whether veterinary services are taxable — Principle of legal certainty — Principle of protection of legitimate expectations
Article in the EU VAT Directive
Articles 273, 287 of the EU VAT Directive 2006/112/EC.
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.
Article 287
Member States which acceded after 1 January 1978 may exempt taxable persons whose annual turnover is no higher than the equivalent in national currency of the following amounts at the conversion rate on the day of their accession:
(1) Greece: 10 000 European units of account;
(2) Spain: ECU 10 000;
(3) Portugal: ECU 10 000;
(4) Austria: ECU 35 000;
(5) Finland: ECU 10 000;
(6) Sweden: ECU 10 000;
(7) Czech Republic: EUR 35 000;
(8) Estonia: EUR 16 000;
(9) Cyprus: EUR 15 600;
(10) Latvia: EUR 17 200;
(11) Lithuania: EUR 29 000;
(12) Hungary: EUR 35 000;
(13) Malta: EUR 37 000 if the economic activity consists principally in the supply of goods, EUR 24 300 if the economic activity consists principally in the supply of services with a low value added (high inputs), and EUR 14 600 in other cases, namely supplies of services with a high value added (low inputs);
(14) Poland: EUR 10 000;
(15) Slovenia: EUR 25 000;
(16) Slovakia: EUR 35 000 ;
(17) Bulgaria: EUR 25 600;
(18) Romania: EUR 35 000 ;
(19) Croatia: EUR 35 000.
Facts
- In May 2011, following a tax inspection, the tax authority demanded from the veterinary practice payment of VAT, together with surcharges and interest, relating to veterinary services which it had provided between 1 October 2007 and 31 December 2010.
- The veterinary practice challenged that decision before the Tribunalul Maramureș (Regional Court, Maramureș) on the ground that, until 1 January 2010, the Romanian legislation exempted those activities from VAT, or that there was at least a doubt in that respect which was only resolved following the entry into force on 1 January 2010 of Regulation No 1620/2009.
- The tax authority, in contrast, contends that that exemption ceased to be applicable as of 1 January 2007, the date when Law No 343/2006, which removed the reference to veterinary activities from the list of services exempt from VAT, came into force. In addition, the tax authority submits that Regulation No 1620/2009 could not in any event amend a national legal provision of a higher level, that is to say a legislative text, and that that regulation merely clarified the applicable legal regime.
- In the main proceedings, the referring court seeks guidance on the obligations of tax authorities under Article 273 of Directive 2006/112, and in particular on the issue of whether that article requires the tax authority to register of its own motion a taxable person for VAT purposes as soon as the person concerned submits tax returns revealing that his income exceeds the VAT exemption threshold.
- The referring court is also uncertain as to whether the principle of legal certainty precludes a demand for payment of VAT in circumstances such as those in the main proceedings where the tax authority did not comply with that obligation to register of its own motion a taxable person for VAT purposes and did not in practice apply that tax to veterinary services during the period from 1 October 2007 to 31 December 2010. The referring court also seeks guidance on the implications of the fact that the judgment in Commission v Italy 122/87, EU:C:1988:256 was not published in Romanian during that period.
Questions
(1) Must Article 273 and point 18 of Article 287 of Directive [2006/112] be interpreted as meaning that the national tax authority was under an obligation to register a taxable person for VAT purposes and to find that person liable to pay the VAT, and the related ancillary debts, arising from the fact that the tax exemption threshold had been exceeded, with effect from the date on which the taxable person submitted tax returns to the competent tax authority showing that the VAT exemption threshold had been exceeded?
(2) If the answer to Question 1 is in the affirmative, does the principle of legal certainty preclude national practice on the basis of which the tax authority has established retroactively that a taxable person is liable to pay VAT because the supply of veterinary services is not exempt from VAT and the tax exemption threshold was exceeded, in a situation in which:
– the tax authority did not, of its own motion, register the taxable person for VAT purposes and did not find that person liable to pay VAT from the moment when the taxable person submitted the tax returns showing that the threshold had been exceeded, but did so only later, after the Detailed Rules for the Implementation of the Tax Code had been amended by Regulation No 1620/2009 to the effect that the exemption provided for under Article 141(1)(a) of the Tax Code does not apply to the supply of veterinary services, as established by the judgment in Commission v Italy 122/87 EU:C:1988:256, and in relation to a period preceding that amendment;
– through the tax returns submitted by the taxable person, the tax authority had become aware, before the Detailed Rules for the Implementation of the Tax Code were amended by Regulation No 1620/2009 in the manner described above, that the exemption threshold had been exceeded;
– before the publication of Regulation No 1620/2009, the tax authority did not adopt in its area of competence — which also covers the taxable person in the main proceedings — any administrative tax measures designed to establish that taxable persons which are veterinary practices had failed to register for the purposes of VAT incurred as a consequence of the VAT payment exemption threshold being exceeded and, consequently, intended to establish the liability of those persons for VAT;
– during the period preceding the adoption and entry into force of Regulation No 1620/2009, the judgment in Commission v Italy 122/87 EU:C:1988:256 had not been published in any form in the Romanian language?
AG Opinion
None
Decision
1. The first paragraph of Article 273 of Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2009/162/EU of 22 December 2009, does not require Member States to register of their own motion a taxable person for the purposes of collecting value added tax solely on the basis of tax returns, other than those relating to value added tax, where those returns would have made it possible to establish that the taxable person had exceeded the exemption threshold for value added tax.
2. The principles of legal certainty and protection of legitimate expectations do not preclude a tax authority from deciding that veterinary services are subject to value added tax in circumstances such as those in the main proceedings, provided that that decision is based on clear rules and the practice of that authority was not such as to create in the mind of a reasonably prudent economic operator a reasonable expectation that value added tax would not be applied to those services, that being a matter for the referring court to establish.
Summary
Member States are not obliged to identify a taxable person ex officio for VAT on the sole basis of tax returns, other than for VAT, even if on that basis it could have been established that this taxable person has exceeded the exemption threshold for the small business scheme.
The principle of legal certainty and the principle of legitimate expectations do not preclude a tax authority from deciding that veterinary services are subject to VAT in circumstances such as those at issue in the main proceedings, provided that that decision is based on clear rules and economic operator did not create reasonable confidence that those services were not taxable.
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