On December 18, 2014, the ECJ issued its decision in the case C-639/13 (Commission v Poland).
Context: State failure – Directive 2006/112/EC – VAT – Reduced rate – Articles intended for fire protection
Article in the EU VAT Directive
Articles 96, 97, 98 of the EU VAT Directive 2006/112/EC.
Article 96 (Standard VAT rate)
Member States shall apply a standard rate of VAT, which shall be fixed by each Member State as a percentage of the taxable amount and which shall be the same for the supply of goods and for the supply of services.
Article 97 (Standard VAT rate)
The standard rate shall not be lower than 15 %.
Article 98 (Reduced VAT rate)
1. Member States may apply either one or two reduced rates.
2. The reduced rates shall apply only to supplies of goods or services in the categories set out in Annex III.
The reduced rates shall not apply to electronically supplied services with the exception of those falling under point (6) of Annex III.
3. When applying the reduced rates provided for in paragraph 1 to categories of goods, Member States may use the Combined Nomenclature to establish the precise coverage of the category concerned.
Article 99 ( (Reduced VAT rate)
1. The reduced rates shall be fixed as a percentage of the taxable amount, which may not be less than 5 %.
2. Each reduced rate shall be so fixed that the amount of VAT resulting from its application is such that the VAT deductible under Articles 167 to 171 and Articles 173 to 177 can normally be deducted in full.
3. By way of derogation from paragraphs 1 and 2 of this Article, and in addition to the rates referred to in paragraph 1 of Article 98, Member States which, on 1 January 2017, applied, in accordance with Union law, reduced rates lower than the minimum laid down in this Article or granted exemptions with deductibility of the VAT paid at the preceding stage to the supply of certain goods referred to in point (6) of Annex III, may also apply the same VAT treatment where that supply is supplied electronically, as referred to in point (6) of Annex III.
Facts
Form of order sought
declare that, by applying a reduced rate of VAT to goods intended to provide fire protection, mentioned in Annex 3 to the Law of 11 March 2004 on tax on goods and services, the Republic of Poland has failed to fulfil its obligations under Articles 96 to 98 of Directive 2006/112/EC on the common system of value added tax, 1 in conjunction with Annex III to that directive;
order the Republic of Poland to pay the costs of the proceedings.
Pleas in law and main arguments
In support of its action, the Commission submits that the Republic of Poland applies a reduced rate of VAT to goods which are not mentioned in Annex III to the directive. Those goods, however, require to be taxed at the standard rate as they cannot come within the scope of the exception provided for in Article 98(2) of the directive. In addition, the argument set out by Poland is related exclusively to economic policy and cannot be taken into consideration for the purpose of providing legal justification for breaching the provisions of the directive. In the Commission’s view, there can therefore be no doubt that the provisions of Polish law have not been adapted to the requirements of the directive.
Decision
By applying a reduced rate of value added tax to supplies of goods intended for fire protection, listed in appendix no.3 of the law of 11 March 2004, relating to the tax on goods and services, the Republic of Poland has failed to fulfill its obligations under Articles 96 to 98 of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax, read in combination with Annex III of this directive.
Summary
Reduced rate – Items intended for fire protection
Poland has failed to fulfill its obligations under Articles 96 to 98 of the VAT Directive in conjunction with Annex III to that Directive by applying a reduced VAT rate to the supply of fire protection goods listed in Annex 3 by the law of 11 March 2004 on the tax on goods and services.
Source:
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