Flashback on ECJ Cases – C-421/10 (Stoppelkamp) – “A taxable person is established abroad” if the place where he has established his business is abroad

On October 6, 2011, the ECJ issued its decision in the case C-421/10 (Stoppelkamp).

Context: VAT – Sixth Directive – Article 21(1)(b) – Determination of the place of reference for tax purposes – Services provided by a supplier residing in the same country as the customer but having established the seat of his economic activities in another country – Concept of ‘taxable person established abroad’

Article in the EU VAT Directive

Article 21(1)(b) of the Sixth VAT Directive (Article 196 of the EU VAT Directive 2006/112/EC).

Article 196
VAT shall be payable by any taxable person, or non-taxable legal person identified for VAT purposes, to whom the services referred to in Article 44 are supplied, if the services are supplied by a taxable person not established within the territory of the Member State.

Facts

In the course of 2002, Mr Raab transferred the seat of his economic activity from Germany to Austria. He then declared, at two locations in Austria, that he was exercising a professional activity described as ‘Überstellungs-, Administrations- und Fahrdienst’ (transfer, administration and transport services). His economic activity consisted in the supply of his own staff to companies established in Lower Bavaria to perform transport services throughout Germany.
On 1 July 2002, Mr Raab also transferred his personal residence from Germany to Austria. However, according to the findings of the competent customs authorities, Mr Raab, even after this official change of residence, continued frequently to live in Germany.
The Austrian fiscal authorities issued a VAT identification number to Mr Raab. He invoiced his services to German transport companies exclusive of VAT with the statement ‘the person to whom the services were supplied is liable for payment of tax in accordance with Paragraph 13b of the UStG’.
The Finanzamt took the view that the conditions for the reverse charge procedure imposing the tax liability on the customer under Paragraph 13b(1), No 1, first sentence, in conjunction with Paragraph 13b(4), were not met. According to the Finanzamt, Mr Raab was not a taxable person established abroad since his personal residence in the year at issue had been within the country. The Finanzamt therefore issued a VAT assessment notice to Mr Raab’s address.
Mr Raab brought an action against that notice. The first-instance court upheld that action on the ground that, in 2002, the seat of Mr Raab’s economic activity was in Austria. In the light of the provisions of Article 21(1)(a) of the Sixth Directive, Paragraph 13b of the UStG, it ruled, had to be interpreted as meaning that, in order for a taxable person to be established abroad, the place of the seat of the undertaking alone was relevant. Thus, where, as in the case before that court, such a seat existed, the existence, at the same time, of a personal residence within the country was irrelevant.
In support of its appeal on a point of law (‘Revision’) to the Bundesfinanzhof (Federal Finance Court), the Finanzamt submits that the first-instance court infringed Paragraph 13b(4) of the UStG, which, in its view, makes it clear that a trader cannot be considered to be established abroad if he is resident within the country.
The Bundesfinanzhof expresses doubts as to whether the German legislation is compatible with European Union law because, according to that German legislation, the criterion of ‘trader established abroad’, laid down as a condition for the application of the reverse charge procedure, is not satisfied where the trader has established his business outside Germany, but has a personal residence within Germany. Under Article 21(1)(b) of the Sixth Directive, it is sufficient, in order for the taxable person to whom the services are supplied to be liable for payment of the VAT, that the services be supplied by an ‘im Ausland ansässigen Steuerpflichtigen’ (taxable person not established within the country). However, that concept is not defined in Article 21 of the Sixth Directive or in any other provision of that directive.

Questions

Is a taxable person to be regarded as “a taxable person established abroad” within the meaning of Article 21(1)(b) of [the Sixth Directive] simply because the place where he has established his business is abroad, or is it an additional requirement that his personal residence must also be abroad?

AG Opinion

None

Decision

Article 21(1)(b) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, as amended by Council Directive 2000/65/EC of 17 October 2000, must be interpreted as meaning that, in order for him to be considered a ‘taxable person who is not established within the territory of the country’, it is sufficient that the taxable person should have established the seat of his economic activity outside that country.

Personal comments/VATupdate

Source: