Background
- The applicant failed to submit VAT returns since June 2013.
- A statement of adjustment was issued in 2015 for the year 2013 but received no response, so a formal record of assessment was sent.
- No returns were submitted for 2014 and 2015 despite reminders, resulting in an ex officio assessment.
- In 2017, a special account was set up due to non-submission of returns and non-payment of VAT. Sums due include VAT, penalties and interest. Penalties are 20% of the gross amount of VAT without considering deductible VAT.
Questions
- Do provisions in national legislation, such as Article 70(1) of the VAT Code, which penalize errors in taxable transactions by imposing a flat-rate fine of 20% of the tax due without allowing for deduction of input tax paid, violate Articles 62(2), 63, 167, 206, 250, and 273 of Council Directive 2006/112/EC and the principle of proportionality, neutrality, and the interpretation in the EN.SA (C-712/17) judgment?
- Does this answer change if the taxable person voluntarily or involuntarily pays the tax owed following an inspection?
Decision
- National legislation can penalize failure to declare and pay VAT with a flat-rate fine of 20% of the VAT amount due, after deducting deductible VAT, as long as the fine is proportionate.
- This is allowed under Article 273 of Council Directive 2006/112/EC.
- The referring court must ensure that the fine imposed in the case in question is proportionate.
See also
