On May 28, 1998, the ECJ issued its decision in the case (C-3/97).
Context: Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Sixth Directive 77/388/EEC – Scope – Supply of counterfeit perfume products
Article in the EU VAT Directive
Article 2 of the Sixth VAT Directive (Article 2(1) of the EU VAT Directive 2006/112/EC).
Article 2
1. The following transactions shall be subject to VAT:
(a) the supply of goods for consideration within the territory of a Member State by a taxable person acting as such;
(b) the intra-Community acquisition of goods for consideration within the territory of a Member State by:
(i) a taxable person acting as such, or a non-taxable legal person, where the vendor is a taxable person acting as such who is not eligible for the exemption for small enterprises provided for in Articles 282 to 292 and who is not covered by Articles 33 or 36;
(ii) in the case of new means of transport, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1), or any other non-taxable person;
(iii) in the case of products subject to excise duty, where the excise duty on the intra-Community acquisition is chargeable, pursuant to Directive 92/12/EEC, within the territory of the Member State, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1);
(c) the supply of services for consideration within the territory of a Member State by a taxable person acting as such;
(d) the importation of goods.
Facts
- Mr Goodwin and Mr Unstead were both convicted of the offence of being knowingly concerned in the taking of steps with a view to the fraudulent evasion of VAT, contrary to Section 72(1) of the Value Added Tax Act 1994.
- Mr Goodwin was accused of having purchased counterfeit perfume products and of having sold them when he was not registered for VAT, ensuring thereby that he did not have to pay any VAT. Mr Unstead was accused of having participated in the manufacture, production, distribution and sale of such products through a business organisation which he ran together with other persons, and which was not registered for VAT and therefore did not pay VAT
- Mr Goodwin and Mr Unstead appealed against their convictions to the Court of Appeal. Without denying that they had carried out the transactions as charged, they submitted that, on a proper construction of the Sixth Directive, supplies of counterfeit perfume products are not subject to VAT.
Questions
Does the supply of counterfeit perfume products fall within the scope of Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes (the Sixth Directive)?
AG Opinion
Article 2 of the 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 must be interpreted as making the supply of counterfeit products, such as perfumes, subject to VAT.
Decision
On a proper construction of Article 2 of Sixth Council Directive 77/388/EEC of 17May 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,VAT is payable on the supply of counterfeit perfumes.
Summary
Article 2 of the Sixth Directive must be interpreted as meaning that the supply of counterfeit perfumes is subject to VAT.
Source
Similar ECJ cases
- C-294/82 Einberger v HauptzollamtFreiburg
- C-269/86 Mol v Inspecteur der Invoerrechten enAccijnzen
- C-289/86 Happy Family v Inspecteur derOmzetbelasting
- C-343/89 Witzemann
Reference to the case in the other EU MS
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