On November 16, 2023, the ECJ issued the AG Opinion in the case C-606/22 (Dyrektor Izby Administracji Skarbowej w Bydgoszczy).
Context: Reference for a preliminary ruling – Common system of value added tax – Directive 2006/112/EC – Taxable amount – Principle of fiscal neutrality – Mistake as to the correct tax rate – Adjustment of the tax debt as a result of a change in the taxable amount – National practice of refusing a claim for a refund on account of a change in the taxable amount on the ground that no invoices were issued, which had to be adjusted beforehand – Adjustment of invoices not necessary where there are no invoices to final customers – No risk of loss of tax revenue – Plea of unjust enrichment – Principle of nemo auditur propriam turpitudinem allegans
Article in the EU VAT Directive
Article 73 in the EU VAT Directive 2006/112/EC.
Article 73 (Taxable amount)
In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply.
- On 27-01-2016 B. sp. j. (the applicant) corrected her VAT return for certain months in the years 2012-2014 due to the application of a VAT rate of 8%, instead of the basic rate of 23% previously applied, to sales of services in the field of leisure activities (access to club areas and undisturbed use of the infrastructure).
- By decision of 22-06-2017, the head of the second tax office refused to confirm that the applicant had paid too much VAT for the aforementioned tax periods.
- The Director of the Bydgoszcz Chamber of the Tax Administration (DIAS) confirmed that decision. The DIAS pointed out that the burden of VAT on the services provided was borne by the final consumers, that is, the natural persons to whom this tax has been charged through the price for the relevant service.
- If the VAT were refunded to the applicant, she would receive an unjustified favor from the Treasury.
- In this situation, the amount of VAT must be refunded to the person who has lost this value, in other words to the said natural persons.
- The applicant appealed against the decision of the DIAS.
- The administrative court of first instance (WSA) has annulled the decision of the DIAS.
- In the opinion of the WSA, a taxpayer has the right to review the taxable amount and the tax due in respect of sales substantiated by sales receipts.
While the Court has ruled on the basis of Article 203 of the VAT Directive with regard to the refund of wrongly invoiced VAT, that the VAT Directive does not contain any provision concerning the revision of wrongly invoiced VAT by the issuer of the invoice, but whereas it is for the Member States to provide in their national law, in order to ensure the neutrality of VAT, the possibility, where the issuer of the invoice proves that he is acting in good faith, to revise all taxes wrongly stated on the invoice . The taxpayer in this case has argued that the fact that he applied the basic rate (23 %) to the services provided is explained by the fact that the tax authorities have indicated in their rulings that such services should be taxed at that VAT rate. It was only when the tax authorities changed their position and determined that these services should be taxed at a reduced rate (8%) that the taxpayer decided to review the sales reported in his returns. This therefore proves that this taxpayer must be presumed to have acted in good faith. In these circumstances, the reasoning of the national tax authorities that there is no legal basis for a revision may raise doubts as to its correctness in the light of Articles 1(2) and 73 of the VAT Directive as well as the principles of neutrality, proportionality and equal treatment. the taxpayer decided to review the sales reported in his returns. This therefore proves that this taxpayer must be presumed to have acted in good faith. In these circumstances, the reasoning of the national tax authorities that there is no legal basis for a revision may raise doubts as to its correctness in the light of Articles 1(2) and 73 of the VAT Directive as well as the principles of neutrality, proportionality and equal treatment. the taxpayer decided to review the sales reported in his returns. This therefore proves that this taxpayer must be presumed to have acted in good faith. In these circumstances, the reasoning of the national tax authorities that there is no legal basis for a revision may raise doubts as to its correctness in the light of Articles 1(2) and 73 of the VAT Directive as well as the principles of neutrality, proportionality and equal treatment.
Should Article 1(2) and Article 73 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1, as amended) and the principles of neutrality, proportionality and equal treatment are interpreted as precluding a practice of national tax authorities according to which, by reference to the lack of a national legal basis and to the existence of unjust enrichment,no revision of the taxable amount and of the tax due is allowed when sales of goods and services to consumers at an excessive VAT rate have been recorded using a cash register and confirmed by means of fiscal receipts instead of VAT invoices, without the price (gross value of sales) being changed as a result of that revision?
Article 1(2) and Article 73 of the VAT Directive, in conjunction with Article 78(a) thereof, preclude a practice of the national tax authorities whereby an adjustment of the tax owed in the tax return is considered inadmissible if supplies of goods and services to consumers were made at an excessive VAT rate and only cash register receipts – that is to say no VAT invoices – were issued. In any event, the taxable person is not unjustly enriched in the case of a fixed amount agreed with a final consumer.
In other words:
Article 1(2), Article 73, and Article 78(a) of the VAT Directive (a set of regulations governing Value Added Tax) prohibit a practice followed by national tax authorities. This practice involves disallowing adjustments to the amount of tax owed on a tax return if goods or services were provided to consumers at a higher than normal VAT rate, and if only cash register receipts were issued instead of proper VAT invoices.
However, it’s important to note that even if such adjustments are not permitted, the taxable person involved is not unfairly benefiting from the situation if they have agreed upon a fixed amount with the consumer.
Similar ECJ cases
- Roadtrip through ECJ VAT Cases – Focus on Taxable Amount – General Rule (Art. 73)
- C-309/06 (Marks & Spencer) – Business should be able to recover overpaid VAT regardless of unjust enrichment
- C-314/17 – Geocycle Bulgaria EOOD – Order – Right to deduct incorrectly invoiced VAT even if no possibility to adjust VAT on invoice
- C-835/18 Terracult – Correction of invoices for purchases subject to reverse charge after the assessment became final
- C-48/20 (P) – Input VAT recovery relating to unduly invoiced VAT
Reference to the case in the other EU MS
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