On January 30, 2024, the ECJ isued the Judgment in the case C-442/22 (P Sp. z o.o.).
This case deals with Article 203 in the EU VAT Directive 2006/112/EC.
Article 203 (Persons liable for payment of VAT to the tax authorities)
VAT shall be payable by any person who enters the VAT on an invoice.
Facts
- The appellant company, P Sp. z o.o., issued fraudulent VAT invoices between January 2010 and April 2014, totaling PLN 1,497,847. The invoices were not recorded in the company’s sales register, and the output VAT was neither paid nor accounted for.
- The fraudulent invoices were issued by an employee, P.K., without the knowledge or consent of the company’s board. P.K. issued summary invoices for receipts collected by employees of a petrol station she managed, and the employees received financial benefits from the scheme.
- The tax authorities found that the employer failed to exercise due diligence in preventing the issuance of fraudulent invoices, and the company’s appeal against the tax decision was dismissed by the Regional Administrative Court.
Questions
- The first question seeks clarification on the interpretation of Article 203 of Council Directive 2006/112/EC. It asks whether, in a situation where an employee issues a fraudulent invoice with the employer’s details as the taxable person without their knowledge or consent, the liability for paying the VAT falls on the employer (whose details were unlawfully used) or the employee (who entered the VAT on the invoice)
- The second question explores whether the liability for paying VAT, as discussed in the first question, is affected by whether the employing VAT taxable person can be deemed to have failed to exercise due diligence in supervising the employee who unlawfully used their details on the VAT invoice.
AG Opinion
- Article 203 of Directive 2006/112/EC states that the person who appears to have issued an invoice for fake transactions is responsible for paying the VAT shown on the invoice.
- However, this is only the case if
- the recipient of the invoice cannot be denied the right to deduct the input tax
- the invoice was issued by someone connected to the person responsible, and
- the person responsible did not act in good faith.
- If the person responsible is at fault, such as through the poor selection or supervision of employees, then they can be held liable for the VAT.
Decision
Article 203 of the directive states that if an employee issues a fake invoice with the employer’s details for VAT purposes without their knowledge or consent, the employee is considered responsible for the VAT unless the employer did not properly supervise the employee’s actions.
See also
- ECJ Case C-442/22 (P Sp. z o.o.) – Judgment – Employee who issued empty invoice is responsible to report them
- Roadtrip through ECJ Cases – Liability to pay VAT – VAT shall be payable by any person who enters the VAT on an invoice (Art. 203)
- Join the Linkedin Group on ECJ VAT Cases, click HERE
- VATupdate.com – Your FREE source of information on ECJ VAT Cases
