Croatian excise duty on fictitious supplies of petroleum products in breach of EU law
- Breach of EU Law: The General Court ruled that Croatia violated EU law by imposing excise duty on fictitious supplies of excise products based on false invoices.
- Invalidation of VAT Deductions: The Croatian tax authorities denied MK’s right to deduct VAT due to forged invoices for non-existent petroleum products, leading to a tax assessment against MK.
- Protection Scheme Irrelevance: Croatia’s justification for the excise duty scheme—aimed at protecting tax interests and preventing abuse—was deemed irrelevant, as the duty did not pertain to illegally obtained energy products.
Source Taxlive
- Facts of the Case: The case involves MK, a Croatian business owner, who was assessed excise duty for petroleum products based on falsified invoices. The invoices indicated fictitious supplies of energy products that never occurred, leading to a tax assessment of HRK 226,837.09 (approximately EUR 30,125) by the Croatian customs authorities.
- Legal Questions: The Upravni sud u Osijeku (Administrative Court, Osijek) sought clarification from the Court of Justice regarding whether Articles 7 and 8 of Directive 2008/118/EC preclude national legislation requiring the payment of excise duty on goods that were never released for consumption, particularly when based on falsified invoices.
- Court’s Decision: The General Court ruled that Article 7 of Directive 2008/118 must be interpreted as prohibiting national legislation that imposes excise duty based on fictitious supplies appearing on falsified invoices.
- Justification for the Decision: The Court emphasized that excise duty becomes chargeable only when goods are released for consumption, as defined in Article 7(2) of the Directive. Since the goods in question were neither released nor supplied, the imposition of excise duty was inconsistent with EU law, which mandates uniformity in the interpretation of tax legislation across Member States.
- Implications: The ruling reinforces the principle that tax obligations must be based on actual transactions and consumption rather than on fabricated documents, thus protecting businesses from unjust tax liabilities stemming from fraudulent activities. The decision also highlights the balance between Member States’ rights to protect tax revenue and adherence to EU harmonization principles.
Source Curia
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