On April 25, 2013, the ECJ issued its decision in the case C-74/11 (Commission v Finland).
Context: Failure of a Member State to fulfil obligations — Taxation — Directive 2006/112/EC — Articles 9 and 11 — National legislation permitting the inclusion of non-taxable persons in a group of persons which can be regarded as a single taxable person for VAT purposes and restricting the possibility of forming such a group to the financial and insurance sector
Article in the EU VAT Directive
Articles 9 and 11 of the EU VAT Directive 2006/112/EC
Article 9 (Taxable person)
1. ‘Taxable person’ shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.
Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as ‘economic activity’. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.
2. In addition to the persons referred to in paragraph 1, any person who, on an occasional basis, supplies a new means of transport, which is dispatched or transported to the customer by the vendor or the customer, or on behalf of the vendor or the customer, to a destination outside the territory of a Member State but within the territory of the Community, shall be regarded as a taxable person.
Article 11 (VAT grouping)
After consulting the advisory committee on value added tax (hereafter, the ‘VAT Committee’), each Member State may regard as a single taxable person any persons established in the territory of that Member State who, while legally independent, are closely bound to one another by financial, economic and organisational links.
A Member State exercising the option provided for in the first paragraph, may adopt any measures needed to prevent tax evasion or avoidance through the use of this provision.
Facts
- On 23 September 2008, the Commission sent the Republic of Finland a letter of formal notice in which it drew that Member State’s attention to the possible incompatibility, with Articles 9 and 11 of the VAT Directive, of the law relating to VAT which, on the one hand, makes no distinction depending on whether a member of a VAT group or a person requesting membership of such a group is or is not subject to VAT and, on the other hand, limits the application of the VAT group scheme to providers of financial services and insurance services. In accordance with Article 226 EC, it invited that Member State to submit its observations.
- In their reply letter of 17 November 2008, the Finnish authorities contested the Commission’s interpretation of Article 11 of the VAT Directive.
- Not being satisfied with that response, the Commission issued a reasoned opinion on 20 November 2009, to which the Republic of Finland replied, by letter of 19 January 2010, opposing the Commission’s allegations and claiming that the provisions of the VAT Law were in line with Articles 9 and 11 of the VAT Directive.
Questions
The European Commission asks the Court to find that, by authorizing non-taxable persons to join a group of persons considered to be a single person subject to value added tax (hereinafter, respectively, a “ VAT group’ and ‘VAT’) and by limiting the possibility of forming a VAT group to providers of financial services and insurance services, the Republic of Finland has failed to fulfill its obligations under Articles 9 and 11 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ L 347, p. 1, ‘the VAT Directive’).
AG Opinion
None
Decision
The Court:
Dismisses the action;
Orders the European Commission to pay the costs; Orders the Czech Republic, the Kingdom of Denmark, Ireland, the Kingdom of Sweden and the United Kingdom of Great Britain and Northern Ireland to bear their own costs.
Summary
Source
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