Value Added Tax
ECLI: EU: C: 2017: 515
Opinion Advocate General Wahl CJEU joined cases C-374/16, C-375/16
Common system of value added tax – Directive 2006/112/EC – Article 178(a) – Right of deduction – Conditions of exercise– Article 226(5) – Details required on invoices – Address of the taxable person – Good faith meeting the requirements for deduction of input tax – Evasion of the law or abuse of rights – National procedures – Principle of effectiveness
RGEX GmbH is a limited liability company trading in motor vehicles. The company has been in liquidation since 2015. In the 2008 VAT return RGEX declared tax-exempt Intra-Union supplies of motor vehicles to buyers in other EU Member States, as well as a tax deduction of approximately € 2 million relating to motor vehicles obtained from EXTEL GmbH.
The competent Finanzamt (Tax Office, Germany) however did not agree with the return. The Intra-Union supplies of motor vehicles to Spain which had been declared as tax-exempt were found taxable, on the ground that the motor vehicles in question had not been delivered in Spain, but had been sold in Germany instead. According to the tax authorities, the corresponding input VAT charged on the invoices issued by EXTEL was not deductible, because EXTEL was a ‘ghost company’, which did not have any establishment at the address mentioned on the invoice.
Mr Igor Butin runs a car dealership in Germany. He claimed VAT deduction based on invoices for a number of vehicles he bought from company Z. The vehicles were purchased for the purpose of resale. Since the supplier Z operates exclusively through the internet, the vehicles were delivered to Mr Butin either in the street where Z has its corporate seat, or at public locations, such as railway station forecourts.
The German tax authority is of the opinion that the VAT charged on the invoices from Z is not deductible because the supplier’s address stated on the invoices is incorrect. Nothing at the stated address would indicate the presence of an undertaking: the address in question was only a letterbox where Z only fetched his mail.
the Bundesfinanzhof (Federal Finance Court) as the referring court, decided to uphold the proceedings and to refer the following questions to the CJEU for a preliminary ruling:
- Does Article 226(5) of [the VAT Directive] require the taxable person to indicate an address at which he carries [out] his economic activities?
- If the answer to question 1 is in the negative,
- Is a letterbox address sufficient as an indication of address pursuant to Article 226(5) of the VAT Directive?
- Which address must a taxable person who operates a business undertaking (in the internet trade, for example) with no business premises indicate on an invoice?
A-G Wahl concludes that Article 226(5) of the VAT Directive precludes national legislation that subjects the right to deduction of value added tax to the indication on the invoice of the address where the issuer carries out its economic activity.
Furthermore, the Advocate General considers the German legislation, according to which, where the formal conditions of invoices are not fulfilled, deduction is granted only if the taxable person proves that he took every measure that could reasonably be required of him in order to satisfy himself that the content of the invoice was correct, in violation of the VAT Directive.