Tax Updates

ECJ: VAT import and ICS

November 12, 2018

On 25/10/2018, the ECJ ruled on reference C-528/17* re VAT exemption upon import.

According to the Court the EU rules must be interpreted to the effect that, in circumstances where the taxable importer and supplier benefitted from an exemption from import VAT on the basis of an authorisation issued after a prior examination by the competent customs authorities in the light of the evidence provided by that taxable person, the latter is not required to pay value added tax after the event where it is revealed, during a subsequent examination, that the substantive conditions for the exemption had not been met, except where it is established, in the light of objective evidence, that that taxable person knew, or should have known, that the supplies subsequent to the imports at issue were involved in fraud committed by the customer and that he did not take all reasonable steps in his power to avoid that fraud, which is a matter for the referring court to determine.

 

*All rulings of the ECJ should be read in the concrete context.

ECJ: DTT

November 12, 2018

On 24/10/2018, the ECJ ruled on reference C-602/17* re double tax treaties application.

The Court found that the EU rules do not preclude a tax scheme of a Member State under a tax convention for the avoidance of double taxation, such as that at issue in the main proceedings, which makes the exemption of the income of a resident which arises in another Member State and relates to employment in that State subject to the condition that the activity in respect of which the income is paid is actually performed in that State.

 

*All rulings of the ECJ should be read in the concrete context.

ECJ: VAT credit

October 17, 2018

On 17/10/2018, the ECJ ruled on a VAT reference C-249/17* re VAT credit.

According to the Court art. 4 and 17 of the Sixth Council Directive must be interpreted as conferring on a company, such as that at issue in the main proceedings, which intends to acquire all the shares of another company in order to pursue an economic activity consisting in the provision of management services subject to VAT to that other company, the right to deduct, in full, input VAT paid on expenditure relating to consultancy services provided in the context of a takeover bid, even if ultimately that economic activity was not carried out, provided that the exclusive reason for that expenditure is to be found in the intended economic activity.

 

*All rulings of the ECJ should be read in the concrete context.

ECJ: VAT credit

September 20, 2018

On 05/07/2018, the ECJ judged on VAT reference C-320/17* re VAT credit.

The Court ruled that the letting of a building by a holding company to its subsidiary amounts to ‘involvement in the management’ of that subsidiary, which must be considered to be an economic activity, within the meaning of Article 9(1) of that directive, giving rise to the right to deduct the VAT on the expenditure incurred by the company for the purpose of acquiring shares in that subsidiary, where that supply of services is made on a continuing basis, is carried out for consideration and is taxed, meaning that the letting is not exempt, and there is a direct link between the service rendered by the supplier and the consideration received from the beneficiary. Expenditure connected with the acquisition of shareholdings in subsidiaries incurred by a holding company which involves itself in the subsidiaries’ management by letting them a building and which, on that basis, carries out an economic activity has to be regarded as belonging to its general expenditure and the VAT paid on that expenditure must, in principle, be capable of being deducted in full.

Expenditure connected with the

ECJ: VAT credit

September 20, 2018

On 12/09/2018, the ECJ ruled on VAT reference C-69/17* re VAT credit.

According to the Court the EU rules preclude national legislation under which it is permissible for the tax authorities to refuse,on account of a failure to submit tax returns, a taxable person which has made acquisitions in the period during which its VAT identification number was revoked the right to deduct VAT on those acquisitions using value added tax returns filed — or invoices issued — after the reactivation of its identification number, on the sole ground that those acquisitions took place in the period during which its VAT identification number was de-activated and where the substantive requirements have been satisfied and the right of deduction is not being invoked fraudulently or abusively.

 

*All rulings of the ECJ should be read in the concrete context.

ECJ: VAT adjustment

September 14, 2018

On 11/04/2018, the ECJ ruled on VAT reference C-532/16* re VAT adjustment.

According to the Court:

  • article 184 of the VAT Directive must be interpreted as meaning that the obligation to adjust undue VAT deductions set down in that article also applies to cases where the initial deduction could not be made lawfully because the transaction giving rise to that deduction was exempt from VAT. By contrast, Articles 187 to 189 of Directive 2006/112 must be interpreted as meaning that the mechanism for the adjustment of undue VAT deductions provided for in those articles is not applicable in such cases, in particular in a situation such as that at issue in the main proceedings, where the initial VAT deduction was unjustified as it concerned a VAT-exempt transaction relating to the supply of land;
  • article 186 of the Directive must be interpreted as meaning

ECJ: interest on WHT

August 7, 2018

On 25/07/2018, the ECJ published its decision on the first Bulgarian reference on direct taxation C-553/16*.

According to the Court EU rules preclude legislation of a Member State, such as that at issue in the main proceedings, whereby the payment of income by a resident company to a company established in another Member State is, in principle, subject to withholding tax, except where otherwise provided in the double taxation convention entered into between those two Member States, if that legislation requires the resident company, which neither deducts nor pays that sum to the tax authorities of the first Member State, to pay irrecoverable default interest for the period from the expiry of the time limit for payment of the income tax up to the date on which the non-resident company proves that the requirements for the application of the double taxation convention have been fulfilled, even though, in accordance with that convention, the non-resident company is not liable to pay any tax in the first Member State or the amount thereof is lower than that normally payable under the tax law of that Member State.

 

*All rulings of the ECJ should be read in the concrete context.

ECJ: VAT exemption

June 26, 2018

On 20/06/2018, the ECJ ruled on VAT reference C-108/17* re VAT exemption.

The Court found that:

  • the competent authorities of a Member State are precluded from refusing exemption from VAT on importation on the sole ground that, following a change of circumstances after the importation, the goods in question have been supplied to a taxable person other than the person whose VAT identification number was stated in the import declaration, where the importer has communicated all the information on the identity of the new purchaser to the competent authorities of the Member State of import, provided that it is shown that the substantive conditions for the exemption of the subsequent intra-Community supply are actually satisfied;
  • documents which confirm the transport of goods from a

ECJ: taxable supply

June 19, 2018

On 13/06/2018, the ECJ ruled on a VAT reference C-421/17* re taxable supply.

According the Court the transfer by a limited company to one of its shareholders of the ownership of immovable propertyas consideration for the buy-back, by that limited company, under a mechanism for the redemption of shares provided for in national legislation, of shares held in its share capital by that shareholder, constitutes a supply of goods for consideration subject to VAT provided that that immovable property is used in the economic activity of that limited company.

 

*All rulings of the ECJ should be read in the concrete context.

ECJ: VAT credit

June 5, 2018

On 31/05/2018, the ECJ ruled on VAT reference C-660/16* re VAT credit.

The Court found that:

  • a potential buyer may not be refused the right to deduct the VAT relating to a payment on account in respect of the goods in question where that payment has been made and received and where, at the time that payment was made, all the relevant information concerning the future supply could be regarded as known to that buyer and the supply of those goods appeared to be certain. However, that buyer may be refused that right if it is established, having regard to objective elements, that, at the time the payment on account was made, he knew or should reasonably have known that that supply was uncertain;