C-342/87
ECLI:EU:C:1989:120
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OPINION OF MR MISCHO —CASE C-342/87
OPINION OF MR ADVOCATE GENERAL MISCHO delivered on 14 March 1989 *
Mr President, First question Members of the Court
2. The Hoge Raad formulated its first question in the following terms:
'Does the right to deduct provided for in the Sixth Directive apply to the tax which is due solely because it is mentioned on the invoice?' An adjustment of the taxable amount for the purposes of turnover tax was imposed on Genius Holding BV, the plaintiff in the main proceedings (called 'Genius BV' at the material time), by the Inspector of Taxes for 3. According to Article 21(1)(c) of the Sixth the period from 1 July to 31 December Directive, 1982. Later confirmed by a judgment of 28 May 1985 of the Gerechtshof Amsterdam (Regional Court of Appeal, Amsterdam), that decision was adopted on the ground that the plaintiff wrongly deducted tax 'any person who mentions the value-added invoiced to it by one of its subcontractors tax on an invoice or other document serving because the tax in question had been as invoice' charged in error and could not therefore be deducted. The plaintiff in the main proceedings therefore brought an appeal before the Hoge Raad der Nederlanden is liable to pay value-added tax. (Supreme Court of the Netherlands), which concluded that the appeal raised questions the answer to which required an interpre tation of the opening words of Articles 17(2), 17(2)(a), 18(1), 21(1) and 22(3) and 4. The German and Spanish Governments (8) of the Sixth Council Directive of 17 argue essentially that Article 21(1)(c) was May 1977 on the harmonization of the laws inserted only in order to prevent fraud. of the Member States relating to turnover Even if any amount appearing on an invoice taxes — Common system of value-added had to be paid to the Treasury by the tax: uniform basis of assessment (Directive person who drew up the invoice, that 77/388/EEC, Official Journal L 145, amount would not give rise to a right to 13.6.1977, p. 1, hereinafter referred to as deduct unless it corresponded to tax actually 'the Sixth Directive'). due under the legislation.
* Original language: French.
GENIUS HOLDING v STAATSSECRETARIS VAN FINANCIËN
5. The German Government argues in The Council replaced the expression 'tax particular that a deduction made by reason invoiced' by 'tax due or paid' and added at of undue payment of turnover tax is incom the end the words 'by another taxable patible with Article 17(2)(a). That provision person'. By doing so, it wanted to exclude reads as follows: cases in which the tax is due solely because it is mentioned on the invoice.
'In so far as the goods and services are used for the purposes of his taxable transactions, the taxable person shall be entitled to 8. There can obviously be no question of deduct from the tax which he is liable to my contesting that such was the Council's pay intention, or at least, that of some of its members, but the fact remains that according to Article 21 any person who mentions the value-added tax on an invoice is to be liable to pay that tax. However, (a) value-added tax due or paid in respect Article 17(2)(a) refers to tax due or paid and of goods or services supplied or to be I consider that it is for the Court to supplied to him by another taxable interpret the directive on the basis of the person.' terms in which it is worded and not in accordance with what one or other of the Member States believes to have been the real intention of the Council.
6. The expression 'tax due' thus refers, according to the German Government, exclusively to the tax which must be paid to the collecting authority on the basis of a correct application of the legislation and not 9. The Spanish Government argues that that due only because it is mentioned on the according to Article 17(1), the right to invoice. deduct arises as soon as the deductible tax becomes chargeable. It concludes that taxes which are not chargeable to the taxable person who passes them on cannot give rise to deduction. Taxable persons in that 7. At the hearing, the German Government situation are liable to pay only the amounts emphasized in particular the changes that due in accordance with the applicable law. the Council had made to the proposal for a directive submitted by the Commission. Article 17(2)(a) of that proposal provided that the taxable person was to be entitled to deduct from the tax which he was liable to pay 10. Article 21 of the directive is entitled 'Persons liable to pay tax to the authorities' and Article 21(1)(c) provides that any person who mentions the value-added tax on an invoice is liable to pay it. A taxable 'value-added tax invoiced to him ... in person who so mentions it must therefore be respect of goods or of services supplied to liable to pay it whether or not it is legally him'. due.
OPINION OF MR MISCHO — CASE C-342/87
11. Moreover, according to Article 10(1), 'the invoice shall state clearly the price exclusive of tax and the corresponding tax at each rate as well as any exemptions'.
'(a) "chargeable event" shall mean the occurrence by virtue of which the legal conditions necessary for tax to become 14. In my opinion, that provision lays down chargeable are fulfilled; a lex generalis from which the lex specialis in Article 21(1)(c) derogates. In principle, every invoice must mention the exact amount of tax applicable to the goods or services to which it refers. However, when that rule is not observed and an amount not (b) the tax becomes "chargeable" when the legally due, or which is erroneous, appears tax authority becomes entitled under on the invoice, the person who drew up the the law at a given moment to claim the invoice is none the less liable, by virtue of tax from the person liable to pay ...'. Article 21(1)(c), to pay the amount actually mentioned, and that amount may later be deducted by the taxable person to whom the goods were delivered or for whom the service was performed. According to Article 10(2),
15. The Netherlands Government, although 'the chargeable event shall occur and the tax it, too, considers that only tax 'in fact due' shall become chargeable when the goods are may be deducted, adopts a position which is delivered or the services are performed. less radical than that of the other governments by referring to the practice developed in the Netherlands. In accordance with that practice, 'the tax auth orities at first look to the person who 12. Any tax mentioned on an invoice, even improperly mentioned the tax on the if it is not legally due, thus becomes char invoice. It is only if that step appears to geable once the transaction to which it have no chance of producing a result that, relates has been carried out. under certain conditions, for example, in the absence of good faith on the part of the person who received the invoice, the tax deducted is later also charged to the latter. That course of conduct is based on the principles of sound administration ... '. 13. The governments which have submitted written observations also refer to Article 18(1)(a) which provides that to exercise his right to deduct, the taxable person must hold an invoice, drawn up in accordance with Article 22(3). Subparagraph (b) of that 16. The Netherlands Government thus provision provides that indicates to the Court the path it ought to
GENIUS HOLDING v STAATSSECRETARIS VAN FINANCIËN
follow in order to resolve the problem. impose joint and several liability where the Since it is clear from Article 21(1)(c) that all taxable transaction is carried out by a tax mentioned on an invoice is due to the taxable person resident abroad but Article authorities, it is logical to claim it in the first 21(1)(c) makes no such provision. place from the person who drew up the invoice. If the amount thus due can be recovered, there is no longer any reason to claim it a second time from the person to 19. Moreover, if recognition of a right to whom the goods were delivered or to whom deduct were refused in such a case, the the service was rendered (hereinafter selfsame right could just as well be denied referred to as 'the second taxable person'). every time the first taxable person failed to pay to the authorities an amount legally due and correctly calculated.
17. If the tax was not automatically paid by the first taxable person or cannot be recovered from him, the following 20. Furthermore, if such joint and several distinction must, to my mind, be drawn: liability were to be laid down, it would impose a wholly excessive duty of care on all traders; can it be imagined that all firms could verify whether each amount of VAT mentioned on the countless invoices which (a) if the second taxable person has also not they receive each year from their suppliers is paid the tax to the supplier, there is a strong correct? presumption of fraudulent collusion and the administration is then fully justified in claiming payment from the second taxable person, thus rendering ineffective the deduction made by him; 21. Like the Commission and the appellant in the main proceedings, I also consider that it would be contrary to the scheme and purpose of the Sixth Directive to refuse to permit a deduction to be made in the (b) if, on the other hand, it transpires that circumstances of this case. The purpose of the second taxable person has actually paid the VAT system is to ensure neutrality of the amount in question to the first, it should taxation so as, in particular, not to distort not be possible for the authorities to claim the conditions of competition. The essential that amount from the second taxable factor is, therefore, to avoid double taxation person. of the same 'added value'. It follows that the right to deduct must be acquired each time that the tax has to be paid, which is the case if it appears, even incorrectly, on an invoice. 18. To treat, in such a situation, both taxable persons as jointly and severally liable to pay the tax, and to do so in the absence of any provision prescribing such liability, would not be in accordance with the prin 22. Moreover, the Court has pointed out ciples of justice and equity. Article 21(1)(a) the importance of the above considerations and (b) permits the Member States to in its case-law in holding that
OPINION OF MR MISCHO — CASE C-342/87
'the deduction system is meant to relieve the on the right of deduction have an impact on trader entirely of the burden of the VAT the level of the tax burden and must be payable or paid in the course of all his applied in a similar manner in all the economic activities. The common system of Member States. Consequently, derogations value-added tax therefore ensures that all are permitted only in the cases expressly economic activities, whatever their purpose provided for in the directive' (paragraphs 16 or results, provided that they are themselves and 17). subject to VAT, are taxed in a wholly neutral way'. 1
However, there is no provision in the directive providing that an amount due 23. I think the judgment in Schul I 2is even solely because it is mentioned on the invoice more instructive inasmuch as it is there does not give rise to a right to deduct. stated that
26. Finally, with regard to the need to 'value-added tax is chargeable on each prevent fraud, the Court stated in paragraph transaction only after deduction of the 22 of the same judgment that that need amount of value-added tax borne directly cannot justify measures derogating from the by the cost of the various price directive otherwise than under the components'. procedure which is provided for in Article 27.
24. It follows that what matters is whether the second taxable person actually paid the 27. I therefore consider that the objections VAT to the first. If so, he may deduct it raised by the governments are not even if it was incorrectly claimed from him. convincing and that the right to deduct provided for in the Sixth Directive extends to tax due solely because it is mentioned on the invoice, except where it is shown that 25. In its judgment of 21 September 1988 in the amount in question was not paid to the Case 50/87 Commission v France [1988] taxable person who drew up the invoice. ECR 4797, the Court was also led to point out that
Second question
'in the absence of any provision empowering the Member States to limit the right of deduction granted to taxable persons, that 28. In the event that the first question is right must be exercised immediately in answered in the affirmative, the Hoge Raad respect of all the taxes charged on trans also asks the Court whether the directive actions relating to inputs. Such limitations allows the Member States to exclude — either entirely or in certain special 1 — Case 268/83 Rompelman v Minister van Financien [1985] cases — the right to deduct such tax by ECR 655, paragraph 19. laying down requirements regarding the 2 — Case 15/81 Schul v Inspecteur der Invoerrechten en Accijnzen [1982] ECR 1409, paragraph 10. invoice.
GENIUS HOLDING v STAATSSECRETARIS VAN FINANCIËN
29. It can be seen from Anicie 18(1)(a) that to deduction practically impossible or to exercise his right to deduct, the taxable excessively difficult'. person must hold an invoice drawn up in accordance with Article 22(3). According to Article 22(3)(b), the invoice is to state clearly the price exclusive of tax and the 32. In the main proceedings, it is not, corresponding tax at each rate as well as properly speaking, additional information any exemptions. which is in question but the following requirements.
30. In its judgment of 14 July 1988 3 in Jeunehomme, the Court held that although 33. According to Article 35(1)(g) of the the directive does no more than require an Netherlands Turnover Tax Law of 1968, invoice containing certain information, the invoice which a trader must issue to Member States may provide for the another trader in respect of goods or inclusion of additional information. Article services he supplies to the other trader must 22(8) provides that mention clearly
'the amount of the tax due in respect of the 'Member States may impose other obli goods or services supplied. A different gations which they deem necessary for the amount of tax may not he stated. correct levying and collection of the tax and for the prevention of fraud'.
34. Secondly, Article 24b of the Turnover Tax Implementation Order 1968 provides 31. In the operative part of the abovemen- that, where there is subcontracting, VAT is tioned judgment, the Court ruled that charged not to the subcontractor who performs the service but to the (principal) contractor who purchases it. The subcon tractor should not mention any amount in respect of VAT on his invoice but should 'Articles 18(1)(a) and 22(3)(a) and (b) of insert in its place the words 'value-added tax the Sixth Council Directive (77/388/EEC) transferred'. of 17 May 1977 allow Member States to make the exercise of the right to deduction subject to the holding of an invoice which must contain certain particulars which are 35. It follows moreover from the necessary in order to ensure the levying of Netherlands legislation that when a value-added tax and permit supervision by principal contractor receives an invoice the tax authorities. Such particulars must which infringes one of the provisions not, by reason of their number or technical summarized above, he is not entitled to nature, render the exercise of the right deduct the amount incorrectly mentioned on the invoice because it is not drawn up in 3 — Joined Cases 123 and 330/87 Jeunehomme and Others v Belgian State [ 1988 ]ECR4517 the prescribed manner, notwithstanding the
OPINION OF MR MISCHO — CASE C-342/87
fact that the person who mentioned that 41. Furthermore, I pointed out in amount on the invoice is also liable to pay it connection with the answer to be given to to the authorities. the first question that the right to deduct applies to tax which is due solely because it is mentioned on the invoice.
36. Let me now consider the general rules and the 'transfer' rules. 42. It is also therefore inconceivable that the Member States may derogate from so fundamental a principle of the Sixth Directive as the right to make deductions on 37. (a) I would like to make the following the basis of a provision of their national law observations concerning the prohibition of requiring that an invoice mention the exact mentioning on an invoice an amount of amount of VAT legally due, to the VAT other than that legally due. exclusion of any other amount.
43. (b) Let me now turn my attention to 38. I consider that even if that obligation is the transfer rules. Those rules were brought not complied with, a Member State cannot into effect in the Netherlands only by virtue be permitted to deprive a (principal) of a derogation from the Sixth Directive contractor of his right to deduct on the granted by the Council 4under Article 27. basis of an argument of form to the effect that the invoice does not correspond to the provisions of national law on the drawing up of invoices. 44. Article 27(1) commences as follows:
39. In my opinion, the obligation not to 'The Council, acting unanimously on a mention an amount of VAT other than that proposal from the Commission, may legally due does not constitute one of the authorize any Member State to introduce 'other obligations' which the Member States special measures for derogation from the may impose under Article 22(8) for the provisions of this directive, in order to correct levying and collection of VAT. On simplify the procedure for charging the tax the contrary, it is an obligation which, or to prevent certain types of tax evasion or although not provided for expressly in the avoidance.' directive, is none the less implicit therein.
45. The basic provision of the VAT transfer rules derogates from one of the funda 40. Moreover, the directive has already laid mental principles of the Sixth Directive, down a sanction if that obligation is not namely the principle that the invoice must fulfilled (Article 21(1)(c)): any person who state clearly the price exclusive of tax and mentions (even incorrectly) a tax on an the corresponding tax at each rate as well as invoice or other document serving as an invoice is liable to pay it. 4 — OJC 197, 317.1982, p. 1.
GENIUS HOLDING v STAATSSECRETARIS VAN FINANCIEN
any exemptions. In this case, there is no would have to supervise the activities of exemption from but a transfer of VAT, with each of his subcontractors and accept from the effect that there is undoubtedly a dero them only invoices bearing the words gation from that principle. 'value-added tax transferred'. The prohibition of deducting tax incorrectly 46. However, I consider that rules dero mentioned on such an invoice is intended to gating from the Sixth Directive, authorized make the principal contractor exercise care. by the Council, must necessarily be The prohibition is therefore an essential regarded as a body. The VAT transfer rules element of those special rules. This second are intended to prevent certain types of tax derogation from the principles of the evasion. In order for the rules to achieve directive must also therefore be regarded as those objectives, the principal contractor covered by the Council's authorization.
Conclusion
47. On the basis of the foregoing considerations, I would propose that the Court should answer the Hoge Raad's questions as follows:
'(1) The right to make the deduction provided for in the Sixth VAT Directive applies to the tax which is due solely because it is mentioned on the invoice except in cases in which it can be established that the amount in question was not paid to the taxable person who drew up the invoice.
(2) The Sixth Directive does not allow the Member States to exclude the right to deduct VAT by laying down a requirement that the invoice mention the exact amount of VAT legally due, to the exclusion of any other amount.'
The situation is different where a Member State has been authorized by the Council under Article 27 of the directive to apply rules derogating from the directive, and prohibiting the mention of an amount of VAT on the invoice and excluding the right to deduct if that prohibition is not complied with.