C-85/95

3. Title XI of the Sixth Directive is entitled 'Deductions'. Article 17 is headed: 'Origin and scope of the right to deduct'. The relevant Community and national legis- Article 17(1) provides that this right 'shall lation arise at the time when the deductible tax becomes chargeable'. Article 17(2)(a) entitles a taxable person to deduct from the tax which he is liable to pay the 'value added tax due or paid in respect of goods or services supplied or to be supplied to him by another taxable person', provided the goods and ser­ vices supplied 'arc used for the purposes of 2. The questions referred raise a number of his taxable transactions'. issues concerning the interpretation of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the 1 - OJ 1977 I. 145, p . 1. 2 - Sec Council Directive 91/680/EEC of 16 December 1991 supplementing the common system of value added lax and amending Directive 77/388/FEC with a view to the abolition * Original language: English. of fiscal frontiers; OJ 1991 I. 376 p. 1.

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4. Article 18 of the Sixth Directive is entitled Obligations under the internal system'. At 'Rules governing the exercise of the right to paragraph (3), it provides that: deduct'. Article 18(1)(a) provides:

'To exercise his right to deduct, the taxable '(a) Every taxable person shall issue an person must: invoice, or other document serving as invoice in respect of all goods and ser­ vices supplied by him to another taxable person, and shall keep a copy thereof.

(a) in respect of deductions under Article 17(2)(a), hold an invoice, drawn up in accordance with Article 22(3).'

7. In 1988 the plaintiff and appellant in the main proceedings (hereinafter 'the plaintiff') had commercial premises built in a building owned by him. He subsequently let those 'Without prejudice to the provisions to be premises to a supermarket operator. Having adopted pursuant to Article 17(4), Member waived exemption from value added tax States may impose other obligations which under Paragraph 4(12)(a) of the UStG, he they deem necessary for the correct levying sought to deduct amounts of input tax paid and collection of the tax and for the preven­ 3 as part of the costs of the building. tion of fraud.'

3 Anicie 17(4) of the Sixth Directive is a special provision 9. The plaintiff indicated at the hearing, for which permits Member Stales to adopt various measures concertimi; 'capital goods'. the first time, that this finding of fact is

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contested and that there was no question of period, to be procured'. In such cases the his being unwilling to produce the original, evidence necessary to claim a deduction may but that the original invoice had actually be adduced in other ways, such as, for been presented to the national tax authori­ example, by way of copies of invoices. In ties. However, he stated that it had been lost, this case, the national court states that, as the for reasons which were not fully explained, plaintiff has not claimed that the invoices prior to the special VAT investigation and were lost, he should be regarded in law as that, furthermore, what was described as a not having produced the evidence necessary 'composite' invoice had been produced to to justify a deduction of input tax. As noted the Finanzgericht. In response, the agent in the preceding paragraph, the plaintiff now representing Germany pointed out that the claims the invoices were lost. However, the Bundesfinanzhof (Federal Finance Court) national court states that its decision turns hears appeals only on points of law and that on whether national law may require as evi­ the facts are determined by the Finanzger­ dence the presentation of the original icht. He said, and I agree, that the present invoice. It takes the view that this decision case must be considered in the light of the raises a question of Community law, since facts as found and related in the order for Article 18 of the Sixth Directive contains reference. It seems to me, in any event, that rules governing the exercise of the right to the Court is in a position to furnish answers deduct. which may be applied by the national court to cither set of facts.

must at all times be in a position to present States which are responsible for determining the invoice to the tax authorities? the criteria which enable a document to serve as an invoice, if the national court thinks that Germany has not properly fulfilled its obli­ gation in this respect, it should, rather than referring questions of interpretation to the Court, have filled in the relevant gaps itself. I 3. Is the exercise of the right to deduct input do not agree. It is settled case-law that 'the tax precluded by virtue of Article 18(1 )(a) of right to determine the questions to be the Sixth Directive 77/388/EEC where the brought before the Court of Justice... taxable person no longer "holds" an devolves upon the court or tribunal of the invoice?' 4 Member State alone ...'. Moreover, the pro­ cedure pursuant to Article 177 of the Treaty 'establishes direct cooperation between the Court and the courts and tribunals of the Member States by way of a non-contentious II — Observations submitted to the Court procedure excluding any initiative of the par- tics who are merely invited to be heard in 5 the course of that procedure'. The Court does not, other than in exceptional circum­ stances, such as evidence that the dispute is contrived, 'look into the circumstances in 12. Written observations were submitted by which national courts were prompted to the plaintiff, the French Republic, the Fed­ submit the questions and envisage applying eral Republic of Germany, the Hellenic the provision of Community law which they 6 Republic, the United Kingdom of Great have asked the Court to interpret'. Britain and Northern Ireland and the Com­ mission, which, with the exception of the United Kingdom, also presented oral obser­ vations.

'hold' an 'invoice' as a prerequisite to exer­ should be interpreted as normally requiring cising a right to deduct and , thus , clearly the production of the original invoice but raise issues regarding the proper interpreta­ that an unduly strict approach ought to be tion of that provision , which is manifestly a avoided. Member States should therefore be proper matter for referral to the Court pur­ free to accept other evidence where appro­ suant to Article 177 of the Treaty. I am satis­ priate . The Commission submits that a com­ fied that the Court has jurisdiction to answer bined interpretation of Articles 18(1)(a) and and must answer the questions submitted in 22(3) permits a Member State to lay down the present case, which all concern the inter­ criteria for recognizing , in place of an pretation of Community law. invoice, any other document , including duplicates and copies, capable of 'serving as an invoice' in accordance with the require­ ments which it has laid down . France and Greece however maintain that Article 18(1)(a) refers only to the original invoice, although Member States may permit a number of duplicates of an invoice to be Analysis of Question 1 issued simultaneously with the invoice. Greece also contends that a national rule which requires the production of the original invoice whenever it is available is perfectly compatible with the objective of ensuring the proper functioning of the VAT system and the prevention of fraud. At the hearing, Greece stated that neither Article 18(1)(a) 15. The plaintiff submits that while the nor Article 22(3) prohibits a national rule existence of an invoice constitutes an impor­ which makes the exercise of the right to tant proof in the exercise of a right to deduct dependent upon production of an deduct , continued possession of it cannot original invoice. constitute a precondition to the .enjoyment of that right, and that a duplicate or copy of the invoice should be regarded as being capable of providing the same evidence. In his view the right to deduct cannot depend on the ongoing ability to produce a docu­ ment whose continued existence is subject to a variety of hazards . Germany submits that it follows from Articles 18(1)(a) and 22(3) of the Sixth Directive that the taxable person must be in possession of the original invoice at the time when he seeks to exercise his right to deduct . That document must con­ 16. It is instructive, in my opinion , to begin tain, in accordance with rules which , subject by looking at the wording of Article 18(1)(a), to the mandatory information required by which is expressed in mandatory terms . In so Article 22(3)(b), arc for the Member States to far as is relevant in the present case, it states determine , all the information necessary for that, to exercise a right of deduction under satisfying the substantive criteria governing Article 17(2)(a), a taxable person 'must ... the right to deduct . The United Kingdom hold an invoice ... drawn up in accordance submits essentially that Article 18(1)(a) with Article 22(3)', which is, in turn , equally

18. The role of the invoice in the operation of the VAT system is pivotal. It must be issued by each supplier of goods or services 17. At the hearing, the Commission referred to a purchaser who is a taxable person; it to the German, French, Italian, Danish, must be held by the taxable person at the Dutch and English texts of Article 22(3)(a) time he claims the right to make a deduction and (c), which were authentic at the time of of the VAT shown thereby to have been paid adoption of the Sixth Directive in 1977. It by him to the supplier. No issue of the con­ stated that the French was the clearest and tent of the invoice arises in the present case. showed that what was at issue was the adop­ In the first question, the national court seeks tion of rules permitting, as an alternative, the guidance as to the meaning of the word substitution of other documents. The Ger­ 'invoice' for the purposes of Article 18(1)(a) man text of Article 22(3)(c) reads 'Die Mit- of the Sixth Directive. It tells us that, in Ger­ gliedstaaten legen die Kriterien fest, nach man law, only the document by which a sup­ denen ein Dokument als Rechnung betra­ plier charges the recipient of goods or ser­ chtet werden kann'. I agree with the Com­ vices can be regarded as an invoice and that mission that, if that wording is ambiguous, consequently only the original invoice can be the French text is particularly helpful: 'Les regarded as a document of account capable États membres fixent les critères selon of serving as evidence justifying the deduc­ lesquels un document peut être considéré tion of the input tax. The possibility of dis­ comme tenant lieu de facture' (emphasis pensing with production of the original is a added). Save in the German text, the idea of separate matter, more relevant to the second recognizing a separate document is reflected and third questions, and must be clearly dis­ in all the language versions of the provision tinguished, as it is by the national court, which were cited by the Commission. Read from the first issue of principle.

19. The Court has left no room for doubt as document which may have been prescribed to the necessity for the taxable person 'in by the Member State to serve as an invoice. order to be entitled to deduct the value- This interpretation seems to me best 8 added tax payable or paid in respect of goods 'adapted to prevent tax evasion'. delivered or to be delivered or services sup­ plied or to be supplied by another taxable person ... [to] ... hold an invoice drawn up in accordance with Article 22(3) of the Sixth 7 Directive (Article 18(l)(a))'. The citation of Article 18(1)(a) shows that the Court was here referring to the original invoice. In my view, a Member State would have to adopt criteria pursuant to Article 22(3)(c) if it were to accord recognition to a document other than the original invoice. Member States may, under that provision, consonant with their obligation 'to ensure the correct levying of value-added tax', determine other docu­ 21. I do not here address the scope of the ments which may serve as invoices. The discretion allowed to Member States, by terms of the order for reference suggest that Article 22(3)(c) of the Sixth Directive, to German law does not contain such rules. determine criteria for considering whether a document — implicitly, other than the origi­ nal invoice — may serve as an invoice. It would be necessary to consider very care­ fully the circumstances in which, for example, duplicates, photocopies of other copies, or computerized records, might be recognized. Clearly, for example, any such alternative document would have to record the minimum information required by 20. In my opinion, a taxable person desirous Article 22(3)(b). Furthermore, the need to of exercising a right to deduct must normally counter irregularity or fraud would have to be in possession of the original invoice or be borne in mind. I am, of course, conscious other document which the authorities in that of the reference in the first question to 'car­ Member State have accepted as constituting bon copies, duplicates or photocopies'. It the invoice for the purposes of seems possible that the comparative ambigu­ Articles 18(1)(a) and 22(3) of the Sixth Direc­ ity of the German text of Article 22(3) has tive. Member States are not, therefore, free to suggested to the national court that such accept as an invoice any other document documents might be admitted as invoices which may contain the same information without the adoption of national rules to either as the original invoice or other original that effect. I think that the linguistic comparison made by the Commission and discussed at paragraph 17 above shows that this is not so. 7 — Joined Cases 123/87 and 330/87 Jeunehomme and Others v Belgian State [1988] ECR4517, paragraph 14 of the judg­ ment (hereinafter 'Jeunehomme'). To the same effect, see Case C-342/87 Genius Holding v Staatssecretaris van Finan- ciën [1989] ECR 4227, paragraph 15 (hereinafter 'Genius Holding'). 8 — See Genius Holding, paragraph 11 of the judgment.

23 . The plaintiff submits essentially that the 24. The United Kingdom and Greece submit invoice merely constitutes proof that the rei that, in general, the taxable person must be evanl supply has taken place and that its sub able, where he is requested by the fiscal sequent non-production should not affect a authorities , to present the original invoice. right to deduct which would otherwise arise They contend thai there may be cases where from that supply. In his opinion , the relevant it can no longer be produced but that it is foi- provisions of the UStG arc in conformity lhe Member Slates to adopt rules governing with this interpretation of Article 18(l)(a) of the circumstances when the production of the Sixth Directive. Germany submits that other documents may be acceptable. I low- the possession of the invoice is merely a for ever, that is not the case in the main proceed­ mal and not a substantive requirement of the ings where it is clear from the order for ref­ right to deduct . Since Article I8 ( l )( a ) only erence ihat lhe plaintiff has simply refused to requires possession of the invoice at the lime produce the relevant invoices despite being when the deduction occurs , the right to in a position to do so . France, supported on deduct cannot be excluded simply because this point by the Commission , considers lhe the taxable person no longer possesses that obligation of the taxable person lo hold the invoice at a later stage. I lowever, Germany invoice as an essential element of the

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26. This interpretation does not conflict with Article 18(3) of the Sixth Directive, which permits the Member States to deter­ 27. In Jeunehomme, the Belgian tax authori­ mine conditions and procedures for the mak­ ties had refused to accept invoices which did ing of deductions notwithstanding failure to not contain all the information required by

9 — Sec Jeunehomme and, in particular, paragraph 16 of the judg­ ment. 10 — Paragraph 17 of the judgment.

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REISDORF v FINANZAMT KOLN WEST

IV — Conclusion

I recommend , accordingly, that the Court answer the questions referred by the Bundesfinanzhof as follows:

(1) An invoice within the meaning of Article 18(1)(a) of the Sixth Council Directive 77 / 388 / EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment should be interpreted as referring to

11 — Paragraph 15 of the judgment. 12 — See the description used by Advocate General Sir Gordon Slynn in his Opinion in Jeunebomme, loc. cit., [1988] ECR 4517, p. 4534.

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