C-85/97
ECLI:EU:C:1998:244
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SFIv BELGIAN STATE
OPINION OF ADVOCATE GENERAL MISCHO delivered on 19 May 1998 *
1. The Tribunal de Première Instance (Court (2) Does a system under which VAT on a of First Instance), Liège has to resolve a dis- benefit in kind granted to an employee pute between Société Financière is calculated on a VAT inclusive basis d'Investissements SPRL (hereinafter 'SFI') and when Belgian VAT is paid by the the Belgian State. The dispute concerns a sum employer and on a VAT exclusive basis of VAT owed by SFI, for the recovery of when VAT of another Member State is which the Belgian tax authorities issued a paid offend against Article 95 of the payment order. SFI applied to have that pay- Treaty of Rome and the principle of fiscal ment order set aside on various grounds. In neutrality laid down by the Sixth VAT particular, it asserts that the recovery action Directive?' brought by the tax authorities is time-barred and that the method of calculation adopted by the authorities for determining the value of the benefit in kind constituted by the pro- vision of a company car to a partner or an employee for private journeys is legally incor- rect. Since SFI's arguments rely on Commu- nity law, the national court has referred the following two questions to the Court for a preliminary ruling: 2. The order for reference gives very little information on the factual and legislative background to the dispute before the national court. It seems to me that this lack of detail concerning the context in which the prelimi- nary questions have been raised, which, in other circumstances, could constitute a hin- drance to the provision of a useful reply, does not pose a real problem here. In its first ques- tion, the national court sets out the position '(1) Is the position taken by the VAT authori- of the Belgian tax authorities on the determi- ties, that the limitation period for the nation of the starting-point of the limitation collection of tax runs from the 20th of period for the recovery of VAT and asks the month following the quarter in which whether that position, which, it must be registration for VAT took place, as assumed, results from a correct interpretation regards taxable transactions carried out of the relevant national provisions, is compat- before that registration, compatible with ible with Community law and, more specifi- Articles 4 and 10 of the Sixth VAT Direc- cally, with Articles 4 and 10 of the Sixth tive? Council Directive (77/388/EEC) of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — * Original language: French. Common system of value added tax: uniform
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basis of assessment 1 (hereinafter 'the Sixth to assess the compatibility with Community Directive'). That is a question which can be law of the position taken by the tax authori- resolved without knowledge of SFI's dealings ties, that is because SFI disputes that position with the tax authorities. by putting forward arguments based on Com- munity law. According to SFI, a limitation period must start to run in favour of a debtor from the time when his debt arises and when, correlatively, the creditor is entitled to assert his claim.
3. The second question is formulated less clearly, if only because it uses terminology — 'calculated on a VAT inclusive basis' and 'cal- culated on a VAT exclusive basis' — which is not found in the Community VAT directives. Moreover, the Court is asked to exercise its review in relation to a provision of the Treaty as well as in relation to a principle of the 5. However — and according to SFI this is Community VAT system. However, its com- where Community law comes in — Article plexity is more apparent than real. From the 10(1) of the Sixth Directive provides as fol- documents in the file and the observations lows: put forward during the oral procedure it is clear that the issue is in fact that of deter- mining the tax base to be taken into account when VAT is applied to a benefit in kind pro- vided to an employee in the form of goods on which VAT has been paid in another Member State. That question also can be use- fully answered without any reference to SFI's precise circumstances. '1. (a) "Chargeable event" shall mean the occurrence by virtue of which the legal conditions necessary for tax to become chargeable are fulfilled.
The first question
(b)The tax becomes "chargeable" when 4. As regards the first question, it will be the tax authority becomes entitled noted, first, that, although the Court is asked under the law at a given moment to claim the tax from the person liable to pay, notwithstanding that the time 1 — OJ 1977 L 145, p. 1. of payment may be deferred.'
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SFIv BELGIAN STATE
6. According to this reasoning, the date from two months following the end of each tax which the limitation period starts to run is period. The tax period may be fixed by determined by Community law, since that Member States as a month, two months, or a date cannot be different from the date on quarter. However, Member States may fix which the tax becomes chargeable, which is different periods provided that these do not itself determined by the Sixth Directive as the exceed a year. date when the chargeable event, as defined by the directive, occurs. Having chosen another date, the argument runs, the Belgian legisla- ture was in breach of the Sixth Directive and SFI, like any other taxable person, is entitled to rely on that breach. The return must set out all the information needed to calculate the tax that has become chargeable and the deductions to be made, including, where appropriate, and in so far as it seems necessary for the establishment of 7. Although on the face of it that reasoning the tax basis, the total amount of the transac- appears rigorous, it must nevertheless be tions relative to such tax and deductions, and rejected since it rests on certain false pre- the total amount of the exempted supplies. misses. The first false premiss lies in a mis- conception of chargeability. The fact that a tax becomes chargeable does not cause it to become immediately payable. A tax becomes chargeable because the taxed transaction has been carried out, or, to use the words of the 5. Every taxable person shall pay the net Sixth Directive, because the chargeable event amount of the value added tax when submit- has occurred. However, the fact that the tax ting the return. The Member States may, how- becomes chargeable certainly does not mean ever, fix a different date for the payment of that the person liable has to pay it forthwith. the amount or may demand an interim pay- Can one imagine a trader sending each day to ment.' the revenue authority the amount of VAT for which he is liable in respect of sales effected during the day? Such a sensible distinction between chargeability and payment is made, not surprisingly, by the Community legisla- ture. In the Sixth Directive, it appears not only in Article 10, the terms of which I have 8. It is thus apparent, and could not be more just cited, but also in Article 22, which, in clearly so, that chargeability is a technical paragraphs 4 and 5, provides: concept which should not be confused with the obligation actually to make payment of VAT. It occurs, in particular, in the deduction mechanism, which is a feature of the Com- munity VAT system, as described in Article 17(1) of the Sixth Directive, under which the '4. Every taxable person shall submit a return right to deduct arises at the time when the within an interval to be determined by each deductible tax becomes chargeable. Moreover, Member State. This interval may not exceed by its very structure, the deduction mecha-
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OPINION OF MR MISCHO — CASE C-85/97
nism, which is governed by Articles 17 to 20 above. Moreover, it will be noted in passing of the Sixth Directive, clearly shows that the that Article 22 itself leaves the Member States amount of VAT payable by a trader will not, a significant margin of discretion, whether in in principle, be that resulting from the tax- fixing the tax period following the end of able transactions which he has carried out which the taxable person must produce a and which have rendered VAT chargeable, return, or in determining the interval within since it will be necessary, in order to deter- which that return must be submitted, or in mine the actual amount payable to the rev- fixing the date for the actual payment of the enue authority, to deduct the VAT credits tax by the taxable person. 2 available to the trader by virtue of the tax which he will have paid when purchasing from his suppliers the goods and services nec- essary for the pursuit of his activities. The fact that what is chargeable and what is pay- able do not match means that, as both a con- ceptual and a tax procedure matter, there must be no confusion between chargeability and the starting-point of the limitation period.
11. Confirmation of the fact that the detailed rules for the collection of VAT are largely unharmonised will be found in Council Direc- tive 76/308/EEC of 15 March 1976 on mutual 9. The second false premiss on which SFI's assistance for the recovery of claims resulting reasoning is based lies in its view of the scope from operations forming part of the system of the Sixth Directive. As far as SFI is con- of financing the European Agricultural Guid- cerned, the detailed rules for the collection of ance and Guarantee Fund, and of agricultural VAT are covered by the harmonisation levies and customs duties, 3 and in respect of achieved by that directive. However, that is value added tax, as amended by Council manifestly not the case. Directive 79/1071/EEC of 6 December 1979. 4 As the Belgian Government points out, Direc- tive 76/308 not only contains no reference to common rules governing the recovery of VAT, but expressly provides, in Article 6(1): 'At the request of the applicant authority, the requested authority shall, in accordance with 10. A mere glance at the subdivisions of the the laws, regulations or administrative provi- Sixth Directive is enough to show, as the Bel- sions applying to the recovery of similar claims gian Government rightly points out, that, arising in the Member State in which the although the directive covers all the requested authority is situated, recover claims substantive-law aspects of the Community which are the subject of an instrument VAT system, it is far from laying down all the detailed procedural rules for the operation of the system, the only provisions which it 2 — Judgment in Case 42/83 Dansk Denkavit [1984] ECR 2649, devotes to them being those of Title XIII rightlyreferredto by the German Government in its written observations. relating to the obligations of persons liable 3 — OJ 1976 L 73, p. 18. for payment, which includes Article 22 cited 4 — OJ 1979 L 331, p. 10.
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SH v BELGIAN STATE
permitting their enforcement', which assumes exact day on which the time-limit set for the the absence of a common system for the business to submit its return for that quarter recovery of VAT. expires. That has not been, and could hardly be, disputed.
12. It remains to be examined, in relation to the first question, whether the Belgian legis- lature has made proper use, compatible with Community law, of the freedom which it is allowed by the Sixth Directive to lay down rules for the recovery of VAT by establishing a system under which the limitation period starts to run from the 20th of the month fol- lowing the quarter in which registration for 14. The choice under the Belgian tax rules of VAT took place as regards taxable transac- the date on which both submission of the tions carried out before that registration. The return and payment must take place is fully Court has consistently held that, even when they act within the scope of the procedural within the limits set out in Article 22(4) and autonomy afforded to them by Community (5) of the Sixth Directive, and the fixing of law, Member States must not lay down the the same date as the starting-point of the procedures governing actions for safeguarding limitation period certainly has the virtue of rights which individuals derive from the direct consistency. As the United Kingdom Gov- effect of Community law by laying down the ernment has appositely pointed out, it would rules which are less favourable than those be extremely odd if a limitation period started governing similar domestic actions or which to run in the taxable person's favour before are such as to render virtually impossible the the date on which the tax authorities, having exercise of rights conferred by Community received his return, were actually in a posi- law. 5 tion to verify his honesty by carrying out whatever checks seem appropriate to them, and to decide on the adjustments called for by any inaccuracies in that return. It would be a boon to tax evaders and would seriously prejudice the effectiveness of officials respon- sible for recovering VAT if the limitation period, which is intended to guarantee legal 13. It should be made clear from the outset that, under the Belgian rules, the limitation certainty for honest traders but at the same period for businesses which are already reg- time might provide impunity for those who istered runs from the 20th of the month fol- are less honest, were to run from a date when lowing the quarter in which the taxable trans- the tax authorities, for want of possession of action was carried out, that is to say, from the the taxable person's return, are utterly pow- erless to act to protect the interests of the public purse, since evasion can be established only from the time of submission of a false 5 — See, in particular, the judgment in Joined Cases C-430/93 and return. C-431/93 Van Schijndel and Van Veen [1995] ECR I-4705.
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OPINION OF MR MISCHO — CASE C-85/97
15. Is the arrangement under that system in proper 'working of the administration but also the particular case of a new taxable person, be potentially detrimental to the taxable person whereby the starting-point of the limitation himself. period shifts to the 20th of the month fol- lowing the quarter in which registration was carried out by the tax authorities, objection- able?
17. It seems to me that to start organising dealings between the taxable person and the authorities from the point which is consti- tuted by registration is a matter of common sense and could not be construed as an inten- 16. It is true that, at the time of the facts of tion to restrict the exercise of the taxpayer's the case before the national court, the Com- rights. munity rules did not provide for registration and that taxable person status does not result from registration but from satisfaction of the conditions laid down by Article 4 of the Sixth Directive. However, I do not see any basis for considering that, by deferring the taxable person's obligation to submit a return and the associated obligation to pay until after regis- 18. As far as the first question is concerned, tration, the Belgian tax rules have infringed I therefore conclude that the Sixth Directive, the limits placed by the Court's case-law on in particular Articles 4, 10(1) and 22 thereof, the procedural autonomy of Member States. does not preclude national rules under which On the contrary, it seems to me that, by fixing the limitation period for the recovery of VAT as the anchor point in dealings between the runs from the 20th of the month following tax authorities and the taxable person the date the quarter in which registration for VAT of registration, that is to say, the date on took place, as regards taxable transactions which the authorities took, as it were, formal carried out before that registration. note of the statement of commencement of activity provided for by Article 22(1) of the Sixth Directive, the Belgian rules take into account the requirements of legal certainty. Once registered, the taxable person should no longer have any doubt either as to the length The second question of time available to him to discharge his peri- odic obligations or with regard to the limita- tion period from which he may benefit. Simi- larly, registration 'will enable the tax authorities to open a file in the taxpayer's name and to ensure that it is monitored regularly, whereas the receipt of returns and payments from an 19. As regards the second question, I shall be unidentified taxable person and registered as brief, if only because the oral procedure dis- such could be a source of confusion which closed a convergence of opinions as to the would certainly harm first and foremost the answer for which it calls.
I - 7454
SH v BELGIAN STATE
20. As I have already indicated in point 3 23. That rule was already contained in Article above, this question borrows from tax-law 8 of the Second Council Directive 67/228/EEC theory terminology not found in the Sixth of 11 April 1967 on the harmonisation of leg- Directive. However, there is no doubt that islation of Member States concerning turn- what the national court is seeking to ascertain over taxes — Structure and procedures for is the tax base for the calculation of the VAT application of the common system of value which, pursuant to Article 6(2) of the Sixth added tax, 6 and was strongly reaffirmed by Directive, is payable on the grant by a busi- the Court in its judgment in the Schul case, 7 ness of benefits in kind to its employees where which concerned the taxation of imported the business has turned to a provider of ser- second-hand goods. It is restated in Article 11 vices established in another Member State in of the Sixth Directive with regard to VAT on order to obtain the service from which it importation. wishes the employees concerned to benefit. More specifically, must that taxable basic amount include the VAT on the provision of services from another Member State which has been paid there?
24. The rule in question is therefore a com- pletely general one which does not apply in different ways depending on whether the supply of services is carried out by a provider established within the national territory or by a provider established in another Member State.
21. As the Commission quite rightly states, it is necessary to refer to Article 11(A)(1)(c) of the Sixth Directive, which states that the tax- able amount is, 'in respect of supplies referred to in Article 6(2), the full cost to the taxable person of providing the services', and to ask 25. It therefore matters little, as the Belgian whether 'the full cost' means the cost inclu- Government acknowledges, that in SFI's case sive of all tax or the cost exclusive of VAT. the vehicles which it provides to members of its staff for their private use have been leased to it by a provider of services established in Luxembourg.
22. It is clear from the very essence of the 26. In all cases, it is the value of the supply Community system of VAT, which was exclusive of VAT which must be used as the designed to replace the old systems of cascade taxes with a neutral system, that the tax must always be charged on a taxable amount which 6 — OJ, English SpecialEdition Series 1967 (I), p. 16. includes no VAT. 7 — Case 15/81 [1982] ECR 1409.
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OPINION OF MR MISCHO — CASE C-85/97
taxable amount for the purposes of the taxa- 30. I would'nevertheless observe that when, tion provided for by Article 6(2) of the Sixth in its written observations, SFI mentions a Directive. number of figures and proposes a method for calculating the VAT for which it would actu- ally be liable, it does not perhaps argue as rig- orously as it should.
27. Since that is the case, it is not clear where any discrimination could arise with regard to services supplied from another Member State. Observance of the principle of fiscal neu- 31. Starting from the assertion that the tax- trality inherent in the Community system of able amount taken by Belgian authorities was VAT takes away any legitimate interest which an amount which included VAT paid in Lux- SFI has in relying not only on Article 95 of embourg, it then goes on to make a calcula- the EC Treaty, assuming that that provision, tion to arrive at the correct taxable amount, which refers to products, can extend to a that is to say, the value exclusive of VAT, for supply of services from another Member State, which purpose it takes into account a VAT but also on Article 59 of the EC Treaty, from rate of 25%, which corresponds to the rate which it would be necessary to argue whether applied in Belgium. the Belgian tax system had the effect of ren- dering less attractive for Belgian undertakings supplies of services offered by providers estab- lished in other Member States, which is not the case.
32. However, if the Belgian tax authorities wrongly took into account as the taxable amount an amount including Luxembourg VAT, the VAT rate in question was 15% and not 25%. 28. There nevertheless remains, it seems, a disagreement between SFI and the Belgian Government over the way in which the Bel- gian tax authorities calculated the VAT pay- able by SFI, the latter claiming that the tax authorities did not in fact take into account a taxable amount exclusive of tax. 33. I suppose that this confused issue could be settled before the national court in due course.
29. That is a question of fact which it is not for the Court to resolve and which, more- over, the Court would be unable to examine 34. Since the Court must confine itself to since the necessary information is not included providing an interpretation of Community among the documents at its disposal. law, I propose that the answer to be given to
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SFI v BELGIAN STATE
the second question should be that, in the business when paying for the goods or the case referred to in Article 6(2) of the Sixth service which it provides to its staff for their Directive, the taxable amount to be taken into private use. account must not include VAT borne by the
Conclusion
35. Having come to the end of my Opinion, I suggest that the Court answer the first question as follows:
The Sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, in particular Articles 4, 10(1) and 22 thereof, does not preclude national rules under which the limitation period for the recovery of VAT runs from the 20th of the month following the quarter in which registration for VAT took place, as regards taxable transactions carried out before that registra- tion.
I propose that the second question be answered as follows:
In the case referred to in Article 6(2) of the Sixth Directive 77/388, the taxable amount to be taken into account must not include VAT borne by the business when paying for the goods or the services which it provides to its staff for their private use.
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