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Rulings of the Court of Justice of the European Union – VAT 

C-144/13 (VDP Dental Laboratory NV), C-154/13 (X BV) and C-160/13 (Nobel Biocare Nederland BV)

Exemption for intra-community acquisition and import of dental prosthesis

ECJ ruled that:
  • If national legislation prescribes a VAT exemption without credit, which is not in line with the EU VAT Directive, taxable person may not apply such exemption and, at the same time, deduct related input VAT quoting stipulations of the VAT Directive; and
  • Taxable person may apply exemption for intra-Community acquisition and import of goods only when a local supply of those would be VAT exempt.

On 26 February 2015 ECJ issued its ruling in the proceeding between VDP Dental Laboratory NV („VDP“; C-144/13), X BV („X“; C-154/13), Nobel Biocare Nederland BV („Nobel“; C-160/13) and Staatssecretaris van Financiën („Staatssecretaris“; Dutch Ministry of Finance). The subject of discussion was simultaneous application of VAT exemption without credit, provided by national legislation, and deduction of related input VAT on the basis of the EU VAT Directive. ECJ also considered scope of the exemption for intra-Community acquisition and import of dental prosthesis, and other goods in general, whose local supply would be VAT exempt in the respective country.

Until 1 January 2007 Dutch VAT legislation VAT exempted all supplies of dental prosthesis. From that date the exemption was restricted to supplies of dental prosthesis by dental technicians and dentists, as envisioned by the EU VAT Directive.
VDP, until statutory gaining the dental technician status, applied specific national exemption for the supplies of dental prosthesis and deducted related input VAT quoting relevant stipulations of the VAT Directive. Staatssecretaris disputed such input VAT deduction. VDP also declared and paid VAT on the intra-Community acquisition and import of dental prosthesis. It however subsequently took the view that it was not liable to do so because Dutch VAT legislation and VAT Directive prescribe exemption for intra-Community acquisition and import of goods whose supply would be VAT exempt when carried out locally within the Netherlands. VDP requested a refund of the VAT paid. Staatssecretaris rejected the request.

X operated a dentistry practice within the Netherlands where it acquired dental prosthesis from German dental technician. At the time, it did not self-assess VAT on the intra-Community acquisition of those because it applied exemption for intra-Community acquisition of goods whose supply would be VAT exempt when carried out within Netherlands. Staatssecretaris disputed application of the respective exemption.

Noble is a Dutch entity which has dental technician status. It procured dental prosthesis from its Swedish parent company (which is also dental technician) and supplied them to dental laboratories in the Netherlands. Nobel did not self-assess VAT on the intra-Community acquisition of those because it applied exemption for intra-Community acquisition of goods whose supply would be VAT exempt when carried out within Netherlands. Staatssecretaris disputed application of the respective exemption.

ECJ was requested to (1) provide opinion if taxable person may simultaneously apply VAT exemption without credit which is provided by the national legislation, but is not in-line with the VAT Directive and, deduct related input VAT quoting stipulations of the VAT Directive; and (2) clarify the scope of the exemption for intra-Community acquisition and import of goods whose local supply would be VAT exempt in the respective country.

The judgment

ECJ ruled that if national legislation prescribes a VAT exemption without credit which is not in line with the EU VAT Directive, taxable person may not apply such exemption and simultaneously deduct related input VAT quoting stipulations of the VAT Directive. ECJ also ruled that taxable person may apply exemption for intra- Community acquisition and import of dental prosthesis if their local supply would be VAT exempt.

In the ruling comment ECJ asserts that in a situation when national legislation is not in line with the EU VAT Directive, taxable person can apply either (a) national legislation or (b) the VAT Directive - it may not combine both to benefit its business transactions. 
As regards exemption for intra-Community acquisition and import of goods when the local supply of those is also VAT exempt, ECJ concluded that conditions for the application of respective exemptions derives from the stipulations of the destination country VAT legislation. For the customer to benefit from exemptions for intra-Community acquisition and import of dental prosthesis it is necessary that the supplier has a status of dental technicians or dentist and that its supply, if carried our locally under the same conditions, would be VAT exempt. If the supplier’s country of establishment does not exempt supply of dental prosthesis, that would not influence the exemption of intra-Community acquisition and imports in the destination country.

Note that Croatia transposed in the VAT Act the VAT Directive stipulations on the exemption of supplies of dental prosthesis carried out by dental technicians and dentists, as well as exemption for intra-Community acquisition and import of goods whose supply if carried our locally would be in all circumstances VAT exempt.

Rulings of the Court of Justice of the EU - VAT

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