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Rulings of the Court of Justice of the European Union

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Rulings of the Court of Justice of the European Union (“ECJ”) constitute part of the acquis communitare and the Member States are obliged to apply them.

VAT – European Union Court

Value added tax (VAT) and other indirect taxes are becoming more significant on the global level. VAT is a type of the consumption tax which is the most material item of the budged revenue. Revenue planned from VAT in Croatia’s 2015 state budget is HRK 41, 5 billion.
Along with importance VAT has for European Union (EU) member states' budget revenues, it supports functioning of EU single market and accomplishment of the fundamental freedoms of movement of goods and supply of services. The main regulation governing VAT in European Union is Directive 112/2006/EC on the common system of VAT. Since the Directive is an EU regulation that has to be transposed into national legal systems, in the territories of the member states VAT is also governed by the national legislations. Powers and importance of the EU Court are considerable in such complex VAT regulatory frame.

Court of European Union is an EU institution whose main tasks are review of the legality of the acts of other EU institutions, ensuring that the member state comply with obligation assumed under the treaties on establishment and functioning of EU observation and ensuring uniform interpretation and application of EU law, all within powers awarded to it by the treaties on establishment and functioning of EU.

Judgments of EU Court represent an important source of EU law and they are binding for all member states, their state bodies and national courts (including the supreme and constitutional court), within their powers. Judgment of Court of European Union pertaining to one member state is mandatory for all other member states. In this sense, failure of an administrative body or court of a member state to consider and apply EU law rule, as interpreted by EU Court in one of its previous judgments (regardless of which branch of jurisdiction the judgment was given and who were the parties in the proceedings) may lead to an serious abuse of EU law and the state's liability for damages. Individuals and legal entities in the proceedings before national authorities of the member states and national courts may rely on EU law, and these authorities are obliged to apply it.

EU Court formalized general principles of law which are basis for EU legal system functioning through its practice and opinions expressed in judgments. Those principles include:

  • The rule of law
  • The principle of direct applicability and the primacy of Union law,
  • The principle of autonomy of EU law,
  • The principle of proportionality,
  • The principle of State liability for breach of EU law, and
  • The guarantee of fundamental rights.

The Court decided in approximately 500 cases pertaining to VAT.

Considering the importance the EU Court practice has for interpretation and application of EU law, we are seeking to provide to our clients and general public continuous professional assistance by publishing the recent EU Court judgments on this portal. As mentioned, these judgments represent a direct source of EU law the Croatian authorities are obligated to apply, in which sense the challenges the economic subject are facing in their activities in regard of VAT might be resolved by insight into the decision of EU Court.

It is however advisable to contact Deloitte when facing a complex challenge. Deloitte has a teams of specialists in VAT and other tax areas, the necessary tools and multidisciplinary and multinational approach by which it can provide solutions to challenges deriving from indirect taxation system you face in your day-to-day business

 

26th of March, 2015.

C-499/13 Marian Macikowski: Sales of immovable property in the enforcement proceedings, principles of proportionality and fiscal neutrality

ECJ concluded that the applicable VAT Directive rules do not preclude the Member States from ensuring the correct collection of tax through specific stipulations of national laws, such as those in this proceedings, which within the context of sales of immovable property effected through enforcement, imposes on a court enforcement officer obligations to calculate, collect and pay the VAT on the proceeds of that transaction.
5th of March 2015

C-502/13 Luxembourg and C-479/13 France: Application of a reduced VAT rate to a supply of digital or electronic books

ECJ ruled that French Republic and Grand Duchy of Luxembourg have failed to meet the VAT Directive requirements by applying the reduced VAT rate to the supply of digital or electronic books.
26th of February, 2015. 

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.

22nd of January, 2015.

C-55/14 Régie communale autonome du stade Luc Varenne: Letting of immovable property

ECJ ruled that making available sport infrastructure, such as football stadium, for a fee which also covers additional services, in particular maintenance, cleaning, upkeep (mowing, grass sowing etc.) and ensuring regulatory compliance of the playing surface, does not qualify as VAT exempt letting of immovable property but rather as an agreement subject to VAT.

December 11, 2014

C-590/13 Idexx Laboratories Italia: Deduction of VAT payable on intra-Community acquisition of goods

ECJ ruled that disrespecting the formal requirements relating to the right of input VAT deduction cannot result in the loss of that right if all substantive requirements governing such right are satisfied.  
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