On October 5, 2016 the Court of Justice of the European Union (CJEU) judged in Case C-576/15 Маya Маrinova ET versus Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’ Veliko Tarnovo pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite (ECLI:EU:C:2016:740).
This request for a preliminary ruling concerns the interpretation of Article 2(1)(a), Article 9(1), Article 14(1) and Articles 73, 80 and 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1, ‘the VAT directive’).
The request has been made in proceedings between Maya Marinova ET (‘MM’) and the Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’ Veliko Tarnovo pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite (Director of the ‘Appeals and Tax and Social Security Office’ Directorate for Veliko Tarnovo, attached to the central office of the National Revenue Agency, Bulgaria, ‘the Director’) concerning a tax adjustment notice in respect of an additional assessment to value added tax (VAT) and late payment interest.
The dispute in the main proceedings and the questions referred for a preliminary ruling
· MM is a sole-trader business owned by Ms Maya Vasileva Marinova, a Bulgarian national registered as a sole trader within the meaning of Bulgarian law. The business sells by retail food and non-food products to end consumers in a shop in the municipality of Troyan (Bulgaria).
· MM was the subject of a tax inspection following which the Territorial Directorate of the Natsionalna agentsia po prihodite (National Revenue Agency, ‘the Bulgarian tax authorities’) issued an additional assessment to VAT on 5 June 2014 in the amount of BGN 30 545.73 (approximately EUR 15 618) increased by BGN 16 442.85 (approximately EUR 8 407) in interest.
· During that inspection, in taking investigative action in relation to MM’s commercial partners, who were registered for the purposes of VAT, the Bulgarian tax authorities found that several of them had issued invoices to MM with regard to tobacco products and food products which had been supplied to MM. Those invoices were recorded in the accounts of their issuers but not in those of MM, which had not deducted the VAT referred to in those invoices.
· The Bulgarian tax authorities took the view that MM had in fact received those goods and they presumed, on the basis of the absence of those goods from the warehouse of that business and their nature, that MM had sold them at retail level to unknown third parties during the tax years in which those invoices had been drawn up. Finding that MM had accounted neither for the supplies of the goods by the suppliers nor their subsequent sale, the Bulgarian tax authorities concluded that that business had concealed those supplies and the revenue from their resale.
· In addition, the Bulgarian tax authorities found that, from 1 May 2008 to 26 April 2010, MM did not appear on the register of persons liable to VAT on the ground that its turnover had not exceeded the threshold of BGN 50 000 (approximately EUR 25 000) laid down in the national legislation from which such registration is mandatory. However, the tax authorities took the view, on the basis also of the invoices issued by that business’s suppliers, that, from 1 May 2007 to 30 April 2008, the actual turnover of MM was above that threshold and that, accordingly, MM was required to request entry onto the register of persons liable to VAT from 1 May 2008, although it did so only on 26 April 2010.
· Consequently, the Bulgarian tax authorities calculated an additional assessment to VAT and issued the tax adjustment notice at issue in the main proceedings. It determined the taxable amount of the presumed retail sales of the products indicated in the invoices drawn up by the commercial partners of MM and the taxable amount of the sales effected by MM in the period from 1 May 2008 to 26 April 2010. In order to determine that taxable amount, pursuant to the national legislation, the Bulgarian tax authorities added a profit margin to the price of the goods appearing on those invoices, determined according to the prices ordinarily applied by MM to the corresponding products.
· MM lodged an administrative objection to that notice with the Director. As that objection was dismissed by decision of 15 August 2014, MM brought judicial proceedings against that notice before the Administrativen sad Veliko Tarnovo (Administrative Court, Veliko Tarnovo, Bulgaria).
· MM claims that there is no basis for the determination ‘by analogy’ of a taxable amount under the procedure provided for by the national law at issue in the main proceedings. In that regard, it submits that the fact that invoices for the sale of goods are recorded in the accounts of suppliers does not mean that the goods referred to in those invoices have actually been supplied and that it concealed the supply of those goods. There is evidence neither of the receipt of those goods by MM nor of their subsequent resale by MM.
· According to the Director, in accordance with the national legislation, it can be presumed from the failure of a taxable person to keep proper accounts that there is a subsequent unaccounted for supply of the goods to third parties for consideration and that the date of the taxable event and taxable amount can be determined.
· The referring court considers it to have been proved that, in acting as a taxable person within the meaning of the VAT directive and, independently, carrying out an economic activity, MM actually received the goods listed on the invoices issued by the suppliers during the tax years in which those invoices were issued and that it had those invoices in its possession, but neither recorded them in the accounts nor produced them to the Bulgarian tax authorities at the time of the tax inspection.
· However, the referring court considers that the receipt of those goods and anomalies in the accounting of MM do not necessarily mean, in the absence of other objective evidence, that those goods were subsequently sold by MM. Noting that the provisions of the DOPK do not require the existence of concealed revenue relating to each of those subsequent presumed sales to be proved and that the taxable amount calculated under that legislation does not necessarily reflect the consideration actually received by the taxable person, the referring court finds that Article 122(2) of the DOPK lays down rules for determining the taxable amount of supplies of goods that are different from those provided for in Articles 73 to 80 of the directive.
· The referring court therefore wishes to know whether the national legislation at issue in the main proceedings is, within the context of the procedural autonomy enjoyed by the Member States, compatible with the principles of fiscal neutrality and proportionality and with Article 9(1), Article 14(1) and Articles 73, 80 and 273 of the directive.
· In those circumstances, the Administrativen sad Veliko Tarnovo (Administrative Court, Veliko Tarnovo) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
(1) Must Article 273, Article 2(1)(a), Article 9(1) and Article 14(1) of the VAT directive, taken together, having regard to the principles of fiscal neutrality and proportionality, be interpreted as meaning that a Member State is to be entitled to treat the de facto absence of goods which were transferred to a taxable person by way of taxable supplies as subsequent taxable supplies of those goods for consideration by that taxable person, without the recipient of those goods being identified, where the aim is to prevent VAT evasion?
(2) Must the provisions referred to in Question 1, having regard to the principles of fiscal neutrality and proportionality, be interpreted as meaning that a Member State is to be entitled to treat the failure by a taxable person to record tax-relevant documents relating to taxable supplies received in the manner described above, where this serves the same aim?
(3) Must Articles 273, 73 and 80 of the VAT directive, taken together, having regard to the principles of equal treatment and proportionality, be interpreted as meaning that Member States are to be entitled, on the basis of national provisions which do not serve to transpose the VAT directive, to determine the taxable amount for supplies of goods by a taxable person in a way which diverges from the general rule provided for in Article 73 of the VAT directive and the exceptions expressly provided for in Article 80 of that directive, where the aim is, first, to prevent VAT evasion and, secondly, to determine a taxable amount for the transactions concerned that is as reliable as possible?
The CJEU judged as follows:
Article 2(1)(a), Article 9(1) Article 14(1) and Articles 73 and 273 of the Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and the principle of fiscal neutrality must be interpreted as not precluding national legislation, such as that at issue in the main proceedings, under which, where goods are not in the warehouse of the taxable person to whom they have been supplied and the tax documents of relevance to those goods have not been recorded in the accounts of that taxable person, tax authorities may presume that the taxable person subsequently sold those goods to third parties and determine the taxable amount of the sale of those goods according to the factual information at hand pursuant to rules not provided for in that directive. It is, however, for the referring court to ascertain whether the provisions of the national legislation go further than is necessary to ensure the correct collection of VAT and to prevent evasion.
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