Summary of the facts
Gamesa, a company established in Bucharest (Romania), governed by Romanian law was involved in the business of the assembly, installation and maintenance of wind farms. The latter acquired various goods and services from suppliers established and registered for VAT purposes in Romania and in other Member States of the European Union.
From 7 October 2010 to 24 May 2011, Gamesa was declared inactive taxpayer’ for the purposes of Article 11(11) of the Tax Code on the ground that, for half a calendar year, it had not filed any of the returns required by law.
On the basis of the report drawn up following that inspection, Gamesa received an assessment notice refusing it the right to deduct a certain amount of VAT and imposing on it an obligation to pay penalties on the basis that it was not entitled to a right of deduction in respect of the acquisitions made in the period during which it had been declared inactive.
Questions referred to the ECJ
(1) Does [Directive 2006/112] (in particular, Articles 213, 214 and 273) preclude, in circumstances such as those of the main proceedings, national legislation or a tax practice under which a taxpayer does not have the right to deduct VAT claimed in several returns after the reactivation of the taxpayer’s VAT identification number, on the basis that the VAT in question relates to purchases made during a period in which the taxpayer’s VAT identification number was inoperative?
(2) Does [Directive 2006/112] (in particular, Articles 213, 214 and 273) preclude, in circumstances such as those of the main proceedings, national legislation or a tax practice under which a taxpayer does not have the right to deduct VAT claimed in several returns after the reactivation of the taxpayer’s VAT identification number, on the basis that, although the VAT in question relates to invoices issued after the reactivation of the taxpayer’s VAT identification number, it concerns purchases made during a period in which the VAT identification number was inoperative?’
Conclusions by the ECJ
It was upheld by the Court that Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2010/45/EU of 13 July 2010, in particular Articles 213, 214 and 273 thereof, must be interpreted as precluding national legislation, such as that at issue in the main proceedings, under which it is permissible for the tax authorities to refuse, on account of a failure to submit tax returns, a taxable person which has made acquisitions in the period during which its value added tax identification number was revoked the right to deduct value added tax on those acquisitions using value added tax returns filed — or invoices issued — after the reactivation of its identification number, on the sole ground that those acquisitions took place in the period during which its value added tax identification number was de-activated and where the substantive requirements have been satisfied and the right of deduction is not being invoked fraudulently or abusively.
The full text of the case can be found here.
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Franco Falzon CPA LL.M
(Managing Partner)
E: franco@ffinternational.com.mt
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