Case C‑107/13

FIRIN OOD

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Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’ — Veliko Tarnovo pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite

(Request for a preliminary ruling from the Administrativen sad Veliko Tarnovo)

‛Common system of value added tax — Deduction of input tax paid — Payments made on account — Refusal to allow the deduction — Fraud — Adjustment of the deduction in the case where the taxable transaction is not carried out — Conditions’

Summary — Judgment of the Court (Second Chamber), 13 March 2014

1. Questions referred for a preliminary ruling — Jurisdiction of the Court — Limits — Clearly irrelevant questions and hypothetical questions put in a context not permitting a useful answer — Questions bearing no relation to the subject matter of the case in the main proceedings

   (Art. 267 TFEU)

2. Harmonisation of fiscal legislation — Common system of value added tax — Deduction of input tax — Refusal on the ground that the supply of goods had not actually been made, on account of fraud and irregularities — Not permissible — Limits — Verification a matter for the national court

   (Council Directive 2006/112)

3. Harmonisation of fiscal legislation — Common system of value added tax — Deduction of input tax — Adjustment of the initial deduction — Aim

   (Council Directive 2006/112)

4. Harmonisation of fiscal legislation — Common system of value added tax — Deduction of input tax — Adjustment of the initial deduction — Obligation on Member States to require adjustment for the payment made on account when no supply of goods has been made — Supplier liable and having not refunded the payment made on account — Irrelevant

   (Council Directive 2006/112, Arts 65, 90(1), 168(a), 185(1) and 193)

1.  See the text of the decision.

   (see paras 29-32)

2.  See the text of the decision.

   (see paras 40-46)

3.  See the text of the decision.

   (see para. 50)

4.  Articles 65, 90(1), 168(a), 185(1) and 193 of Directive 2006/112 on the common system of value added tax must be interpreted as requiring that the deduction of value added tax made by the recipient of an invoice drawn up with a view to a payment being made on account in relation to the supply of goods be adjusted where that supply is ultimately not made, even if the supplier remains liable for that tax and has not refunded the payment made on account.

   So far as concerns the treatment of value added tax that has been improperly invoiced because there is no taxable transaction, it follows from the directive that the two traders involved are not necessarily treated identically. On the one hand, the issuer of an invoice is liable to pay the tax entered on that invoice even if there is no taxable transaction, in accordance with Article 203 of Directive 2006/112. On the other hand, exercise of the right of deduction by the recipient of an invoice is limited solely to tax corresponding to a transaction subject to value added tax, in accordance with Articles 63 and 167 of that directive.

   In this connection, in such a situation, compliance with the principle of fiscal neutrality is ensured by the possibility, to be provided for by the Member States, of correcting any tax improperly invoiced where the issuer of the invoice shows that he acted in good faith or where he has, in sufficient time, wholly eliminated the risk of any loss of tax revenue.

   Therefore, in those circumstances and without prejudice to the right of the taxable person to obtain from its supplier, through the appropriate national legal remedies, a refund of the payment made on account for a supply of goods which ultimately was not made, the fact that the value added tax payable by that supplier has not itself been adjusted does not affect the right of the tax authority to obtain repayment of the tax deducted by that taxable person on the basis of the payment made on account corresponding to such a supply.

   (see paras 54, 55, 57, 58, operative part)