Case C‑276/18

KrakVet Marek Batko sp.k.

v

Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága

(Request for a preliminary ruling from the Fővárosi Közigazgatási és Munkaügyi Bíróság)

Judgment of the Court (Fifth Chamber), 18 June 2020

(Reference for a preliminary ruling — Common system of value added tax (VAT) — Directive 2006/112/EC — Article 33 — Determination of the place where taxable transactions are carried out — Supply of goods with transport — Supply of goods dispatched or transported by or on behalf of the supplier — Regulation (EU) No 904/2010 — Articles 7, 13 and 28 to 30 — Cooperation between the Member States — Exchange of information)

1. Harmonisation of fiscal legislation — Common system of value added tax — Supply of goods — Place where taxable transactions are carried out — Supply of goods with transport — Whether VAT can be charged for supplies already subject to VAT in other Member States — Obligation of cooperation between the tax authorities of the Member States — Scope — Common solution as to the treatment of the same transaction for VAT purposes — Not included — Transactions unilaterally subject to tax treatment different from that in the other Member State — Whether permissible

   (Council Regulation No 904/2010; Council Directive 2006/112)

   (see paragraphs 46, 48-50, 53, operative part 1)

2. Questions referred for a preliminary ruling — Reference to the Court — Obligation to seek a preliminary ruling — Scope — Transaction subject to different VAT treatment in two Member States — Included — Condition — Decision issued by the referring court against which there is no judicial remedy under national law

   (Art. 267 TFEU)

   (see paragraph 51)

3. Harmonisation of fiscal legislation — Common system of value added tax — Supply of goods — Place where taxable transactions are carried out — Supply of goods with transport — Transport contract concluded between the purchaser and the carrier — Supplier recommending a carrier but leaving free choice to the purchaser — Transport or dispatch by or on behalf of the supplier — Concept — Goods transported or dispatched by a supplier having a predominant role in the essential stages of the supply — Included — Criteria for checking — Consideration of the economic and commercial reality

   (Council Directive 2006/112, Arts 32 and 33)

   (see paragraphs 61, 63, 66, 67, 69-73, 77, 78, 80, 82, operative part 2)

4. Harmonisation of fiscal legislation — Common system of value added tax — Actions constituting abuse — Supply of goods transported from a Member State other than that in which the transport ends — Transport contract concluded between the purchaser and the carrier — Supplier recommending a carrier but leaving free choice to the purchaser — Recommended carrier is independent and carries out a genuine economic activity — No abuse

   (Council Directive 2006/112)

   (see paragraphs 84, 85, 89, 90, 96, operative part 3)

Résumé

In the judgment in KrakVet Marek Batko (C‑276/18), delivered on 18 June 2020, the Court interpreted, for the first time, Article 33 of Directive 2006/112 ( 1 ) (‘the VAT Directive’) and the concept of goods ‘dispatched or transported by or on behalf of the supplier’, within the meaning of that provision, in the context of double taxation due to the different treatment, by two Member States, of the same transaction, a supply of goods involving cross-border dispatch or transport. That classification has an effect on the determination of the place where the taxable transaction is carried out and of the Member State responsible for the purposes of collecting value added tax (VAT).

The Court was also asked about the scope of the obligation of cooperation between the tax authorities of the Member States with regard to determining the place of supply of the goods at issue, pursuant to Regulation No 904/2010, ( 2 ) in order to rule on whether it is possible for the tax authorities of the Member State in which the goods are located when the transport ends to come, regarding the same transaction, to a different conclusion from that of the tax authorities of the Member State in which the supplier is established, resulting in double taxation of the taxable person.

In the present case, KrakVet, a company incorporated under Polish law that sells products for animals, offered its clients residing in Hungary, via its website, the possibility of entrusting delivery of goods to a Polish carrier that works in collaboration with it, those clients remaining, however, free to choose another carrier. If the purchaser chooses to make use of the recommended carrier, he concludes a contract with that carrier, which ensures delivery of the goods to the warehouses of two courier companies established in Hungary, from which the goods are distributed by a Hungarian carrier to the final consumers. Payment for the goods was made upon delivery to the courier service or by advance payment into a bank account.

As the Polish tax authorities took the view that the place of taxation of KrakVet’s commercial activities was in Poland, KrakVet paid VAT in that country. However, the Hungarian tax authorities carried out a posteriori checks of the VAT returns and initiated administrative tax proceedings against KrakVet, in the course of which those authorities consulted the Polish tax authorities. At the end of those proceedings, the Hungarian tax authorities found that the VAT on goods transported in Hungary had to be paid in Hungary and required KrakVet to pay a sum corresponding to the difference in taxation of VAT, a penalty and late payment interest, plus a fine for failure to comply with its obligations to register with the Hungarian tax authorities.

KrakVet challenged before the referring court the decision issued by the Hungarian tax authorities that resulted in it paying VAT twice, on the ground that this is contrary to EU law.

The Court ruled, first of all, that the VAT Directive and the relevant provisions of Regulation No 904/2010 do not preclude the tax authorities of a Member State from being able, unilaterally, to subject transactions to VAT treatment different from that under which they have already been taxed in another Member State. It thus pointed out that that regulation is confined to enabling administrative cooperation for the purposes of exchanging information that may be necessary for the tax authorities of the Member States and does not therefore govern the powers of those authorities to carry out the classification of the transactions concerned under the VAT Directive. That regulation does not lay down an obligation requiring the tax authorities of two Member States to cooperate in order to reach a common solution as regards the treatment of a transaction for VAT purposes and does not provide that the tax authorities of one Member State are bound by the classification given to that transaction by the tax authorities of another Member State. The correct application of the VAT Directive must make it possible to avoid double taxation and to ensure fiscal neutrality. Where there is divergence between the Member States in the tax treatment of a transaction, it is for the national courts to refer the matter to the Court of Justice for the purposes of interpreting the provisions of EU law. If it transpires that VAT has already been overpaid in a Member State, the right to a refund of charges levied in a Member State in breach of the rules of EU law is the consequence and complement of the rights conferred on individuals by provisions of EU law as interpreted by the Court. The Member State concerned is therefore required, in principle, to repay charges levied in breach of EU law.

Next, the Court examined the rules laid down by the VAT Directive with regard to determining the place where taxable transactions are carried out in cases of supply of goods with transport. The Court recalled that, in accordance with Article 32 of that directive, where goods are dispatched or transported by the supplier, or by the customer, or by a third person, the place of supply is deemed to be the place where the goods are located at the time when dispatch or transport of the goods to the customer begins. However, by way of derogation, Article 33 of that directive provides that the place of supply of goods dispatched or transported by or on behalf of the supplier from a Member State other than that in which dispatch or transport of the goods ends is deemed to be, subject to certain conditions, the place where the goods are located at the time when dispatch or transport of the goods to the customer ends.

Since consideration of the economic and commercial reality is a fundamental criterion for the application of the common system of VAT, the Court held that when, as in the present case, goods sold by a supplier established in one Member State to purchasers residing in another Member State are delivered to those purchasers by a carrier recommended by that supplier, but with which the purchasers are free to enter into a contract for the purpose of that delivery, those goods must be regarded as dispatched or transported ‘by or on behalf of the supplier’ and the supply must be regarded as falling within the scope of Article 33 of the VAT Directive where the supplier’s role is predominant in terms of initiating and organising the essential stages of the dispatch or transport of those goods.

Lastly, the referring court took the view that the situation at issue in the main proceedings raised the question whether it is possible to regard KrakVet’s practice as abusive, KrakVet having benefited from the lower rate of VAT of the Member State in which it is established, since the provisions laid down by Article 33 of the VAT Directive have not been applied to it. The Court ruled that it is not necessary to find that transactions by which goods sold by a supplier are delivered to purchasers by a company recommended by that supplier constitute an infringement of the law when, on the one hand, there is a connection between the supplier and that company, but, on the other hand, the purchasers remain free to make use of another company or personally collect the goods, since those circumstances are not liable to affect the finding that the supplier and the transport company recommended by it are independent companies which engage, on their own behalf, in genuine economic activities.

( 1 ) Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).

( 2 ) Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating fraud in the field of value added tax (OJ 2010 L 268, p. 1).