Joined Cases C-621/10 and C-129/11

Balkan and Sea Properties ADSITS and Provadinvest OOD

v

Direktor na Direktsia ‘Obzhalvane i upravlenie na izpalnenieto’ — Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite

(References for a preliminary ruling from the Administrativen sad Varna)

‛VAT — Directive 2006/112/EC — Articles 73 and 80(1) — Sale of immovable property between connected companies — Value of the transaction — National legislation providing that for transactions between connected persons the taxable amount for VAT purposes is the open market value of the transaction’

Summary of the Judgment

1. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of value added tax — Taxable amount — Supply of goods or services — Transaction between connected persons

   (Council Directive 2006/112, Art. 80(1))

2. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of value added tax — Taxable amount — Supply of goods or services — Transaction between connected persons

   (Council Directive 2006/112, Art. 80(1))

1.  Article 80(1) of Directive 2006/112 on the common system of value added tax must be interpreted as meaning that the conditions of application it sets out are exhaustive and, consequently, that national legislation cannot on the basis of that provision provide that the taxable amount is to be the open market value of a transaction between connected persons in cases other than those listed in that provision, in particular where the taxable person has a full right of deduction of value added tax, which is for the national court to ascertain.

   In accordance with the general rule set out in Article 73 of Directive 2006/112, the taxable amount for the supply of goods or services for consideration is the consideration actually received for them by the taxable person. That consideration is the subjective value, that is to say, the value actually received, and not a value estimated according to objective criteria. By allowing the taxable amount to be taken as the open market value of the transaction in certain cases, Article 80(1) of Directive 2006/112 lays down an exception to the general rule stated in Article 73 of that directive, which must as such be interpreted strictly.

   (see paras 43, 45, 52, operative part 1)

2.  Article 80(1) of Directive 2006/112 on the common system of value added tax confers on the companies concerned by a transaction between connected persons the right to rely on it directly to oppose the application of provisions of national legislation that are incompatible with that provision. If it is not possible to interpret the national legislation in conformity with Article 80(1) of the directive, the national court should disapply any provision of that legislation that is contrary to it.

   (see para. 62, operative part 2)

Joined Cases C-621/10 and C-129/11

Balkan and Sea Properties ADSITS and Provadinvest OOD

v

Direktor na Direktsia ‘Obzhalvane i upravlenie na izpalnenieto’ — Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite

(References for a preliminary ruling from the Administrativen sad Varna)

‛VAT — Directive 2006/112/EC — Articles 73 and 80(1) — Sale of immovable property between connected companies — Value of the transaction — National legislation providing that for transactions between connected persons the taxable amount for VAT purposes is the open market value of the transaction’

Summary of the Judgment

1. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of value added tax — Taxable amount — Supply of goods or services — Transaction between connected persons

   (Council Directive 2006/112, Art. 80(1))

2. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of value added tax — Taxable amount — Supply of goods or services — Transaction between connected persons

   (Council Directive 2006/112, Art. 80(1))

1.  Article 80(1) of Directive 2006/112 on the common system of value added tax must be interpreted as meaning that the conditions of application it sets out are exhaustive and, consequently, that national legislation cannot on the basis of that provision provide that the taxable amount is to be the open market value of a transaction between connected persons in cases other than those listed in that provision, in particular where the taxable person has a full right of deduction of value added tax, which is for the national court to ascertain.

   In accordance with the general rule set out in Article 73 of Directive 2006/112, the taxable amount for the supply of goods or services for consideration is the consideration actually received for them by the taxable person. That consideration is the subjective value, that is to say, the value actually received, and not a value estimated according to objective criteria. By allowing the taxable amount to be taken as the open market value of the transaction in certain cases, Article 80(1) of Directive 2006/112 lays down an exception to the general rule stated in Article 73 of that directive, which must as such be interpreted strictly.

   (see paras 43, 45, 52, operative part 1)

2.  Article 80(1) of Directive 2006/112 on the common system of value added tax confers on the companies concerned by a transaction between connected persons the right to rely on it directly to oppose the application of provisions of national legislation that are incompatible with that provision. If it is not possible to interpret the national legislation in conformity with Article 80(1) of the directive, the national court should disapply any provision of that legislation that is contrary to it.

   (see para. 62, operative part 2)