Keywords
Summary

Keywords

Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Chargeable event and chargeability of tax

(Council Directive 77/388, Art. 10(2), second para.)

Summary

The second subparagraph of Article 10(2) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 95/7, as a derogation from the rule laid down in the first subparagraph of that provision, provides that, where payments are made on account before the goods are delivered or the services are performed, the tax becomes chargeable on receipt of payment and on the amount received. Prepayments of lump sums paid for goods referred to in general terms in a list which may be altered at any time by agreement between the buyer and the seller and from which the buyer may possibly select articles, on the basis of an agreement which he may unilaterally resile from at any time, thereupon recovering the unused balance of the prepayments, do not fall within the scope of that provision.

In order for the tax to become chargeable where an amount is paid on account without the supply or service having been provided, all the relevant information concerning the chargeable event, namely the future delivery or future performance, must already be known and therefore, in particular, when the payment on account is made the goods or services must be precisely identified.

(see paras 45, 48, 51, operative part)