ECJ judgments

Incorrect VAT treatment may temporarily lead to double taxation within the same Member State

T-638/24 – D GmbH

In the case of an intra-Community acquisition of goods, a VAT payment obligation arising as a sanction for the use of a VAT identification number issued by a Member State other than the Member State of destination, and the VAT payment obligation connected with the issuance of a domestic invoice including VAT, may apply simultaneously. However, the possibility of correcting the situation must be ensured.

The plaintiff in the main proceedings is an Austrian GmbH that acquired goods in Austria and requested that those goods be dispatched to other Member States. The GmbH did not have VAT registrations in the Member States of destination; instead, it carried out the intra-Community acquisitions in all the Member States concerned using its “home” Austrian VAT identification number. The Austrian supplier, observing that the GmbH had provided an Austrian VAT number, issued invoices including Austrian VAT in respect of the supplies of goods. In the course of a tax audit, the Austrian tax authority examined the transactions and concluded that, pursuant to the Austrian implementation of Article 41 of the VAT Directive (Section 51 of the Hungarian VAT Act contains a corresponding provision), the GmbH was liable to pay Austrian VAT on the intra-Community acquisitions that were actually carried out in other Member States, because the acquisitions had not been made using a VAT identification number issued by the Member State of destination. At the same time, the Austrian tax authority also determined that the supplier—solely because it had indicated VAT on the invoices—was likewise liable to pay VAT, and that the domestic VAT incorrectly charged on the invoices could not be deducted by the GmbH.

The Court of Justice of the European Union held that it is not contrary to EU law that the incorrect VAT treatment of an intra-Community supply of goods may temporarily result in double taxation. The simultaneous application of two VAT liabilities arising on different legal grounds—namely, that the intra-Community supply cannot be treated as VAT-exempt for the seller because the purchaser provided a VAT identification number from the Member State of dispatch, while on the purchaser’s side a sanction-type VAT liability arises due to the use of a VAT identification number issued by a Member State other than the Member State of destination—may occur even within the same Member State. This is because the VAT obligations in question apply independently of one another and are subject to different conditions. The Court further emphasized that the situation leading to double taxation can be remedied through the correction of the VAT incorrectly charged. Member States must ensure the possibility of such correction, particularly where the taxable person acted in good faith and the risk of loss of tax revenue has been eliminated.

Full English text of the judgement

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