ECJ judgments

The VAT credit may only be utilised during the operation of the taxable person

C‑680/23. – Modexel

The ECJ held in Modexel case that in the case of cessation and resumption of the economic activity, the taxable person may not carry excess VAT, declared at the time of that cessation of activity, forward to a period after the resumption.

The plaintiff of the background case ceased its economic activity from 28 February 2015 and set out a VAT credit of more than twelve thousand euros in its closing VAT return. That VAT credit was however not reclaimed within the twelve-month forfeit deadline provided by the Portuguese law, but the plaintiff declared it as a recoverable VAT in May 2016 when they resumed their economic activity.

The Portuguese tax authority refused the VAT deduction on the ground that the plaintiff missed the forfeit deadline for the VAT reclaim. The plaintiff lodged an administrative act against the tax authority’s decision before the Administrative and Tax Court of Funchal which referred the case to the ECJ as the court found that it is unclear from the regulation what is meant by “following period” for the purposes of the utilisation of the VAT credit; is it referring to the period immediately following, in the calendar, the period in respect of which the VAT credit was declared or there can be breaks between the periods.

The ECJ took the view that an interpretation giving an economic operator the possibility of carrying forward, after resumption of an economic activity, excess VAT declared when the previous activity ceased could encourage abuse and the establishment of artificial arrangements by economic operators.

The court held that an operator who ceases economic activity also ceases to be a taxable person for VAT purposes, namely there is no ‘following period’ after the termination of the activity nor ‘previous period’ when the activity is resumed. The court has also confirmed that it is in accordance with the principles of the common system of VAT if a Member State sets out a twelve-month forfeit deadline for the VAT reclaim in case of termination of the business activity.

Full English text of the judgement

Lépjen kapcsolatba szakembereinkkel!

Az alábbi űrlap segítségével feliratkozhat szakmai hírlevelünkre, így folyamatosan értesítjük az adózás, a könyvelés és a bérszámfejtés területén megjelenő újdonságokról.

További hírek

ECJ judgments

A report may not be sufficient for VAT deduction purposes

C-624/23.  – „SEM Remont” EOOD | The VAT deduction may not be practiced upon a report submitted during the tax administration procedure. Member States may exclude the possibility of correcting an invoice if that invoice does not state VAT charged and the VAT payment liability was established during [...]

ECJ judgments

The ECJ has interpreted the concept of ‘building land’

C-594/23. – Lomoco Development and others | An improved land with concrete foundations qualifies as ‘building land’ within the meaning of the VAT Directive. The plaintiff in the background case acquired an immovable property, used formerly as a campsite, and divided the property into sixteen plots. The plaintiff [...]

ECJ judgments

Even the small business exemption can be refused if the business was established for abusive purposes

C‑171/23. – UP CAFFE d.o.o. | The prohibition of abuse of rights concerning the EU VAT system must apply even in the absence of specific national regulations. In this case, a Croatian company carried on a restaurant business under the exemption for small enterprises. Once it no longer [...]

ECJ judgments

New ECJ decision on the VAT considerations of charging electric vehicles

C‑60/23. – Digital Charging Solutions | Charging an electric vehicle in a charging point constitutes supply of goods for VAT purposes however it is not evident that the access to the network and the adjacent services are ancillary to the supply of electricity. The electricity may also be [...]

ECJ judgments

The input VAT on assets provided free of charge to the subcontractor is deductible according to the ECJ

C‑475/23. - Voestalpine Giesserei Linz GmbH | The value-added tax related to the acquisition of assets provided free of charge to the subcontractor can also be deducted if the subcontractor uses the asset to the extent necessary for the economic activity of the company providing the asset. The [...]

ECJ judgments

The ’adjustment period’ of immovable properties has been interpreted by the ECJ

C‑243/23. Drebers | For the purposes of the capital goods scheme, the adjustment period of the immovable property is also applicable for construction works covering the full renovation and alteration of a building provided that the useful economic life of the result of the renovation works is as [...]

ECJ judgments

May the asset management of the employer’s pension funds be VAT-exempt?

C 639/22–C 644/22. – Stichting BPL Pensioen | Based on the judgement given by the ECJ on the 5th of September, it may not be excluded that the asset management activity of the employer’s pension funds qualifies as a VAT-exempt portfolio management. In the background case, employer’s pension funds, [...]

ECJ judgments

The ECJ ruled on the refundability of the improperly charged VAT

C‑83/23. – H GmbH | The incorrectly charged and remitted VAT may not be reclaimed by the customer directly from the tax authority if the supplier had this VAT refunded during an insolvency procedure. The plaintiff in the background case is a German business dealing with rental of [...]

ECJ judgments

The ECJ has confirmed that the transactions within a VAT group are not subject to VAT

C‑184/23. – Finanzamt T vs. S | The ECJ has confirmed that the transactions within a VAT group are not taxable even if the recipient of the services would not be entitled to recover the input VAT. The plaintiff in the case is a German foundation governed by [...]

ECJ judgments

The ECJ has ruled on the VAT consequences of the indemnity paid on expropriation

C‑182/23. – Makowit | It is decisive in the VAT treatment of indemnity paid on expropriation whether the property was utilised for business purposes. The plaintiff in this case is J. S. who has carried out breeding of dairy cattle and purchased meadows from non-taxable persons to expand [...]

ECJ judgments

Another CJEU judgment on the interpretation of the concept of fixed establishment

C-533/22 – Adient | The plaintiff in the case is Adient Ltd & Co. KG (Adient DE), headquartered in Germany, and a global supplier to automotive manufacturers. Adient DE entered into a service contract with its group company in Romania (Adient RO). Adient RO undertook the sewing of [...]