Principle of proportionality and fiscal neutrality in the VAT in cases of tax fraud. Judgement of the ECJ of 5 of October 2016. Maya Marinova


While the VAT Directive of sets guidelines, limits and provisions that Member States must adopt in its national regulation concerning the VAT, its article 273 allows to said Member States to establish others obligations that they may deem necessary for ensuring the correct collection of the tax and prevent the tax fraud, whenever these respect the principle of equality in comparison with domestic transactions and of transactions made between Member States. That is, the principles of fiscal neutrality and proportionality must be respected.

In this case the Tax Authorities in Bulgaria, as a result of a tax audit, raised a VAT liquidation to the taxable person whose activity consisted in retail sales of food or non-food products. In the course of the inspection was found that the taxable person had received invoices from its suppliers corresponding to deliveries of merchandise that was not in the warehouse, without had constancy of the rear sale of those goods to its customers. The taxable person had not accounted for these invoices received nor for the subsequent sales, without any tax declaration as well.

In view of the existence of the purchase invoices as well as of the absence of the goods, the Tax Authorities understood that the taxable person proceeded to sell those, without declaring the corresponding VAT, reason why they liquidated the VAT on the basis of an estimation of taxable base, by adding a margin to the prices of the goods acquired depending on the prices that used to apply to the corresponding products. Ultimately, in accordance with national legislation, the absence of accounting allows to presume the existence of a supply of goods subject to VAT.

Therefore, the remittance Court asks whether national rules allowing to settle the VAT through the estimation of a tax base when there is lack of accounting is compatible with the VAT Directive in terms of the principles of fiscal neutrality and proportionality.

The ECJ recalls that the Directive lays down the requirements for control purposes to taxable persons allowing the correct collection of the tax and the proper functioning of the VAT system, which are the proper accountancy, to keep all invoices and to submit a declaration determining the tax payable. In addition, as mentioned at the beginning, the Directive allows Member States to establish additional obligations to avoid tax fraud, provided that they respect the principle of equal treatment of domestic transactions and those carried out between Member States.

In any case corresponds to the national Body to decide if the measures laid down in national rules comply with these requirements, but the Court provides some indications in this respect. With regard to the principle of proportionality, understands the Court that to determine the taxable base according to the closest consideration really perceived in relation to the dates of transactions, its recipient and taxed income, do not go beyond what is necessary, so it would meet the proportionality.

Regarding the principle of neutrality, a taxable person that has committed a fraud by hiding taxable income and transactions is not under a comparable situation with taxable persons that meet their obligations, by what said principle cannot be invoked by who has deliberately committed a tax fraud.

Attached is a copy of the judgment of the ECJ with case number C-576/15.

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ECJ C 576_15

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