CJEU ruled that the Flemish Decree (requiring invoices relating to cross-border transactions to be drawn up exclusively in Dutch if the issuer has its place of business in the Dutch-speaking region) is contrary to EU law.

Imagine your company has its place of business within the Dutch-speaking region of Belgium. Your company sells its vehicles / (spare) parts / services to, for example, an Italian customer. In the given circumstances, according to the Decree on the use of Languages your invoice needs to be issued in the official language of the Flemish Community (ie. Dutch).

You obviously prefer that your Italian customer be able to understand the content of the invoice (he needs to be clear on how, when and what to pay). You therefore decide to issue your invoice in English or Italian. Your customer fails to pay the invoice, so you initiate legal proceedings. During these proceedings the customer claims that your invoice is null and void as it infringes the aforementioned Decree.

Very similar facts occurred in a case that was brought before the Commercial Court of Ghent (Belgium) wherein the latter submitted a request with the European Court of Justice (CJEU) for a preliminary ruling. On 21 June 2016 the CJEU (C-15/15) ruled that the aforementioned requirement of the Decree (to draw up the invoices relating to cross-border transactions exclusively in the Dutch language if the issuer has its place of business in the Dutch-speaking region) is contrary to EU law as it constitutes a restriction on the free movement of goods within the EU.

The CJEU considered that:

“[I]n depriving the traders concerned of the possibility of choosing freely a language which they are both able to understand for the drawing-up of their invoices and in imposing on them to that end a language which does not necessarily correspond to the one they agreed to use in their contractual relations, legislation such as that at issue in the main proceedings is likely to increase the risk of disputes and non-payment of invoices, since the recipients of those invoices could be encouraged to rely on their actual or alleged inability to understand the invoices’ content in order to refuse to pay them.

Conversely, the recipient of an invoice drawn up in a language other than Dutch could, given that such an invoice is null and void, be encouraged to dispute its validity for that reason alone, even if it were drawn up in a language he understands. Such nullity could, moreover, be the source of significant disadvantages for the issuer of the invoice, including the loss of default interest.” (C-15/15 paragraphs 40-41).

The CJEU recognised the objectives of the given legislation (ie. to encourage the official language of the linguistic region and to ensure the efficiency of fiscal supervision by the competent VAT authorities) but did not consider them sufficient to justify a restriction on the exercise of the free movement of goods within the EU.

In this respect the CJEU suggests: legislation of a Member State which not only required the use of the official language of that Member State for the drawing-up of invoices relating to cross-border transactions but which also, in addition, permitted an authentic version of such invoices to be drawn up in a language known to the parties concerned, would be less prejudicial to the free movement of goods than the legislation at issue in the main proceedings, while being appropriate for securing the objectives pursued by that legislation.” (C-15/15 paragraph 54).

Please note that, in accordance with Circular letter AAF n° 02/2013 dated 23.01.2013, the right of VAT deduction cannot be refused by the Belgian VAT Authorities on the sole ground that details required by law to be in an invoice are drawn up in a language other than an official language of the member-state in question. At most, the Belgian VAT Authorities could – if required for control / audit purposes – ask you to provide them with a translation of the invoice in an official national language.

As a result of this ruling in conjunction with circular letter AAF n°02/2013, you can in practice draw up your invoices in, for example, English or even Italian if that is more appropriate for your customer.