Court of Justice of the European Union Judgment of 14 April 2015

Case C-76/14

In this Judgment, rendered within a reference for a preliminary ruling, the Court of Justice of the European Union decides that the creation by a Member State of a tax on motor vehicles, levied on second-hand imported vehicles, at the time of their first registration in that Member State, as well as on vehicles already registered in that Member State, at the time of the first transfer of the right of ownership within that same State, does not contravene the principle of free movement of goods.

However, exemption from that tax on the domestic second-hand motor vehicles in respect of which a similar tax previously in force and subsequently declared incompatible with EU law has already been paid (instead of its reimbursement with interest) does constitute a violation of the principle of free movement of goods, since it favours sales of domestic second-hand vehicles and discourages the importation of similar vehicles.

Court of Justice of the European Union Judgment of 16 April 2015

Case C-591/13

In this Judgment, rendered in the context of an action for failure to fulfil obligations under the Treaty, the Court of Justice of the European Union gives its opinion on the legal regime in a Member State regarding the taxation of capital gains realised on the sale of an investment asset that forms part of the assets of a permanent establishment located within that Member State.

According to the analysed legal regime, the taxation of those capital gains is deferred if they are reinvested in the acquisition or production of replacement assets that shall form part of the assets of a permanent establishment of the same taxpayer, located within the Member State in question. However, if the reinvestment is made in assets that shall form part of the assets of an establishment of the same taxpayer located in another Member State, the capital gains in question are subject to immediate taxation.

The Court of Justice of the European Union concludes that these provisions constitute an illegal restriction on the principle of freedom of establishment, because they give rise to a cash-flow disadvantage for the taxpayer wishing to reinvest those capital gains in the assets of a permanent establishment located within the territory of another Member State, resulting in a difference in treatment that cannot be explained by an objective difference in situation and cannot be justified by overriding grounds of public interest.

Court of Justice of the European Union Judgment of 16 April 2015

Case C-42/14

In this Judgment, rendered within a reference for a preliminary ruling, the Court of Justice of the European Union decides, in line with previous decisions, that the letting of immovable property and the supply of water, electricity and heating as well as waste management accompanying that letting must, in principle, be regarded as constituting several distinct and independent supplies which need to be assessed separately for VAT purposes.

However, those supplies are deemed to be a single complex supply if their different elements are closely linked, in such a way that they form, objectively, a single, indivisible economic supply, which would be artificial to split. For this purpose it is necessary to analyse the economic reason on the basis of the conclusion of such contract.

If the lessee is not able to freely choose the suppliers and the terms of use of the goods or services provided with the letting, this indicates that the supplies and letting must be considered a single supply for VAT purposes.

Court of Justice of the European Union Judgment of 23 April 2015

Case C-111/14

In this Judgment, rendered within a reference for a preliminary ruling, the Court of Justice of the European Union decides that the neutrality of VAT is not compatible with a national provision which refuses the supplier of services the possibility to recover from the recipient the VAT paid by the former following a compulsory assessment (which was based on the grounds that the services have been supplied from a fixed establishment located in the territory of the Member State in question), when the recipient of those services, VAT taxpayer established in the territory of said Member State, had also paid that tax on the mistaken assumption that the supplier did not have a fixed establishment in that State, without having the right to the correspondent deduction.

The Court of Justice of the European Union holds that, in order to ensure the neutrality of VAT, the Member States have to provide for the possibility of regularising the invoices incorrectly issued (in casu, invoices issued without VAT because of the improperly application of the reverse charge rule), where the person who issued the invoice shows that he acted in good faith. However, where the risk of any loss of tax revenue has been totally eliminated, the principle of the neutrality of VAT requires the regularisation to be admitted without being dependent upon the discretion of the Tax Authority on to the good faith of the issuer of the relevant invoice.

Thus the Court of Justice of the European Union notes that the principle of neutrality of the tax would not be undermined in this case if the national provisions in question allowed the supplier of services, after having paid the VAT due as a result of the compulsory assessment, to adjust the invoices issued and recover that VAT from the recipient of the services, who should be granted the right to obtain the correspondent deduction.

Court of Justice of the European Union Judgment of 23 April 2015

Case C-16/14

In this Judgment, delivered within a reference for a preliminary ruling, the Court of Justice of the European Union decides on the VAT taxable amount of an operation assimilated to a supply of goods for consideration.

The Court of Justice of the European Union states that, when dealing with a definitive allocation of a real estate asset built by the taxpayer to an exempt area of activity, in respect of which VAT was previously wholly deducted (upon its previous allocation for the purposes of the company’s business), the taxable amount shall be the purchase price of similar goods at the time of the allocation to an exempt area of activity. In this context, it is irrelevant to assess the elements of such purchase price, more specifically if one of those elements results from the payment of interest.

Therefore, the cost criterion shall only be used to determine the taxable amount of a situation as described above if it would not be possible to ascertain the purchase price of a similar good in the market (in casu, property real estate asset whose location, size and other essential characteristics are similar to those of the asset in question).