15.10.2019
In the opinion of the Federal Finance Court, the full address of the supplier on an invoice must be the one under which he develops his economic activity. The deduction of input tax must therefore only be granted if, in addition to the material requirements, the formal requirements are also met and if, in addition, an economic activity of the taxpayer is carried out at his address. However, the Federal Finance Court had doubts about the conformity of this formalistic approach with EU law after the ECJ ruling of 22 October 2015, C-277/14, PPUH Stehcemp, in which the ECJ ruled that a taxpayer may not be denied the right to deduct input tax solely because the invoice was issued by a "non-existent economic operator".
Now the Federal Finance Court wanted to know whether a letterbox invoice is sufficient for the input tax deduction ?
As a preliminary point, it should be recalled that, pursuant to Article 178(a) of the VAT Directive, in order to exercise the right of deduction, a taxable person must hold an invoice drawn up in accordance with Articles 220 to 236 and Articles 238 to 240 of that directive.
Article 226 of that directive lists the details which must appear on such an invoice. Article 226(5) lays down, in particular, the requirement to indicate the full name and address of the taxable person and of the customer.
In accordance with the case-law of the Court, in interpreting a provision of EU law, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it forms part.
As regards the wording of Article 226(5) of the VAT Directive, it should be noted that it offers different possibilities of interpretation in the various languages.
However, the absence or presence of the adjective ‘full’ in the wording of that requirement does not provide guidance as to whether the address indicated on the invoice must correspond to the address where the issuer of the invoice carries out its economic activity.
Furthermore, it should be stated that the ordinary meaning of the term ‘address’ is broad. As the Advocate General noted in his Opinion, the usual meaning of that term covers any type of address, including a ‘letterbox address’, provided that the person may be contacted at that address.
Moreover, Article 226 of the VAT Directive states that, without prejudice to the particular provisions of that directive, only the details mentioned in that article are required for VAT purposes on invoices issued pursuant to Article 220 of that directive.
It follows that the requirements relating to those details must be interpreted strictly since it is not possible for Member States to lay down more stringent requirements than those under the VAT Directive.
Consequently, it is not open to Member States to make the exercise of the right to deduct VAT dependent on compliance with conditions relating to the content of invoices which are not expressly laid down by the provisions of the VAT Directive.
In the second place, with regard to the context of which Article 226 of the VAT Directive forms part, it should be recalled that the right to deduct VAT may not, in principle, be limited.
The Court has held, in that regard, that holding an invoice showing the details referred to in Article 226 of the VAT Directive is a formal condition of the right to deduct VAT. The deduction of input VAT must be allowed if the substantive requirements are satisfied, even if the taxable persons have failed to comply with certain formal conditions. It follows that the detailed rules regarding the indication of the address of the issuer of the invoice cannot be a decisive condition for the purposes of the deduction of VAT.
In the third place, as regards the teleological interpretation of Article 226 of the VAT Directive, the purpose of the details which must be shown on an invoice is to allow the tax authorities to monitor the payment of the tax due and the existence of a right to deduct VAT.
In that respect, as the Advocate General noted, in essence, the aim of indicating the address, name and VAT identification number of the issuer of the invoice is to make it possible to establish a link between a given economic transaction and a specific economic operator, namely the issuer of the invoice. The identification of the issuer of the invoice allows the tax authorities to check whether the amount of VAT giving rise to the deduction has been declared and paid. Such identification also allows the taxable person to check whether the issuer of the invoice is a taxable person for the purposes of the VAT rules.
In that regard, it should be noted that the VAT identification number of the supplier of the goods or services is an essential piece of information in that identification. That number is easily accessible and verifiable by the tax authorities.
Moreover, as the Advocate General noted in his Opinion, in order to obtain a VAT identification number, undertakings must complete a registration process in which they are required to submit a VAT registration form, along with supporting documentation.
It follows that the aim of indicating the address of the issuer of the invoice, in conjunction with his name and VAT identification number, is to identify the issuer of the invoice and thus to enable the tax authorities to carry out the checks referred to.
In that context, it should also be pointed out that the Court has held that the deduction system is intended to relieve the trader entirely of the burden of the VAT payable or paid in the course of all its economic activities. In order to achieve the objectives pursued by that system, it is not necessary to lay down an obligation to indicate the address where the issuer of the invoice carries out its economic activity.
It follows that, for the purposes of the exercise of the right to deduct VAT by the recipient of goods or services, it is not a requirement that the economic activities of the supplier be carried out at the address indicated on the invoice issued by that supplier.
Consequently, the answer to the first question in Case C‑374/16 and the first and second questions in Case C‑375/16 is that Article 168(a) and Article 178(a) of the VAT Directive, read in conjunction with Article 226(5) thereof, must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which makes the exercise of the right to deduct input VAT subject to the condition that the address where the issuer of an invoice carries out its economic activity must be indicated on the invoice.
In other words, the right to deduct may not be made subject to the condition that the issuer of the invoice actually carries out his economic activity at the address indicated on the invoice. Consequently, the indication of a letterbox seat is also a "complete address" within the meaning of Paragraph 14 (4) Number. 1 of the law on Vat (=UStG), which is entitled to deduct input tax if the material conditions for input tax deduction are met.
European Court of Justice: Judgment of 15. November 2017, C‑374/16 und C‑375/16
