Provisional text

5 September 2024 (*1)

( Reference for a preliminary ruling – Harmonisation of fiscal legislation – Common system of value added tax (VAT) – Directive 2006/112/EC – VAT unduly invoiced and paid – Correction of the invoice – Liquidation of the supplier – Refund to the supplier of the VAT – Refusal of the tax authority to refund the VAT directly to the purchaser – Priority for the right to a VAT refund – Risk of a double refund of the VAT – Risk of loss of tax revenue )

In Case C‑83/23,

REQUEST for a preliminary ruling under Article 267 TFEU from the Bundesfinanzhof (Federal Fiscal Court, Germany), made by decision of 3 November 2022, received at the Court on 15 February 2023, in the proceedings

Finanzamt M,

THE COURT (Seventh Chamber),

composed of F. Biltgen (Rapporteur), President of the Chamber, N. Wahl and M.L. Arastey Sahún, Judges,

Advocate General: T. Ćapeta,

Registrar: A. Calot Escobar,

having regard to the written procedure and further to the hearing on 11 January 2024,

after considering the observations submitted on behalf of:

– H GmbH, by M. Boche, M. von Einem and A. Graf, Rechtsanwälte, D. Hoffmanns and J. Scholz, Steuerberater,

– the German Government, by J. Möller and N. Scheffel, acting as Agents,

– the European Commission, by B. Eggers and J. Jokubauskaitė, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

1This request for a preliminary ruling concerns the interpretation of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1), as amended by Council Directive 2010/45/EU of 13 July 2010 (OJ 2010 L 189, p. 1) (‘the VAT Directive’), and of Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State (OJ 2008 L 44, p. 23).

2The request has been made in proceedings between H GmbH, a company established in Germany, and the Finanzamt M (Tax Office M, Germany) concerning the right to deduct input value added tax (VAT) and the equitable refund of that tax.

Legal context

European Union law

Directive 2011/92

3 Recitals 7 to 9 of Directive 2011/92 state:

‘(7) Development consent for public and private projects which are likely to have significant effects on the environment should be granted only after an assessment of the likely significant environmental effects of those projects has been carried out. …

(8) Projects belonging to certain types have significant effects on the environment and those projects should, as a rule, be subject to a systematic assessment.

ECLI:EU:C:2025:140

(9) Projects of other types may not have significant effects on the environment in every case and those projects should be assessed where the Member States consider that they are likely to have significant effects on the environment.’

Article 2(1) of that directive provides:

‘Member States shall adopt all measures necessary to ensure that, before development consent is given, projects likely to have significant effects on the environment by virtue, inter alia, of their nature, size or location are made subject to a requirement for development consent and an assessment with regard to their effects on the environment. Those projects are defined in Article 4.’

Under Article 3(1) of that directive:

‘The environmental impact assessment shall identify, describe and assess in an appropriate manner, in the light of each individual case, the direct and indirect significant effects of a project on the following factors:

…

(b) biodiversity, with particular attention to species and habitats protected under [Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ 1992 L 206, p. 7), as amended by Council Directive 2013/17/EU of 13 May 2013 (OJ 2013 L 158, p. 193) (“Directive 92/43”)] and Directive 2009/147/EC [of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (OJ 2010 L 20, p. 7)];

…’

Article 4 of Directive 2011/92 provides:

‘1. Subject to Article 2(4), projects listed in Annex I shall be made subject to an assessment in accordance with Articles 5 to 10.

(a) a case-by-case examination;

(b) thresholds or criteria set by the Member State.

Member States may decide to apply both procedures referred to in points (a) and (b).

Where a case-by-case examination is carried out or thresholds or criteria are set for the purpose of paragraph 2, the relevant selection criteria set out in Annex III shall be taken into account. Member States may set thresholds or criteria to determine when projects need not undergo either the determination under paragraphs 4 and 5 or an environmental impact assessment, and/or thresholds or criteria to determine when projects shall in any case be made subject to an environmental impact assessment without undergoing a determination set out under paragraphs 4 and 5.

Where Member States decide to require a determination for projects listed in Annex II, the developer shall provide information on the characteristics of the project and its likely significant effects on the environment. The detailed list of information to be provided is specified in Annex IIA. The developer shall take into account, where relevant, the available results of other relevant assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The developer may also provide a description of any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

The competent authority shall make its determination, on the basis of the information provided by the developer in accordance with paragraph 4 taking into account, where relevant, the results of preliminary verifications or assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The determination shall made available to the public and:

(a) where it is decided that an environmental impact assessment is required, state the main reasons for requiring such assessment with reference to the relevant criteria listed in Annex III; or

(b) where it is decided that an environmental impact assessment is not required, state the main reasons for not requiring such assessment with reference to the relevant criteria listed in Annex III, and, where proposed by the developer, state any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

Member States shall ensure that the competent authority makes its determination as soon as possible and within a period of time not exceeding 90 days from the date on which the developer has submitted all the information required pursuant to paragraph 4. In exceptional cases, for instance relating to the nature, complexity, location or size of the project, the competent authority may extend that deadline to make its determination; in that event, the competent authority shall inform the developer in writing of the reasons justifying the extension and of the date when its determination is expected.’

Annex II.A of that directive contains the list of ‘information to be provided by the developer on the projects listed in Annex II’. That list reads as follows:

‘1. A description of the project, including in particular:

(a) a description of the physical characteristics of the whole project and, where relevant, of demolition works;

(b) a description of the location of the project, with particular regard to the environmental sensitivity of geographical areas likely to be affected.

(a) the expected residues and emissions and the production of waste, where relevant;

(b) the use of natural resources, in particular soil, land, water and biodiversity.

ECLI:EU:C:2025:140

JUDGMENT OF 6. 3. 2025 – CASE C-41/24 WALTHAM ABBEY RESIDENTS ASSOCIATION

The criteria of Annex III shall be taken into account, where relevant, when compiling the information in accordance with points 1 to 3.’

Annex III to that directive sets out the ‘criteria to determine whether the projects listed in Annex II should be subject to an environmental impact assessment’.

Directive 2014/52

Recitals 11 and 29 of Directive 2014/52 state:

‘(11) The measures taken to avoid, prevent, reduce and, if possible, offset significant adverse effects on the environment, in particular on species and habitats protected under [Directive 92/43] and Directive 2009/147 …, should contribute to avoiding any deterioration in the quality of the environment and any net loss of biodiversity, in accordance with the [European] Union’s commitments in the context of the [United Nations Convention on Biological Diversity, signed in Rio de Janeiro on 5 June 1992,] and the objectives and actions of the Union Biodiversity Strategy up to 2020 laid down in the [Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions] of 3 May 2011 entitled ‘Our life insurance, our natural capital: an EU biodiversity strategy to 2020’ [(COM(2011) 244 final)]

…

When determining whether significant effects on the environment are likely to be caused by a project, the competent authorities should identify the most relevant criteria to be considered and should take into account information that could be available following other assessments required by Union legislation in order to apply the screening procedure effectively and transparently. In this regard, it is appropriate to specify the content of the screening determination, in particular where no environmental impact assessment is required. Moreover, taking into account unsolicited comments that might have been received from other sources, such as members of the public or public authorities, even though no formal consultation is required at the screening stage, constitutes good administrative practice.’

Directive 92/43

Article 6(3) of Directive 92/43 provides:

‘Any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon, either individually or in combination with other plans or projects, shall be subject to appropriate assessment of its implications for the site in view of the site’s conservation objectives. In the light of the conclusions of the assessment of the implications for the site and subject to the provisions of paragraph 4, the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public.’

Article 12(1) of that directive provides:

‘Member States shall take the requisite measures to establish a system of strict protection for the animal species listed in Annex IV(a) in their natural range, prohibiting:

(a) all forms of deliberate capture or killing of specimens of these species in the wild;

(b) deliberate disturbance of these species, particularly during the period of breeding, rearing, hibernation and migration;

(c) deliberate destruction or taking of eggs from the wild;

(d) deterioration or destruction of breeding sites or resting places.’

Point (a) of Annex IV to that directive mentions ‘all species’ of bats belonging to the suborder of ‘microchiroptera’.

Irish law

The referring court considers that the case at issue in the main proceedings is comparable to, in some respects, that which gave rise to the judgment of 13 October 2022, HUMDA (C‑397/21, EU:C:2022:790). The referring court doubts, however, that the solution adopted in that judgment can be transposed to the case at issue in the main proceedings. More specifically, that judgment does not answer the question whether there is a ‘direct right’ to a refund where, as in the present case, it is necessary to replace the national VAT on the initial invoice with the higher rate of VAT from another Member State. The referring court asks whether, in terms of the European Union as a whole and including the Member State in which the service was actually provided, there is not rather a right to have an invoice referring to the Italian tax issued. In that context, that judgment also does not resolve the question whether the ‘direct right’ to a refund could, in a situation such as that at issue in the main proceedings, be subject to the condition that the purchaser has brought a civil action seeking to have the insolvent supplier issue an invoice referring to the VAT of that other Member State. The question also arises as to whether considerations relating to the prevention of fraud could, in such a situation, affect the right of the purchaser to claim directly from the tax authority a refund of the VAT unduly invoiced and paid. In that regard, the referring court states that the fact that the court-appointed insolvency administrator of E-GmbH will not declare in Italy the Italian VAT legally due could, under Italian law, result in VAT fraud in Italy.

25In the second place, the referring court asks whether, in a situation such as that at issue in the main proceedings, the tax authority must prioritise the right to a refund by the issuer of the invoice on account of the adjustment of the invoice or the ‘direct right’ of the recipient of the invoice. It asks, in that regard, whether it is necessary to take account of the fact that the usual refund chain cannot be followed on account of the insolvency of the issuer of the invoice and/or the matters of timing such as, for example, the fact that, when the tax authorities refunded that VAT to the issuer of the invoice, they were aware that the issuer of the invoice was insolvent and could therefore discern the possibility that the recipient of the invoice had a ‘direct right’ to a refund.

26In those circumstances the Bundesfinanzgericht (Federal Fiscal Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) Does the recipient of a service, who is domiciled in the national territory, have a so-called direct claim against the national tax administration by virtue of the judgment of the Court of 15 March 2007, Reemtsma Cigarettenfabriken – C‑35/05 (EU:C:2007:167) if:

(1)(a) the service provider, who is also domiciled within the national territory, issues the service recipient with an invoice that shows the tax incurred at a national level and the service recipient pays the invoice, with the provider then duly paying the tax shown in the invoice,

(b) the invoiced service is provided in another Member State,

(c) the service recipient is therefore denied an input VAT deduction in its country of domicile because no tax is owed under the laws of that country,

(d) the provider then corrects the invoice by removing any reference to the tax incurred at a national level, thereby reducing the invoice amount by the amount of the tax,

(e) the service recipient proves unable to assert any payment claims against the provider because insolvency proceedings were opened in respect of the provider’s assets, and

(f) the provider, who is not yet registered in the other Member State, has the option to register for VAT purposes in that Member State in order to be able to issue the service recipient with an invoice bearing the relevant tax number in that Member State and showing the tax payable in said Member State, which would entitle the service recipient to an input VAT deduction in said Member State under the special procedure set out in Directive 2008/9/EC of 12 February 2008?

(2) Does the answer to that question depend on whether the national tax administration has refunded the tax paid to the provider merely by virtue of the corrected invoice, even though the provider did not repay anything to the service recipient following the opening of insolvency proceedings?’

Consideration of the questions referred

27By its two questions, which it is appropriate to examine together, the referring court is asking, in essence, whether the VAT Directive, read in the light of the principles of effectiveness and VAT neutrality, must be interpreted as meaning that the recipient of a service may request directly from the tax authority of the Member State in whose territory it is established the refund of the VAT which it paid to the supplier of that service – which invoiced in error the national VAT of that Member State instead of the VAT legally due in another Member State and paid it to the tax authorities of the first Member State – where those tax authorities have already refunded the VAT to the supplier, which has gone into liquidation, of the service.

28As a preliminary point, it must be recalled that the principle of VAT neutrality, which lies at the heart of the common system of VAT established by EU legislation, is ensured by the right of deduction which is intended to relieve the operator entirely of the burden of the VAT due or paid in respect of all its economic activities and therefore ensuring neutrality of taxation of all economic activities, whatever their purpose or results of those activities, provided that they are themselves, in principle, subject to VAT (see, to that effect, judgment of 13 October 2022, HUMDA, C‑397/21, EU:C:2022:790, paragraph 18 and the case-law cited).

29Having set out that premiss, it should be noted that, according to settled case-law, in the absence of any provision in the VAT Directive on the adjustment by the issuer of the invoice of VAT improperly charged, it is, in principle, for the Member States to lay down the conditions in which that VAT may be adjusted (judgment of 13 October 2022, HUMDA, C‑397/21, EU:C:2022:790, paragraph 19 and the case-law cited).

30In order to ensure neutrality of VAT, it is for the Member States to provide, in their domestic legal systems, for the possibility of adjusting any tax improperly invoiced where the person who issued the invoice shows that he or she acted in good faith (judgment of 13 October 2022, HUMDA, C‑397/21, EU:C:2022:790, paragraph 20 and the case-law cited).

31In the present case, the referring court questions the transposability to the present case of the case-law arising from the judgment of 15 March 2007, Reemtsma Cigarettenfabriken (C‑35/05, EU:C:2007:167), which concerned the principles of neutrality, effectiveness and non-discrimination.

32In that judgment, as regards the question whether a recipient of services is entitled to request a refund of VAT from the supplier who has invoiced that VAT in error, and who could in turn seek a refund from the tax authority, or whether such a recipient must be able to address its request directly to that authority, the Court held that, in principle, a system in which, first, the supplier who has paid the VAT to the tax authorities in error may seek to be reimbursed and, second, the recipient of the services may bring a civil law action against that supplier for recovery of the sums paid but not due observes the principles of neutrality and effectiveness. Such a system enables the recipient who bore the tax invoiced in error to obtain a reimbursement of the sums unduly paid (judgment of 15 March 2007, Reemtsma Cigarettenfabriken, C‑35/05, EU:C:2007:167, paragraph 39).

33The Court added that, if reimbursement of the VAT becomes impossible or excessively difficult, in particular in the case of the insolvency of the supplier, those principles may require that the recipient of the services be able to address its application for reimbursement to the tax authorities directly. Thus, the Member States must provide for the instruments and the detailed procedural rules necessary to enable the recipient of the services to recover the unduly invoiced tax in order to respect the principle of effectiveness (judgment of 15 March 2007, Reemtsma Cigarettenfabriken, C‑35/05, EU:C:2007:167, paragraph 41).

34In that regard, it should be noted that, as the referring court itself pointed out in its request for a preliminary ruling, the right to a direct refund of VAT which has been unduly invoiced, as follows from the case-law of the Court, concerns national VAT not due in the Member State in which it was invoiced and in the budget of which it was paid (see, to that effect, judgment of 13 October 2022, HUMDA, C‑397/21, EU:C:2022:790, paragraph 25). The right to a direct refund of unduly invoiced VAT which, in certain circumstances, the recipient of an invoice enjoys accordingly relates to the VAT which the Member State concerned has received from the issuer of the invoice.

35While it is true that the dispute in the main proceedings concerns claims for a refund of VAT which has been unduly invoiced and paid, it is however clear that, in the present case, the Tax Office X has already repaid the VAT unduly paid by the recipient of the services to the insolvency estate of the supplier of the services.

36In those circumstances, the case-law arising from the judgment of 15 March 2007, Reemtsma Cigarettenfabriken (C‑35/05, EU:C:2007:167) cannot be transposed to a situation such as that at issue in the main proceedings.

37If, in the event of VAT unduly invoiced and paid, a tax authority, at the request of the supplier of services, had already refunded the VAT, in accordance with the case-law resulting from the judgment of 15 March 2007, Reemtsma Cigarettenfabriken (C‑35/05, EU:C:2007:167), and also had to refund that VAT to the recipient of the services, the tax authority would be required to refund that VAT twice.

38In that regard, it should be recalled that the Court has held repeatedly that where a supplier has incorrectly invoiced and paid VAT, that VAT must, in principle, be refunded to that supplier. The right to a refund of charges levied in a Member State in breach of rules of EU law is the consequence and complement of the rights conferred on individuals by provisions of EU law as interpreted by the Court. The Member State concerned is therefore in principle required to refund charges levied in breach of EU law. The request for a refund of unduly paid VAT concerns the right to recovery of sums paid but not due which, according to settled case-law, helps to offset the consequences of the tax’s incompatibility with EU law by neutralising the economic burden which that tax has unduly imposed on the trader who has, in fact, ultimately borne it. The principle of VAT neutrality, which is a fundamental principle of the common system for VAT, is meant to relieve the taxable person entirely of the burden of the VAT in the course of its economic activities (see, to that effect, judgment of 2 July 2020, Terracult, C‑835/18, EU:C:2020:520, paragraphs 23 to 25).

39The fact that, as in the case which gave rise to the judgment of 15 March 2007, Reemtsma Cigarettenfabriken (C‑35/05, EU:C:2007:167), the service provider in the present case is in liquidation is not relevant in the present case.

40The case-law arising from that judgment is not intended to call into question the order of priority of creditors in the context of liquidation proceedings.

41In such circumstances, it is indeed true that it could not be ruled out from the outset that the purchaser would find itself in a situation where it is impossible or excessively difficult to bring a civil action against the court-appointed insolvency administrator responsible for the liquidation of the supplier of services with a view to having an invoice including Italian VAT drawn up and that that purchaser would subsequently be prompted to make a reimbursement request directly to the tax authority. However, if an unreasonable burden is not to be imposed on the tax authority, the tax authority cannot be required to take account of the fact that, in a situation such as that at issue in the main proceedings, the usual refund chain has been seriously disrupted, or even interrupted, by reason of the fact that the supplier was in liquidation, with the result that the VAT which was to be refunded to that supplier by the tax authority would become part of the insolvency estate and would risk not being refunded to the purchaser.

42It is also true that preventing potential fraud, tax evasion, and abuse is an objective recognised and encouraged by the VAT Directive, so that the tax authorities must not only carry out the necessary inspections of taxable persons in order to detect VAT irregularities and fraud, but also check taxable persons’ returns, accounts and other relevant documents (see, to that effect, judgment of 21 June 2012, Mahagében and Dávid, C‑80/11 and C‑142/11, EU:C:2012:373, paragraphs 62 and 63 and the case-law cited).

43However, to require, in the present case, the German tax authority to determine whether the fact that the court-appointed insolvency administrator responsible for the liquidation of the service provider will not declare in Italy the Italian VAT legally due constitutes, under Italian law, VAT fraud in that Member State goes beyond what may reasonably be imposed on a national tax authority in accordance with the objective referred to in the preceding paragraph.

44It should also be recalled that the possibility for the purchaser or recipient to make its request for the refund of VAT which has been unduly invoiced and paid ‘directly’ to the tax authority constitutes an exception and is, as is apparent from the case-law cited in paragraph 33 of the present judgment, available only if the recovery of that VAT from the supplier is impossible or excessively difficult, which presupposes that the purchaser or recipient has not ignored any possibility of asserting its rights outside that situation.

45As is apparent from the order for reference and, in particular, from the circumstances set out by the referring court in its wording of the first question, in the present case, the supplier, who is not yet registered in the Member State in which the VAT is legally due, is able to register for VAT purposes in that Member State, so that the supplier could then, by indicating a tax identification number of that Member State, send the recipient of the service an invoice which refers to the tax of that Member State, which would enable the recipient of the service to deduct the input VAT paid in that Member State.

46Therefore, as the referring court noted, in the present case, the applicant in the main proceedings could, in order not to have to bear the cost of the VAT concerned, have brought a civil action against the insolvency administrator responsible for the liquidation of the supplier of the services with a view to having an invoice including Italian VAT drawn up, an action which it has not brought.

Having regard to the foregoing, it is appropriate to provide a composite response to the questions referred for a preliminary ruling, read in the light of the principles of effectiveness and of VAT neutrality, that the VAT directive must be interpreted as meaning that the recipient of a service may not request directly from the tax authority of the Member State in whose territory it is established, the refund of the VAT which it paid to the supplier of that service – which invoiced in error the national VAT of that Member State instead of the VAT legally due in another Member State and paid it to the tax authorities of the first Member State – where those tax authorities have already refunded the VAT to the supplier, which has gone into liquidation, of the service.

Costs

48Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Seventh Chamber) hereby rules:

Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2010/45/EU of 13 July 2010, read in the light of the principles of effectiveness and neutrality of value added tax (VAT),

must be interpreted as meaning that the recipient of a service may not request directly from the tax authority of the Member State in whose territory it is established, the refund of the VAT which it paid to the supplier of that service – which invoiced in error the national VAT of that Member State instead of the VAT legally due in another Member State and paid it to the tax authorities of the first Member State – where those tax authorities have already refunded the VAT to the supplier, which has gone into liquidation, of the service.

[Signatures]

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Language of the case: German.