TAXATION : ECJ CONFIRMS LIMITS TO MUTUAL ASSISTANCE.

• Position: European Court of Justice

The EU Court of Justice has once again demonstrated the discrepancies in the directive on mutual administrative assistance in taxation matters between member states. According to the judges in Luxembourg, the tax authorities of a member state (a supplier of goods) are not obliged, in the context of an intra-Community delivery, to ask for information from the destination member state designated by a supplier to verify the completion of the delivery of goods. A judgement to this effect was adopted by the ECJ on 27 September in the context of a preliminary question (Case C-184/05).

The case pitted an international transport company based in the Netherlands (Twoh International) against the Dutch secretary of state for finances. At stake: an additional VAT assessment of 3.2 million concerning a delivery of computer parts to companies based in Italy. According to clauses established by the International Chamber of Commerce, Twoh was obliged to make the goods available to the buyers in a warehouse in the Netherlands, as the responsibility to transport the goods to Italy had been assumed buy the buyer.

In this context, the seller made no declaration about this delivery of goods to the Italian buyers establishing the intra-Community nature of the transaction (the declaration would have given them the right to a total dispensation from Dutch VAT). Now, following an accounting investigation, the Dutch tax authorities believed that it was not proved that the merchandise has unequivocally been delivered to Italy and that it was therefore wrong in granting a VAT dispensation.

For the transport company, it is the responsibility of the Dutch tax authorities to establish the intra-Community nature of the goods delivery by asking the Italian tax authority to establish the facts under the Directive on mutual assistance (77/799/CEE) and the Regulation of administrative cooperation (218/92).

NO OBLIGATION TO INQUIRE ABROAD

At the end of a legal struggle, the Dutch court proved Twoh International partially correct by annulling part of the authority's request and reducing the additional VAT assessment. But the...