Zipvit Ltd v The Commissioners for Her Majesty's Revenue & Customs.

• Jurisdiction: European Union
• Court: Court of Justice (European Union)
• ECLI: ECLI:EU:C:2022:2
• Date: 13 January 2022
• Celex Number: 62020CJ0156
• Docket Number: C-156/20

JUDGMENT OF THE COURT (First Chamber)

13 January 2022 (*)

(Reference for a preliminary ruling – Common system of value added tax (VAT) – Directive 2006/112/EC – Article 168 – Right of deduction – Supply of postal services mistakenly exempted – VAT deemed to be included in the commercial price of the supply for the purpose of exercising the right of deduction – Not included – Concept of VAT ‘due or paid’)

In Case C‑156/20,

REQUEST for a preliminary ruling under Article 267 TFEU from the Supreme Court of the United Kingdom, made by decision of 1 April 2020, received at the Court on 6 April 2020, in the proceedings

Zipvit Ltd

v

The Commissioners for Her Majesty’s Revenue and Customs,

THE COURT (First Chamber),

composed of L. Bay Larsen, Vice-President of the Court, acting as President of the First Chamber, J.‑C. Bonichot (Rapporteur) and M. Safjan, Judges,

Advocate General: J. Kokott,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

– Zipvit Ltd, by D. Garcia, L. Allen and W. Shah, Solicitors, and by R. Thomas QC,

– the United Kingdom Government, by S. Brandon, acting as Agent, and by S. Grodzinski QC and E. Mitrophanous QC,

– the Czech Government, by M. Smolek, J. Vláčil and O. Serdula, acting as Agents,

– the Greek Government, by M. Tassopoulou and I. Kotsoni, acting as Agents,

– the Spanish Government, by I. Herranz Elizalde and S. Jiménez García, acting as Agents,

– the European Commission, initially by R. Lyal and P. Carlin, and subsequently by P. Carlin, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 8 July 2021,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation of Article 168(a) and of Article 226(9) and (10) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).

2 The request has been made in proceedings between Zipvit Ltd and The Commissioners for Her Majesty’s Revenue and Customs (United Kingdom; ‘the tax and customs administration’), concerning the decision by which the latter did not accede to Zipvit’s request for deduction of value added tax (VAT).

Legal context

3 Article 63 of Directive 2006/112 provides:

‘The chargeable event shall occur and VAT shall become chargeable when the goods or the services are supplied.’

4 Article 90 of that directive states:

‘1. In the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly under conditions which shall be determined by the Member States.

2. In the case of total or partial non-payment, Member States may derogate from paragraph 1.’

5 Under Article 132(1)(a) of Directive 2006/112, Member States are required to exempt the supply by the public postal services of services other than passenger transport and telecommunications services, and the supply of goods incidental thereto.

6 Article 167 of that directive states:

‘A right of deduction shall arise at the time the deductible tax becomes chargeable.’

7 Under Article 168 of that directive:

‘In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay:

(a) the VAT due or paid in that Member State in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person;

…’

8 Article 185 of Directive 2006/112 provides:

‘1. Adjustment shall, in particular, be made where, after the VAT return is made, some change occurs in the factors used to determine the amount to be deducted, for example where purchases are cancelled or price reductions are obtained.

2. By way of derogation from paragraph 1, no adjustment shall be made in the case of transactions remaining totally or partially unpaid or in the case of destruction, loss or theft of property duly proved or confirmed, or in the case of goods reserved for the purpose of making gifts of small value or of giving samples, as referred to in Article 16.

However, in the case of transactions remaining totally or partially unpaid or in the case of theft, Member States may require adjustment to be made.’

The dispute in the main proceedings and the questions referred for a preliminary ruling

9 Zipvit, a company established in the United Kingdom, carries on the business of supplying vitamins and minerals by mail order.

10 Between 1 January 2006 and 31 March 2010, Royal Mail, the operator responsible for the public postal service in the United Kingdom, supplied postal services to Zipvit under contracts which had been negotiated individually with Zipvit. Those supplies were regarded as exempt from VAT on the basis of national legislation and directives published by the tax and customs administration intended to transpose, inter alia, Article 132(1)(a) of Directive 2006/112 and, consequently, led to Royal Mail issuing invoices without VAT, indicating that those supplies were exempt from VAT.

11 However, on 23 April 2009 the Court delivered the judgment in TNT Post UK (C‑357/07, EU:C:2009:248), from which it is apparent that the exemption from VAT referred to in Article 132(1)(a) of Directive 2006/112 does not apply to services supplied by the public postal services for which the terms have been individually negotiated.

12 Zipvit, taking the view that the payments which it had made to Royal Mail had therefore to be regarded retrospectively as including VAT, submitted two applications for deduction of input VAT relating to the supplies at issue to the tax and customs administration, on 15 September 2009 and 8 April 2010, for a total amount of 415 746 pounds sterling (GBP) (approximately EUR 498 900), together with interest.

13 By decision of 12 May 2010, the tax and customs administration dismissed those applications on the grounds that the supplies at issue had not been subject to VAT and that Zipvit had not paid that tax.

14 On 2 July 2010, the tax and customs administration reviewed and confirmed that decision.

15 It is apparent from the order for reference, first, that Royal Mail did not attempt to recover the VAT mistakenly unpaid from Zipvit or from its...