Practical changes
Are you an entrepreneur acting as an intermediary (party B in the chain)? And do you wish to apply the simplified ABC scheme? Then you must clearly include a reference on the invoice indicating that VAT has been shifted.
In the absence of this reference you risk obtaining a number acquisition in the member state of establishment. An amended invoice that subsequently mentions the shifting of VAT to the recipient also does not provide a solution. Since the effect of that change is not retroactive.
Background
Luxury Trust Automobil GmbH (Case C-247/21).
The Court of Justice ruled on December 8, 2022, in the case of Luxury Trust Automobil GmbH (Case C-247/21).
The Court held that in the case of a simplified ABC transaction, the ultimate recipient (party C) cannot be designated as the person liable for VAT when the invoice prepared by the intermediary (party B) does not contain the mention "VAT reverse charged."
Furthermore, the Court of Justice stated that the omission of the "VAT reverse charged" mention on the invoice cannot be retroactively corrected by adding a statement indicating that the invoice pertains to an intra-community ABC transaction and that the tax liability is shifted to the party for whom the supply is intended (party C).
Case situation
Luxury Trust Automobil GmbH (hereinafter referred to as 'Luxury Trust' or 'party B') is an Austrian-based entrepreneur acting as an intermediary in the cross-border purchase and sale of luxury vehicles. The case pertains to an ABC transaction, in which Luxury Trust (party B) acquires vehicles from a supplier in the UK (party A) and subsequently resells them to a customer (party C) in the Czech Republic.
The vehicles are delivered directly from the UK supplier to the customer (party C), with transportation arranged by Luxury Trust (party B). The intra-community supply, therefore, occurs within the A-B link, which initially requires Luxury Trust to declare intra-community acquisitions in the Czech Republic. However, the parties attempted to apply the simplified ABC scheme, in which the intra-community acquisition of goods by party B in the Czech Republic was essentially exempt, and the VAT liability within the context of successive local deliveries was shifted from party B to party C.
The invoices issued by Luxury Trust to party C only reference a VAT-exempt intra-community ABC transaction. The Austrian tax authority asserts that the simplified ABC scheme could not be applied to these transactions because Luxury Trust's invoices do not indicate the transfer of VAT liability to the recipient of the service. Due to Luxury Trust issuing the invoices under its Austrian VAT identification number, the Austrian tax authority assumed that intra-community acquisitions took place in Austria (i.e. number acquisition ).
Court of Justice's Ruling
The Court of Justice is presented with the question of whether, in the case of a simplified ABC transaction, indicating a VAT-exempt intra-community supply on the invoice is sufficient to designate the recipient of the service as the entity responsible for paying the VAT. Additionally, it is asked whether:
- such an invoice note can be retrospectively modified by subsequently stating that the VAT liability is shifted to the recipient,
- whether it is necessary for the recipient of the invoice to receive the modified invoice for the change to be effective, and
- whether the effect of the change retroactively applies to the original invoice date.
Consistent with Advocate General Kokott's opinion, the Court of Justice rules that in the case of a simplified ABC transaction, the ultimate recipient (party C) is not designated as the entity liable for VAT when the invoice prepared by the intermediary (party B) does not contain the mention 'VAT reverse charged.' Only based on this notation the recipient of the service could know that they are the one responsible for the VAT.
Furthermore, the Court of Justice indicates that the omission of the VAT reverse charged notation on the invoice cannot be corrected retrospectively by adding a statement. The statement had to indicate that the invoice pertains to an intra-community ABC transaction and that the tax liability is shifted to the party for whom the delivery is intended (party C). Since such a correction or modification cannot have retroactive effect, the Court of Justice does not address the other questions posed by the referring court regarding an amended invoice.
