Key facts of the case:
Reference for a preliminary ruling: Commissione tributaria provinciale di Genova - Italy.
Sixth VAT Directive - Reverse charge procedure - Right to deduct - Time-bar - Irregularity in accounts and tax returns affecting transactions subject to the reverse charge procedure.
Outcome of the case:
On those grounds, the Court (Third Chamber) hereby rules:
- Articles 17, 18(2) and (3) and 21(1)(b) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, as amended by Council Directive 2000/17/EC of 30 March 2000, do not preclude national legislation which lays down a limitation period for the exercise of the right to deduct, such as that at issue in the main proceedings, provided that the principles of equivalence and effectiveness are respected. The principle of effectiveness is not infringed merely because the tax authority has a longer period in which to recover unpaid value added tax than the period granted to taxable persons for the exercise of their right to deduct.
- However, Articles 18(1)(d) and 22 of Sixth Directive 77/388, as amended by Directive 2000/17, do preclude a practice whereby tax returns are reassessed and value added tax recovered which penalises a failure to comply, first, with obligations arising from formalities laid down in national legislation pursuant to Article 18(1)(d), and, second, with the obligations relating to accounts and tax returns under Article 22(2) and (4) respectively, such as that in the main proceedings, by denying the right to deduct in the case of a reverse charge procedure