Case C‑596/20

54.In my opinion, that question should be answered in the negative, in line with the view taken by the Portuguese Republic. The opposite position taken by the Hungarian tax authorities contradicts the very foundations of the system of the VAT Directive. It proceeds on the assumption that it follows from the abusive practice between WML and Lalib that the website is operated from Hungary by WML, with the result that the IT support services could likewise have been provided only to WML in Hungary. Contrary to the view taken by the Commission, however, the determination of the ‘correct’ recipient of the applicant’s supplies is not closely linked to the question as to whether the licence agreement between WML and Lalib is to be assessed as constituting an abuse of rights.

55.This is because, according to that logic, not only the supplies of the applicant, but all the supplies received by Lalib– an existing Portuguese company (if the Portuguese response to the Hungarian request for information was accurately reproduced)– in connection with the operation of the website would have been taxable in Hungary; that would also apply to the supplies of other Portuguese service providers. The fact that the Hungarian tax authorities– unlike the Portuguese tax authorities– consider that Lalib either does not exist or else is thus to be equated to WML is in any event not a sufficient basis for that.

2.Taking into account the fiscal neutrality of VAT law

56.First, the VAT Directive is, in principle, fiscally neutral.(14) According to settled case-law of the Court, regard must be had to the objective character of the transaction in question.(15) This applies, in particular, to the interpretation of the place-of-supply rules, the object of which– as the Court rightly put it– is to avoid (i) conflicts of jurisdiction which may result in double taxation and (ii) non-taxation.(16) They therefore serve to allocate powers of taxation between the Member States.

57.Therefore, the question of whether the recipient of a car wash, that is to say, a service, is also the owner of the car, has rented it in a valid manner or has stolen it has no bearing on the question as to who is the recipient of the supply and where the place of supply is. Even a thief who commissioned and paid for the cleaning of the stolen car is and remains the recipient of the supply, with the result that the place of supply of the service is determined on the basis of his or her status (for example, whether or not he or she is the taxable person– see Article44 of the VAT Directive, on the one hand, and Article45, on the other).

3.Taking into account the perspective of the supplier of the service

58.Moreover, the abovementioned logic of the Hungarian tax authorities fails to take into account the indirect taxation technique of VAT. This is because the ‘abstraction principle’ explained in the example of the car thief also follows from the fact that the undertaking that makes the supply acts as an extension of the State in the collection of tax (‘tax collector on behalf of the State’).(17) Since that undertaking does not do so voluntarily, but by virtue of statutory rules imposed on it, it could also be described as a ‘compulsory accessory of the State’.(18)

59.However, such an accessory of the State must know where the place of supply of goods or services is situated in order to be able to apply the correct rate of tax and pay the appropriate amount of tax. If the place of supply of a service depends on the status of the recipient of that supply (for example, whether he or she is the taxable person), the supplier of the service must be able to determine that status autonomously.

60.He or she must be able to identify and determine his or her contractual partner which is obliged to pay him or her the consideration (the price) on the basis of the contractual agreements. By contrast, the supplier of the service has, in principle, neither any influence on nor any knowledge of circumstances that concern only the relationship between the recipient of that supply and third parties. Therefore, such elements must, in principle, be irrelevant to the determination of the place of supply of his or her goods or services. When providing his or her service, the taxable person may rightly be indifferent as to the real owner of the car to be washed. The recipient of the supply is his or her contracting partner and the place of supply is always the same, irrespective of whether the car was rented, purchased or stolen.

4.Taking into account the rules on trading for commission

61.In addition, as made clear by Article28 of the VAT Directive, the recipient of the supply may act in his or her own name but on behalf of another person. Consequently, the fact that, in the end, any person other than the contracting partner actually uses the service is irrelevant for VAT purposes. A non-owner who acts in his or her own name but on behalf of another person (for example, the owner) is also the recipient of a supply of services.

62.It is therefore decisive that Lalib is obliged to pay the consideration for the applicant’s IT support services pursuant to the underlying legal relationship. Thus, the question as to whether Lalib received the supplies in its own name and on its own behalf or in its own name but on behalf of WML is, in principle, irrelevant to Lalib’s status as recipient of the supplies. Therefore, the place of supply of the IT services to Lalib by the applicant is in Portugal and must be assessed independently of a possible abusive practice between WML and Lalib.

5.A conceivable exception: abusive arrangement by all parties involved

63.The outcome might be different only if the entire legal structure between Lalib, WML and the applicant were to be regarded as a single significantly abusive arrangement. This would allow the transactions involved to be redefined so as to re-establish the situation that would have prevailed in the absence of those transactions. However, such an abusive arrangement does not follow from the request for a preliminary ruling.

64.In view of the fact that everything indicates that Lalib does in fact exist, is in fact established in Portugal and has in fact settled the applicant’s invoices, and that there is no discernible VAT advantage, at least with regard to the IT support services, there are considerable doubts as to whether such an arrangement exists. The Commission also appears to take the view that Lalib alone supplies the end consumers by means of the website. However, that is a matter that can ultimately be assessed only by the referring court.

6.Interim conclusion

65.The recipient of the applicant’s supply of IT services is its contracting partner (Lalib). A possible abusive practice between WML and Lalib has no bearing on this. That applies in any event if the conclusion of the contract between the applicant and Lalib is not, in itself, to be assessed as forming part of an abusive practice. However, on the one hand, the Court has no evidence that that is the case and, on the other hand, that matter can be assessed only by the referring court.

D.In the alternative: dealing with conflicting findings of the tax authorities of different Member States in VAT law

1.Explanation of the problem

66.It is true that the place of supply of the applicant’s services has been clarified in this Opinion. Nevertheless, there remains a risk of double taxation inherent in the VAT system in the present case also. That risk would materialise if the referring court were to find that the entire legal structure between Lalib, WML and the applicant is to be regarded as a single abusive arrangement.

67.Hungary would assume a supply to WML and a place of supply in Hungary, and would levy VAT in Hungary. The Portuguese Republic, on the other hand, would probably continue to assess the facts as not constituting an abusive arrangement, with the result that the recipient of the supply would be Lalib and the place of supply would be in Portugal. This would lead to double taxation due to a conflict of qualification.

68.That potential outcome is contrary to the concept of the principle of neutrality in VAT law. This is because, as the Court has already held, the double taxation of business activities is contrary to the principle of fiscal neutrality inherent in the common system of VAT.(19) This also confirms the previous case-law on the risk of double taxation in the case of imports of goods on which VAT has already been levied.(20)

69.A number of approaches by which such double taxation might be avoided already follow from the case-law of the Court.

2.First tax assessment not binding in nature

70.In that respect, the Court has already rightly held that, in correct application of the VAT Directive, the Member State which first assesses the tax does not bind the other Member State.(21) Such a ‘first come, first served’ principle would run counter to the place-of-supply rules, which are intended to allocate tax revenue to the Member States and divide it among them.

71.The question as to whether it already follows from Regulation No904/2010 that the tax authority of one Member State is required to send a request for information to the tax authorities of another Member State where such a request is useful, or even essential, for determining that VAT may be chargeable in the first Member State(22) can be left open.

72.This is because, where the courts of one Member State find that the same transaction has been the object of a different tax treatment in another Member State, they have the power, or even– depending on whether there is a judicial remedy against their decision– the obligation, to refer a request for a preliminary ruling to the Court.(23) Accordingly, the referring court has asked the Court to interpret the place-of-supply rules of the VAT Directive in the present case.

3.Divergent interpretation of the rules on the place of supply

73.In so far as the underlying conflict relates to the interpretation of the place-of-supply rules, the solution is simple. It can and must be resolved by referring the matter to the Court. Such an interpretation of EU law within the framework of the request for a preliminary ruling is also binding on the other tax authorities.

74.In so far as the latter have not yet taken a final decision at that time, double taxation is thereby prevented. If there is already a final decision which, contrary to the interpretation given by the Court, gives rise to such double taxation, that decision is contrary to EU law. Therefore, if it turns out– after a preliminary ruling by the Court, as the case may be– that VAT has already been wrongly paid in another Member State, the person concerned is entitled to a refund of the excess VAT paid. According to settled case-law, 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 required, in principle, to repay charges levied in breach of EU law.(24)

4.Divergent assessment of the underlying facts

75.However, where the conflict does not relate to a divergent interpretation of EU law, but to a divergent assessment of the facts (for example, the existence of an abusive practice), the path outlined above does not lead any further. This is because it is for the national courts to apply EU law to the specific facts of the case. Their decisions are not binding on the tax authorities of the other Member States, with the result that the risk of double taxation persists.

76.Such double taxation is contrary to the objectives of the VAT Directive (see point68 above). It is true that the Court has ruled, in the context of income tax law, that, in the absence of harmonisation at EU level, the Member States are not obliged to adapt their own tax systems to the different tax systems of other Member States, in order to eliminate double taxation.(25) However, that concerns double taxation due to non-harmonised income tax law and follows from the Member States’ remaining legislative competence in that respect. That argument does not apply to VAT law.

77.Moreover, double taxation based on EU law (in casu, the VAT Directive) affects the fundamental rights of the taxable person (see Articles15, 16 and 17 of the Charter of Fundamental Rights of the European Union) in the implementation of EU law.(26) Furthermore, double taxation in respect of VAT for cross-border supplies of goods and services would impair the free movement of goods and the freedom to provide services.

78.The double taxation, which is thus contrary to the internal market, could ultimately be avoided only if, in that special situation– double taxation by two Member States due to a conflict of qualification under VAT law in a cross-border case– the Court itself were to establish, on an exceptional basis, how the facts of the case are to be assessed, that is to say, in the present case, therefore, whether there is abuse.

79.As the only authority that can take a decision which is binding on the Member States involved and can thus effectively prevent double taxation, the Court previously made its own de facto assessment of the facts in a similar situation. For example, the Auto Lease Holland case was based on a different assessment of the facts in two Member States, as the referring court expressly emphasised in the proceedings in that case.(27) Nevertheless, the Court answered the question referred and ruled that ‘Article5(1) of the Sixth Directive is to be interpreted as meaning that there is not a supply of fuel by the lessor of a vehicle to the lessee where the lessee fills up at filling stations the vehicle which is the subject-matter of a leasing contract, even if the vehicle is filled up in the name and at the expense of that lessor’.(28) This amounted to nothing more than the Court’s assessment of the facts as requested by the referring court.

80.However, in order to take into account the fact that the assessment of the facts is, in principle, the task of the national court and that the Member States have possibilities to exchange information by virtue of Regulation No904/2010 and to reach agreement by virtue of the VAT Committee (Article398 of the VAT Directive), the Court could make the answer to such questions referred for a preliminary ruling subject to the condition that, as a general rule, those other possibilities have been exhausted beforehand.

VI.Conclusion

81.I therefore propose that the Court answer the questions referred by the Fővárosi Törvényszék (Budapest High Court, Hungary) as follows:

1.The recipient of the supply who is relevant for the purposes of determining the place of supply is to be determined from the perspective of the supplier on the basis of the underlying legal relationship, which establishes who must bear the expense for the supply received. An allegation of abuse of rights relating only to the recipient of the supply and a third party is irrelevant to the determination of the recipient of the supply and the place of supply.

2.Having regard to the Charter of Fundamental Rights of the European Union and the fundamental freedoms, the principle of neutrality of Council Directive 2006/112/EC of 28November on the common system of value added tax and Council Regulation (EU) No904/2010 of 7October 2010 on administrative cooperation and combating fraud in the field of value added tax preclude double taxation by several Member States in respect of VAT for one and the same transaction. If such double taxation is based on a different assessment of the facts and, the Member States do not agree on a solution, the national court may or must ask the Court for such a solution.

1Original language: German.

2In this regard, see, inter alia, judgments of 20October 1993, Balocchi (C‑10/92, EU:C:1993:846, paragraph25); of 21February 2008, Netto Supermarkt (C‑271/06, EU:C:2008:105, paragraph21); and of 23November 2017, Di Maura (C‑246/16, EU:C:2017:887, paragraph23).

3‘the VAT Directive’.

4As last amended, at that point in time, by Council Directive 2009/69/EC of 25June 2009 (OJ 2009 L175, p.12).

5As last amended, at that point in time, by Council Directive 2010/88/EU of 7December 2010 (OJ 2010 L326, p.1).

6Council Directive 2008/8/EC of 12February 2008 amending Directive 2006/112/EC as regards the place of supply of services (OJ 2008 L44. p.11).

7Council Regulation (EU) No904/2010 of 7October 2010 on administrative cooperation and combating fraud in the field of value added tax (OJ 2010 L268, p.1).

8Judgment of 17December 2015, WebMindLicenses (C‑419/14, EU:C:2015:832).

9Judgments of 21February 2006, Halifax and Others (C‑255/02, EU:C:2006:121, paragraph98); of 17December 2015, WebMindLicenses (C‑419/14, EU:C:2015:832, paragraph52); and of 22November 2017, Cussens and Others (C‑251/16, EU:C:2017:881, paragraph46).

10Judgments of 26January 2012, ADV Allround (C‑218/10, EU:C:2012:35, paragraph27 and the case‑law cited), and of 16October 2014, Welmory (C‑605/12, EU:C:2014:2298, paragraph42). See also, to that effect, judgment of 18June 2020, KrakVet Marek Batko (C‑276/18, EU:C:2020:485, paragraph42).

11Judgment of 16September 2021, Balgarska natsionalna televizia (C‑21/20, EU:C:2021:743, paragraphs31). See, to that effect, judgments of 22June 2016, Český rozhlas (C‑11/15, EU:C:2016:470, paragraphs21 and 22), and of 22November 2018, MEO– Serviços de Comunicações e Multimédia (C‑295/17, EU:C:2018:942, paragraph39).

12See, to that effect, judgments of 13June 2013, Promociones y Construcciones BJ 200 (C‑125/12, EU:C:2013:392, paragraph28), and of 26April 2017, Farkas (C‑564/15, EU:C:2017:302, paragraph24), each of which concerned Article199 of the VAT Directive.

13Judgment of 6October 2011, Stoppelkamp (C‑421/10, EU:C:2011:640, paragraph33), which concerned Article21(1)(b) of Sixth Council Directive 77/388/EEC of 17May 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 (OJ 1977 L145, p.1; ‘the Sixth Directive’).

14Judgments of 29June 1999, Coffeeshop “Siberië” (C‑158/98, EU:C:1999:334, paragraphs14 and 21); of 29June 2000, Salumets and Others (C‑455/98, EU:C:2000:352, paragraph19); and of 6July 2006, Kittel and Recolta Recycling (C‑439/04 and C‑440/04, EU:C:2006:446, paragraph50– the principle of fiscal neutrality prevents any general distinction between lawful and unlawful transactions). Regarding the exceptions, see judgments of 5July 1988, Vereniging Happy Family Rustenburgerstraat (289/86, EU:C:1988:360, paragraph20), and of 6December 1990, Witzemann (C‑343/89, EU:C:1990:445).

15Judgments of 6April 1995, BLP Group (C‑4/94, EU:C:1995:107, paragraph24); of 9October 2001, Cantor Fitzgerald International (C‑108/99, EU:C:2001:526, paragraph33); of 27September 2007, Teleos and Others (C‑409/04, EU:C:2007:548, paragraph39); and of 21February 2013, Žamberk (C‑18/12, EU:C:2013:95, paragraph36).

16Judgments of 26January 2012, ADV Allround (C‑218/10, EU:C:2012:35, paragraph27 and the case‑law cited), and of 16October 2014, Welmory (C‑605/12, EU:C:2014:2298, paragraph42). See also, to that effect, judgment of 18June 2020, KrakVet Marek Batko (C‑276/18, EU:C:2020:485, paragraph42).

17In this regard, see, inter alia, judgments of 20October 1993, Balocchi (C‑10/92, EU:C:1993:846, paragraph25); of 21February 2008, Netto Supermarkt (C‑271/06, EU:C:2008:105, paragraph21); and of 23November 2017, Di Maura (C‑246/16, EU:C:2017:887, paragraph23).

18See Stadie,H., Umsatzsteuerrecht, 2005, paragraph1.18.

19Judgments of 25May 1993, Mohsche (C‑193/91, EU:C:1993:203, paragraph9); of 8March 2001, Bakcsi (C‑415/98, EU:C:2001:136, paragraph46); of 17May 2001, Fischer and Brandenstein (C‑322/99 and C‑323/99, EU:C:2001:280, paragraph76); and of 23April 2009, Puffer (C‑460/07, EU:C:2009:254, paragraph46).

20Judgment of 5May 1982, Schul Douane Expediteur (15/81, EU:C:1982:135, operative part2); similarly, judgment of 6July 1988, Ledoux (127/86, EU:C:1988:366, paragraph20).

21Judgment of 17December 2015, WebMindLicenses (C‑419/14, EU:C:2015:832, paragraph54), confirmed by judgment of 18June 2020, KrakVet Marek Batko (C‑276/18, EU:C:2020:485, paragraph53). Along similar lines, see also judgment of 5July 2018, Marcandi (C‑544/16, EU:C:2018:540, paragraph65).

22See judgment of 17December 2015, WebMindLicenses (C‑419/14, EU:C:2015:832, paragraph59); to the opposite effect, see judgment of 18June 2020, KrakVet Marek Batko (C‑276/18, EU:C:2020:485, paragraph48).

23Judgments of 17December 2015, WebMindLicenses (C‑419/14, EU:C:2015:832, paragraph59); of 5July 2018, Marcandi (C‑544/16, EU:C:2018:540, paragraphs64 and 66); and of 18June 2020, KrakVet Marek Batko (C‑276/18, EU:C:2020:485, paragraph51).

24See judgments of 14June 2017, Compass Contract Services (C‑38/16, EU:C:2017:454, paragraphs29 and 30 and the case‑law cited), and of 18June 2020, KrakVet Marek Batko (C‑276/18, EU:C:2020:485, paragraph52).

25Judgments of 12February 2009, Block (C‑67/08, EU:C:2009:92, paragraph31); of 8December 2011, Banco Bilbao Vizcaya Argentaria (C‑157/10, EU:C:2011:813, paragraph39); and of 26May 2016, NN (L) International (C‑48/15, EU:C:2016:356, paragraph47).

26As is known, that requirement contained in Article51(1) of the Charter of Fundamental Rights is understood very broadly by the Court– see, inter alia, judgment of 26February 2013, Åkerberg Fransson (C‑617/10, EU:C:2013:105, paragraph25 et seq.).

27Bundesfinanzhof (Federal Finance Court, Germany), decision of 22February 2001– VR 26/00, UR 2001, 305, paragraphs54 and 56.

28Judgment of 6February 2003, Auto Lease Holland (C‑185/01, EU:C:2003:73, paragraph37). Similarly, judgment of 5July 2018, Marcandi (C‑544/16, EU:C:2018:540, paragraph49), which was based on a different assessment of the issuance of ‘credits’ in the Member States.