(Reference for a preliminary ruling– Taxation– Value added tax (VAT)– Directive 2006/112

19Kollaustraße, a civil-law company, leased a plot of land for industrial and commercial purposes of which it was itself the lessee.

20Kollaustraße and its lessor had effectively waived the tax exemption for such rental turnover and therefore opted for their liability to VAT. Under Paragraph20 of the UStG, they were authorised by the tax office to calculate VAT on the basis of the remuneration received, or, in other words, according to the cash-accounting scheme, and not on the basis of the remuneration agreed. With the rental contract, Kollaustraße had a proper permanent invoice.

21From 2004, Kollaustraße’s rental payments were partly deferred. Thus, it proceeded to pay part of its rent for the years 2009 to 2012 during the financial years 2013 to 2016. It was also released from the debt by the lessor in 2016.

22The payments made all included 19% VAT and Kollaustraße– irrespective of the rental period for which the payments were intended– asserted its input tax deduction claim in the prepayment period or calendar year in which the payment was made.

23During an audit, the tax office was of the opinion that the input tax deduction claim had already arisen with the performance of the transaction– in this case the monthly rental of the property– and should therefore have been asserted for the corresponding financial years.

24Consequently, tax notices were issued for the financial years 2011 to 2015 and a provisional tax assessment for the 2016 financial year. In those notices, the tax to be deducted was calculated on the basis of the rent agreed each year, resulting in a tax adjustment totalling EUR18409.67 for the financial years 2013 to 2016.

25It is pointed out that the tax notices for previous financial years have not been amended, as the assessment of the tax is time-barred. The VAT which had been included in the rent paid in 2013 and 2014, corresponding to the 2009 and 2010 rental periods, was not charged to Kollaustraße as input tax, since the tax office took the view that the right of deduction should have been relied on in the 2009 and 2010 financial years.

26On 3July 2017 Kollaustraße filed an objection to the tax notices issued for the financial years 2013 to 2016, which was rejected on 8November 2017. On 28November 2017 Kollaustraße then brought an action before the Finanzgericht Hamburg (Finance Court, Hamburg, Germany), before which it claimed an infringement of the VAT Directive, arguing that if the supplier of goods or services calculates his or her tax on the basis of the remuneration received, the recipient of the supply’s right of deduction only arises at the time when the remuneration is paid.

27In determining whether, if the supplier of goods or services calculates VAT on the basis of the remuneration received, the right of VAT deduction arises on completion of the supply or only on receipt of the remuneration, the referring court wonders whether the German rules under which the right of deduction must always be relied upon when the supply is made are compatible with EU law.

28The referring court states that, under German legislation, the right of deduction arises when the goods or services are supplied, regardless of when the tax becomes chargeable to the supplier and regardless of whether the tax is calculated by the supplier on the basis of the remuneration agreed or on the basis of the remuneration received. It states, in that regard, that the German legislature has not made use of the option given to Member States in Article167a of the VAT Directive, so that, under German law, the recipient of the supply of goods or services’ right of deduction arises at the time the supply of goods or services takes place, even where the supplier is a taxable person who is taxable on the basis of the remuneration received.

29However, the referring court has doubts as to the compatibility of German law with EU law in the light of Article167 of the VAT Directive, under which the right of deduction arises only at the time when the deductible tax becomes chargeable.

30It submits that German law is contrary to a strict application of Article167 in so far as, while the national legislature has made use of the option given to Member States to provide that the tax becomes chargeable to certain taxable persons solely on receipt of the payment, it provides that the right of input tax deduction, even in that case, arises at the time the supply has been made, thereby severing the relationship between the chargeability of tax and the right of deduction.

31The referring court considers that such strict application of Article167 of the VAT Directive is supported by Article226(7a) of that directive, which has not been transposed into national law. It states that, despite the Federal Republic of Germany not transposing Article226(7a) of the Sixth Directive, legal writers maintain that it follows from that provision that the relationship between the chargeability of the tax and the right of deduction laid down in Article167 of that directive is now mandatory.

32Conversely, it could be considered, in its view, that German law is compatible with EU law if Article167 of the VAT Directive does not lay down a mandatory rule, but merely contains a ‘guiding idea’. Such an interpretation could emerge from the declaration in the minutes of the Council of the European Union and of the European Commission on Article17(1) of Sixth Council Directive 77/388/EEC of 17May 1977 on the harmonization 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 wording of which was reproduced in Article167 of the VAT Directive. According to that declaration, Member States could derogate from the principle laid down in Article17(1) where the supplier of the goods or services is taxed according to the VAT receipts received.

33In the event that a Member State were to derogate from Article167 of the VAT Directive, the referring court also questions whether the taxable person may, in such cases, in any event assert the right of input tax deduction during the tax year in which the right of input tax deduction would have arisen according to a strict application of that article when the taxable person no longer has the possibility of asserting that right in the relevant earlier tax period under national law.

34In that regard, the referring court states that, under German law, a taxable person who has not deducted input tax cannot assert his or her right of deduction for a subsequent tax year. The referring court states that, accordingly, the right of deduction is not to be exercised where the input tax can no longer be asserted retroactively on account of the expiry of the period for payment of the tax, as in the case before it. However, the referring court considers that Article167 of the VAT Directive could require a different assessment in such a case. In the light of the fundamental importance of the right of deduction and in order to ensure the neutrality of VAT, it might prove necessary, in the view of the referring court, to allow a taxable person to deduct input tax in the tax year which results from the application of Article167 even where national law derogates from it.

35In those circumstances, the Finanzgericht Hamburg (Finance Court, Hamburg) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)Does Article167 of [the VAT Directive] preclude a provision of national law according to which the right of input tax deduction already arises at the time the transaction is performed, even if, under national law, the tax claim against the supplier or service provider arises only when the remuneration is received and the remuneration has not yet been paid?

(2)If the first question is answered in the negative: does Article167 of [the VAT Directive] preclude a provision of national law according to which the right of input tax deduction cannot be asserted for the tax period in which the remuneration has been paid if the tax claim against the supplier or service provider arises only when the remuneration is received, the service has already been provided in an earlier tax period and, under national law, due to the matter being time-barred, it is no longer possible to assert the input tax claim for that earlier tax period?’