Case C‑475/17
Viking Motors and Others
v
Tallinna linnandMaksu- ja Tolliamet
(Request for a preliminary ruling from the Riigikohus)
(Reference for a preliminary ruling — Taxation — Common system of value added tax (VAT) — Directive 2006/112/EC — Article 401 — Domestic taxes which can be characterised as turnover taxes — Prohibition — Concept of ‘turnover tax’ — Local sales tax — Essential characteristics of VAT — None)
Summary — Judgment of the Court (Seventh Chamber), 7 August 2018
Harmonisation of fiscal legislation — Common system of value added tax — Prohibition on the levying of other domestic taxes which can be characterized as turnover taxes — Scope — Estonian local sales tax — Lawfulness
(Council Directive 2006/112, Art. 401)
Article 401 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted to the effect that it does not preclude the maintenance or introduction of a tax such as the sales tax at issue in the main proceedings.
In order to decide whether a tax, duty or charge can be characterised as a turnover tax within the meaning of Article 401 of the VAT Directive, it is necessary, in particular, to determine whether it has the effect of jeopardising the functioning of the common system of VAT by being levied on the movement of goods and services and on commercial transactions in a way comparable to VAT (see, by analogy, judgment of 11 October 2007, KÖGÁZ and Others, C‑283/06 and C‑312/06, EU:C:2007:598, paragraph 34 and the case-law cited).
In that regard, it must be pointed out, as is apparent from the file before the Court, that the legislation governing the sales tax at issue in the main proceedings did not require taxpayers to add the amount of that tax to the sale price or to indicate separately on the invoice delivered to the purchaser the amount of the tax to be paid. Thus, the passing-on of that tax to the final consumer was a possibility and not an obligation for the retailers who could at any time choose to bear that tax themselves, without increasing the prices of the goods and services provided. The Court has already held that a tax levied on production in such a way that it is not certain that it will be borne, like a tax on consumption such as VAT, by the final consumer is likely to fall outside the scope of Article 401 of the VAT Directive (judgment of 11 October 2007, KÖGÁZ and Others, C‑283/06 and C‑312/06, EU:C:2007:598, paragraph 50). Whereas, through the mechanism of the deduction of VAT, that tax is charged only to the final consumer and is completely neutral as regards the taxable persons involved in the production and distribution process prior to the stage of final taxation, regardless of the number of transactions involved, that is not the case with a tax such as the sales tax (see, by analogy, judgment of 11 October 2007, KÖGÁZ and Others, C‑283/06 and C‑312/06, EU:C:2007:598, paragraph 51 and the case-law cited).
(see paras 36, 45, 47, 48, 53, operative part)