© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
T1: Person liable (general)
GENERAL
- Person liable is substantive issue
"[32] Indeed, the designation of the person liable for the amounts due following the adjustment of a VAT deduction does not constitute a ‘detail’ or ‘procedure’ within the meaning of those provisions, but rather, as is apparent from Article 21 of that directive, a substantive rule of the common VAT system established by that directive." (Pactor Vastgoed C-622/11)
- Purpose of rules: efficient collection of VAT from the most appropriate person in the specific situation
"[26] The provisions of Section 1 of Chapter 1 of Title XI of the VAT Directive, which include Article 205 of that directive, are aimed at identifying the person liable for payment of VAT in various situations. In so doing, the purpose of those provisions is to ensure for the public exchequer the efficient collection of VAT from the most appropriate person in the light of the specific situation (judgments of 20 May 2021, ALTI, C‑4/20, EU:C:2021:397, paragraph 28, and of 12 December 2024, Dranken Van Eetvelde, C‑331/23, EU:C:2024:1027, paragraph 20)." (Konreo C-276/24)
SUPPLY VAT
Person making the supply liable
"VAT shall be payable by any taxable person carrying out a taxable supply of goods or services, except where it is payable by another person in the cases referred to in Articles 194 to 199b and Article 202." (Article 193)
"(2) VAT on any supply of goods or services is a liability of the person making the supply and (subject to provisions about accounting and payment) becomes due at the time of supply." (VATA 1994, s.1)
Liability arises at the time of supply
"(2) VAT on any supply of goods or services is a liability of the person making the supply and (subject to provisions about accounting and payment) becomes due at the time of supply." (VATA 1994, s.1)
NON-SUPPLIER LIABILITY
- Directive lists exhaustively cases in which other persons may be made liable
"[38] In that context, it must be observed that Article 21(1)(a) of that directive provides that the taxable person liable for VAT under the internal system is the person carrying out a taxable transaction (see order in Case C‑395/02 Transport Service [2004] ECR I‑1991, paragraph 23). Furthermore, as the Advocate General has pointed out in points 66 and 68 of his Opinion, that article lists exhaustively the cases in which a person other than that taxable person may be liable for payment of that tax." (Pactor Vastgoed C-622/11)
REVERSE CHARGE
- Interpret strictly as exception to normal rules
"[32] As a preliminary point, it should be noted that the reverse charge mechanism is an exception to the normal rules in Article 193 of the VAT Directive, according to which VAT is payable by any taxable person carrying out a taxable supply of goods or services, and that it must, for that reason, be strictly interpreted (see, to that effect, judgment of 13 February 2019, Human Operator, C‑434/17, EU:C:2019:112, paragraph 30 and the case-law cited)." (VB C-146/21)
- Member State must get permission to impose reverse charge outside the expressly identified situations
"[40] It is not apparent, however, from the file submitted to the Court that Romania obtained, on the basis of Article 395 of Directive 2006/112, authorisation to apply the reverse charge mechanism in situations not expressly provided for in that directive.
[41] Consequently, it is necessary to examine whether the immoveable property transactions at issue in the main proceedings can be subject to the reverse charge mechanism on the basis of Article 199(1)(c) of Directive 2006/112." (Marcu C-392/16)
- May result in no VAT being paid to authorities
"[33] Accordingly, under that mechanism, no VAT payment takes place between the seller and the purchaser of the property, the purchaser being liable, in respect of the transactions carried out, for the input VAT, while being able, in principle, if the purchaser is a taxable person, to deduct that tax so that, in such circumstances, no amount is payable to the tax authorities (see, to that effect, judgment of 26 April 2017, Farkas, C‑564/15, EU:C:2017:302, paragraph 41 and the case-law cited)." (VB C-146/21)
- Member States may lay down conditions for situations not expressly included in Directive
"[36] In that regard, it should be noted, in the first place, that it is not apparent either from the VAT Directive or from Implementing Decisions 2010/583 or 2013/676 that, where a Member State is authorised to derogate from Article 193 of the VAT Directive, by designating as the person liable for payment of the VAT the taxable person who is the recipient of the supply of the goods at issue, thereby applying the reverse charge mechanism to certain taxable transactions, the national legislature of that Member State is precluded from determining, when implementing that derogation, conditions for the application of that mechanism, provided those conditions do not contravene the principle of fiscal neutrality." (VB C-146/21)
- Justified to distinguish between registered and unregistered traders in relation to application of reverse charge
"[48] The aim of that restriction is legal certainty and legal clarity. In circumstances such as those at issue in the main proceedings, the recipient of a supply of goods is liable to pay VAT if the transaction is subject to VAT, which depends, in particular, on the supplier’s turnover, who may benefit from the special exemption scheme provided for by Romanian legislation concerning small businesses. However, that condition is difficult for the recipient of the supply to ascertain. In that regard, it must be pointed out that, in the present case, it is apparent, in particular, from recital 6 of Implementing Decision 2010/583 that the Romanian timber market consists of a large number of small businesses which the Romanian authorities have found difficult to control.
[49] By imposing on taxable persons a condition of registration for VAT purposes, the beneficiary of the taxable transaction has a more accessible criterion for knowing, precisely, the extent of its tax liabilities, since Romanian law excludes from the obligation to register for VAT taxable persons benefiting from the exemption applicable to small businesses and therefore not carrying out transactions in respect of which VAT is deductible.
[50] The difference in treatment therefore appears proportionate to the aim pursued by the national legislation at issue in the main proceedings, in so far as, first, registration for VAT purposes derives from EU law itself, namely Article 214 of the VAT Directive, and, secondly, the right of deduction of the taxable persons concerned is not, in principle, called into question." (VB C-146/21)
IMPORT VAT
Person liable for any import duty also liable for import VAT
"(4) VAT on the importation of goods into the United Kingdom shall be charged and payable as if it were import duty." (VATA 1994, s.1)