The ECJ ruled that the VAT identification number is not a condition of deductibility.
For the Court of Justice, the VAT identification number is not a condition of the right to deduct: a person not yet identified at the time he has incurred expenditure subject to VAT can not be denied the opportunity to deduct tax if it meets the substantive requirements of the right of deduction and identify if within a reasonable time after the transactions giving rise to a right of deduction.
A VAT registered entity which meets the basic conditions to derive it and identifies with the VAT in a reasonable time from the transactions that give rise to a right of deduction shall not be deprived of the possibility of exercise this right by national legislation which prohibits the deduction of VAT paid in connection with the purchase of property when that subject would not have identified for VAT before using them for its taxable activity.
Ruling for the purposes of VAT in Lithuania.
In this case, the company had acquired in Lithuania Nidera grain it had exported to third countries, before being registered for VAT in that country. It had supported the Lithuanian VAT on its purchases of cereals and had applied to exports, according to Lithuanian legislation, a VAT rate of 0%. Having registered for VAT in Lithuania, Nidera had sought refund of VAT paid on purchases of grain, which the Lithuanian government refused, arguing that property acquired by Nidera had been used before that it acquires the status of taxable person identified for VAT. It should be noted that under Lithuanian law, the deduction is subject to the condition in Lithuania to be identified for VAT.
Following an appeal from Nidera, the judge had asked the Lithuanian Court of Justice whether the Lithuanian legislation was consistent with the VAT Directive in that it prohibits the deduction of VAT paid in connection with the purchase of goods when the subject would not have identified for VAT before using such property for its taxable activity.
The Court first reaffirmed that Member States may not limit the right of deduction in the circumstances listed in the directive (ECJ Case 21-9-1988. 50/87, Commission v. France; ECJ 15 – Case 1-1998. 37/95, Ghent Coal Terminal NV). She recalls that the principle of neutrality requires that the deduction of input VAT is granted if the substantive requirements are met, even if certain formal requirements have been omitted by the subject (ECJ Case 21-3-2000. 110/98 to 147/98, Gabalfrisa SL; ECJ Case 27-9-2007. 146/05, Stuck, ECJ Case 8-5-2008. 95/07 and 96/07, Ecotrade SpA ECJ Case 30-9-2010. 392 / 09 Uszodaépitö, concerning the reverse charge).
The Court concludes that the VAT identification under section 214 of the Directive is not a constituent of the deductible, which arises when the deductible tax becomes payable, but is a formal requirement to control purposes. It follows that a VAT can not be prevented from exercising its right to deduct the grounds that it would not have identified for VAT before using assets acquired as part of his taxable activity.
The Court agrees, however, that States may not only provide for administrative penalties for non-compliance with formal requirements under the VAT Directive but also impose a reasonable time to the subject for identification for VAT in order not to render meaningless this obligation. In this case, it notes that Nidera has completed the formalities of identification within six months after the transactions have to be deductible, and considers this reasonable.
In France, the administration makes the right to deduct from new taxpayers to the condition that the company has demonstrated by a declaration of existence and identification through acquisitions and intends to make taxable . Recently, an Administrative Court of Appeal went to the same effect as administration, make the recognition of taxable persons (and the right to deduct it attached) of a non-resident EU European declaration of existence. This doctrine and administrative decision, which rely a formalistic approach to the detriment of the consideration of economic reality, are not consistent with this decision of the Court of Justice.