Brussels, 5 June 2008
VAT – Commission takes steps against Poland regarding its exclusions to deduct VAT on certain specific motor vehicles and on the fuel acquired to propel them
The European Commission has formally requested Poland to bring its national rules governing the exclusions of the right to deduct VAT due or paid on certain specific motor vehicles and on the fuel acquired to propel them in line with the provisions of the VAT Directive. The request takes the form of a reasoned opinion (second step of the infringement procedure provided for in Article 226 of the EC Treaty). If, within two months, the relevant national provisions are not amended so as to comply with the reasoned opinion, the Commission may decide to refer this matter to the European Court of Justice.
According to the VAT Directive (Article 176), Member States which joined the European Community after 1-1-1979 may retain all the exclusions of the right to deduct VAT provided for under their national laws on the date of their accession. The European Court of Justice has ruled that, after accession, those Member States are entitled to modify those exclusions only in so far as the modification entails their abolition or at least the reduction of their scope. By contrast, no modification leading to a wider scope of the exclusion is allowed.
The Commission takes further the view that the VAT Directive does not allow a Member State which joined the Community after 1-1-1979 to widen the scope of the exclusions of the right to deduct VAT upon accession, that is to say, by means of an amendment to the previous rules entering into effect on the very same day of accession. Any amendment entering into force upon accession can only result in the abolition or at least reduction of the exclusions of the right to deduct VAT previously applied.
The exclusions of the right to deduct VAT borne on acquisitions of motor vehicles and fuel applied in Poland have been amended both at the time of accession (1-5-2004) and at a later date (22-8-2005). As a result, certain specific categories of motor vehicles (and the fuel acquired to propel them) which under the preceding legislation were subject to the normal rules of deduction have fallen within an exclusion of the right to deduct. As they were applied in Poland immediately before accession, this entails that, at least in certain cases, the scope of the exclusions has been widened in breach of Community Law.
For this reason, the Commission has formally requested Poland to change its national rules by means of a reasoned opinion. It must be added that, on the basis of Article 234 of the EC Treaty, a preliminary question on this same subject has already been referred to the European Court of Justice by a Polish court and it is currently pending (Case C-414/07)
The Commission's reference number is 2005/4855.
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