Court of Justice (Second Chamber) 10 October 2013, C‑622/11 (Staatssecretaris van Financiën v Pactor Vastgoed BV.)

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In Case C-622/11, the Court of Justice (Second Chamber) addressed whether the Sixth VAT Directive permits recovery of amounts due following adjustment of a VAT deduction from a taxable person other than the one who originally applied that deduction. The decisive issue was whether Article 20 of the Sixth Directive, read in conjunction with Article 21, allowed the Netherlands to impose, under Article 12a of the 1968 Law on Turnover Tax, the tax debt arising from adjustment of a supplier's VAT deduction upon the purchaser (Pactor Vastgoed BV), who was extraneous to the transaction that gave rise to the original deduction. The Court held that the Sixth Directive precludes such recovery, as the adjustment mechanism establishes a direct relationship between the right to deduct and the use of goods for taxable transactions by the same taxable person, and neither Article 20(4), Article 21(1)(a), nor Council Decision 88/498/EEC provided a valid legal basis for imposing that liability on a person other than the taxable person who applied the deduction.AI