CJEU rules on VAT treatment of Czech ‘society‘ without legal personality
The Tenth Chamber of the Court of Justice of the European Union (CJEU) ruled on case C-796/23 Česká síť s.r.o. It concerns the determination of the taxable person who performed a taxable supply and is obliged to pay value added tax in the context of a ‘society’ without legal personality.
A summary of the dispute and the opinion of the advocate general can be found in our previous article.
In its decision, the CJEU sided with the opinion of its advocate general. Among other things, it stated that to determine the taxable person for VAT purposes, it is essential to verify who carried out the relevant economic activity and who bears the economic risk associated with it.
According to the CJEU, the individual companies, although linked by capital, carried out their economic activities independently and should therefore be considered separate taxable persons. With reference to previous case law (C-340/15), it also states that the proven existence of cooperation between several companies cannot be sufficient to call into question their independence.
The CJEU also agreed with the advocate general's opinion that Česká síť and the branches concerned (even though legally independent) could be considered a single taxable person, but only if it were proven that the splitting of turnover between these four companies constituted an abuse of law.
The CJEU concludes that a ‘society’ without legal personality cannot, in this case, be considered the person who provided the services, and therefore cannot be the person liable for paying VAT.
According to the CJEU, Articles 9(1) and 193 of Directive 2006/112 preclude a national law from treating one member of a ‘society’ without legal personality as the person liable for VAT on services provided by all the members of that ‘society’ independently.