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ECJ Says Poland May Restrict Reduced VAT Rate To 'Fresh' Pastries

by Ulrika Lomas, Tax-News.com, Brussels

10 November 2017


The European Court of Justice has provided another ruling on the value-added tax (VAT) treatment of pastry goods and cakes.

A polish court sought clarification from the ECJ after a taxpayer questioned a Polish legal provision providing that the eight percent reduced rate of value-added tax should apply only to those pastry goods or cakes that have a use-by date or best-before date not exceeding 45 days.

In a preliminary ruling on November 9, 2017, in AZ v. the Polish Finance Minister (Case C-499/16), the Court replied that states have discretion to set the limitations for the application of a reduced rate of value-added tax to foodstuffs for human consumption. providing such provisions do not contravene the principle of fiscal neutrality.

The ECJ ruled that it is for the national court to assess whether, in the Polish market, there are pastry goods or cakes whose shelf life does not exceed 45 days but which nevertheless are similar in the eyes of that consumer to pastry goods and cakes which have a best-before date exceeding 45 days, such as those produced by the taxpayer, AZ, and which are interchangeable with the latter. In such case, the principle of fiscal neutrality would preclude such a provision and Poland would be required to amend its value-added tax law.

The Court ruled: "Article 98 of Council Directive 2006/112/EC of November 28, 2006, on the common system of value added tax must be interpreted as meaning that it does not preclude – provided that the principle of fiscal neutrality is complied with, which is for the referring court to ascertain – national legislation, such as that at issue in the main proceedings, which makes the application of the reduced VAT rate to fresh pastry goods and cakes depend solely on the criterion of their 'best-before date' or their 'use-by date.'"

TAGS: court | Finance | tax | value added tax (VAT) | law | food | legislation | Poland | European Union (EU) | Europe

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