Polish VAT law stipulated that ‘taxable persons effecting sales to natural persons not engaged in economic activity’ were required to ‘keep records of turnover and the amount of tax due through the use of cash registers’, and that taxable persons who failed to fulfil this obligation ‘shall forfeit the right to reduce the amount of tax due in an amount equivalent to 30% of the amount of input tax paid on the acquisition of goods and services’. In Dyrektor Izby Skarbowej w Bialymstoku v Profaktor Kulesza Frankowski Józwiak Orlowski sp j (ECJ Case C-188/09), a company which had failed to use cash registers to record its turnover appealed against a reduction of its input tax, contending that the Polish legislation contravened the EC Sixth Directive.
The case was referred to the ECJ, which found in favour of the Polish authorities, holding that the Directive ‘does not preclude a Member State from imposing a temporary restriction on the extent of the right of taxable persons who have not complied with a formal requirement to keep accounting records of their sales to deduct input tax paid, on condition that the sanction thus provided for complies with the principle of proportionality’.
Why it matters: The ECJ confirmed that the Polish authorities were entitled to insist on the use of cash registers to record turnover. But the fact that a trader has a cash register does not always mean that the whole of his turnover will be recorded.
Polish VAT law stipulated that ‘taxable persons effecting sales to natural persons not engaged in economic activity’ were required to ‘keep records of turnover and the amount of tax due through the use of cash registers’, and that taxable persons who failed to fulfil this obligation ‘shall forfeit the right to reduce the amount of tax due in an amount equivalent to 30% of the amount of input tax paid on the acquisition of goods and services’. In Dyrektor Izby Skarbowej w Bialymstoku v Profaktor Kulesza Frankowski Józwiak Orlowski sp j (ECJ Case C-188/09), a company which had failed to use cash registers to record its turnover appealed against a reduction of its input tax, contending that the Polish legislation contravened the EC Sixth Directive.
The case was referred to the ECJ, which found in favour of the Polish authorities, holding that the Directive ‘does not preclude a Member State from imposing a temporary restriction on the extent of the right of taxable persons who have not complied with a formal requirement to keep accounting records of their sales to deduct input tax paid, on condition that the sanction thus provided for complies with the principle of proportionality’.
Why it matters: The ECJ confirmed that the Polish authorities were entitled to insist on the use of cash registers to record turnover. But the fact that a trader has a cash register does not always mean that the whole of his turnover will be recorded.
