The Contentious-Administrative Chamber of the Supreme Court has established in a ruling that a bread considered special according to the Spanish technical-sanitary and food regulations, for including in its preparation ingredients added to those required for its classification as common bread, is entitled to the super-reduced VAT of 4% that the Law of said Tax sets for common bread. The court concludes that “there is no bread, as a particularly intense basic need, which the tax law has intended to treat in a different and worse way than what is considered common bread.”
The reason for the Supreme Court’s decision is that The exclusion of such special bread from the super-reduced tax rate contradicts EU law, not being perceptible by an average consumer. The bread was considered special because it included in its preparation ingredients added to those required for its classification as common bread.
The high court upholds in its ruling the appeal of a company that manufactures and markets bread products known as ‘baguettes’, and that argued that the jurisprudence of the Court of Justice of the EU establishes that similar goods and services must receive the same treatment for the purposes of VAT, and this similarity must be determined from the point of view of the average consumer.
The Supreme Court agrees with him and points out that, in accordance with the doctrine of the CJEU, it opposes the principle of VAT neutrality, in its aspect of guaranteeing free competition, the difference between types of tax that does not take into account the average consumer’s perspective on the products.
For the Chamber, the outcome of the problem is that the baguette bread offered by the appellant deserves to be considered common bread for the purposes of article 91.Two of the VAT Law. First, because there is no substantial difference that has been established by the Administration to deny the very reduced rate of tax that the taxpayer included in her self-assessment, between the bread that concerns us and the one that the Administration and the Court of Appeal consider, for opposition, common bread.
Second, the ruling continues, because the incorporation of an irrelevant amount of gluten into the dough, in the absence of evidence to the contrary, It cannot be understood that it is perceptible by the consumer or a piece of information that therefore implies the existence of a substantial difference in tax treatment, as it is not a differentiating element in the product compared to the one that does deserve the 4% rate.
Likewise, the court points out that by not differentiating the VAT law between these two different types of bread that derive from the application of the hygienic-sanitary standard – the VAT Law could only endorse this distinction based on the expression common bread, which art. 91. Two uses – “it is not possible to create a distinction that is not clearly expressed in the law. The law itself does not define common bread, it is not opposed to or distinguished from an alleged special bread, nor are the characteristics established that allow it to be singled out. one and the other, the latter endowed with an unfavorable tax regime”.
For all these reasons, the Supreme Court, in a ruling for which Judge Francisco José Navarro Sanchís was the rapporteur, declares jurisprudential doctrine that “the non-application of the super-reduced rate of VAT to bread considered special according to Spanish technical-sanitary and food regulations – for including in its preparation ingredients added to those required for its classification as common bread, which is taxed at the 4% rate, opposes the principle of neutrality of VAT, in its aspect of guaranteeing free competition and the doctrine of said CJEU according to which the difference between tax rates must take into account the average consumer’s perspective on the products”.
#Supreme #Court #establishes #special #bread #entitled #superreduced #VAT #applies #common #bread
