In last week's Opinion, the Advocate General concluded that the obligation to draw up cross-border invoices exclusively in Dutch, failing which they are to be declared null and void, infringes EU law.
In the dispute, the company New Valmar, which has its registered office in the Dutch-speaking region of Belgium, concluded a distribution agreement with an Italian company. According to the agreement, it was governed by Italian law. At the termination of the agreement, the Belgian company sued its Italian distributor to claim payment of several invoices that were drafted in Italian. The distributor raised the defence that the invoices were null and void, because a Flemish decree of 1973 requires that “acts and documents required by the law” shall be drawn up in the Dutch language.
If an invoice is null and void, a new regular invoice must be issued and late payment interests will only accrue as from the date of the new invoice. Moreover, the argument that an invoice was not disputed in due course and is therefore due is no longer valid, because the new invoice can be disputed immediately.
According to the Advocate General, however, the Flemish decree of 1973 does not comply with the free movement of goods in the EU (infringement of Article 26(2) and Articles 34–35 of the Treaty on the Functioning of the European Union). The Advocate General pointed out that the Flemish legislation produces a dissuasive effect with regard to intra-Community trade, not only for those undertakings established in the Flemish Region which seek to export their goods to other Member States, but also for foreign companies seeking to conclude a transaction with those undertakings.
While promoting and encouraging the use of one or more official languages of a Member State constitutes a legitimate objective and guarantees the speed and effectiveness of the checks carried out by the competent VAT authorities, it still has to be ascertained whether such legislation is proportionate to the objectives concerned. In the opinion of the Advocate General, the proportionality criterion is not met in this case.
The Flemish language rules go beyond what is strictly necessary to promote the use of Dutch and to enable the competent authorities to check the relevant details. It would be sufficient in practice to require a translation into Dutch. Also, the statutory penalty of declaring the invoices null and void is excessive, according to the Advocate General.
We expect that the Court of Justice will follow the opinion of the Advocate General and declare the provisions of the Flemish decree of 1973 incompatible with EU law. After all, the Court of Justice reached the same conclusion in relation to the decree concerning the language requirements in the employer-employee relationship (judgment of 16 April 2013 in Las, C 202/11).
Tom Heremans (tom.heremans@cms-db.com)
