VAT deduction even when the issuer of the invoice is in violation

Such a conclusion reached by the Court of the EU in Case C-324/11 (Gabor Toth / Nemzeti Ado-es Vamhivatal), which considers the situation in which the issuer of the invoice has been terminated for VAT, in addition to it was found that had not declared to the tax authorities persons employed by him.

EU VAT laws

EU VAT laws

According to the judges in Luxembourg there are the following points in relation to the right to deduct:

A) EU law precludes the tax authority to deny the taxpayer the right to deduct VAT for services rendered only because the license for the individual entrepreneur biller is withdrawn before the latter has provided the services in question, or is issued the invoice when the latter contains all the required information, in particular information that is needed to identify the person who has prepared, and the nature of the services provided.

B) It is also not permissible tax authority to deny the taxpayer the right to deduct VAT on services supplied to him because the issuer of the invoice for these services has not declared his hired workers without the authority to establish, based on objective evidence that the person knew or should have known that the transaction, which justifies the right to deduct a portion of tax fraud committed by that publisher or other entity up the supply chain.

C) The fact that the taxpayer has not checked whether between employees of the construction workers and biller relationship existed or whether the publisher has declared those workers is not an objective fact , which may be inferred that the recipient is aware of the invoice or should have known to be involved in a transaction connected with fraudulent VAT if the recipient did not have data on which to suspect the existence of irregularities or fraud in this regard by the publisher. The right to deduct cannot be refused on such grounds as provided substantive and procedural conditions for the exercise of this right are met.

D) When the tax authority provides concrete evidence of the existence of tax fraud, EU law allows a national court to ascertain , on the basis of an overall assessment of all the circumstances of the case whether the invoice itself publisher has committed the transaction in question . Right of deduction may be denied only when the tax authority determines that the invoice recipient knew or should have known that the transaction , which justifies the right to deduct a portion of tax fraud committed by the issuer or other entity up the supply chain.

 

1 comment to VAT deduction even when the issuer of the invoice is in violation

  • [...] Such a conclusion reached by the Court of the EU in Case C-324/11 (Gabor Toth / Nemzeti Ado-es Vamhivatal), which considers the situation in which the issuer of the invoice has been terminated for VAT, in addition to it was found that had not declared to the tax authorities persons employed by him.  [...]