ECJ Case C-146/19 (SCT vs Slovenia) – Questions – Reduction taxable amount, definitive non-payment, failure by vendor to take proper steps

The European Court of Justice received questions in case C-146/19 (SCT) on 3 April 2019.

The case concerns the situation where a taxpayer has issued invoices to a customer, who went bankrupt. However, the tax payer did not file its invoices with the bankruptcy register, and as such did not receive anything from the bankruptcy cash-pool. The tax authorities denied the refund of VAT on the bad debt, arguing that the tax payer should have tried to get some money from the customer first. The tax payer argues that this is not required based on EU VAT rules.

The court asks the following questions to the ECJ:

  • Is Article 90(2) of the VAT Directive to be interpreted as permitting derogation from the right to reduce the taxable amount for VAT purposes even with respect to cases of definitive non-payment, where such definitive non-payment is a consequence of a failure on the part of the taxable person liable for the VAT to take proper steps, such as lodging a claim in bankruptcy proceedings commenced against his debtor, as in the present case?
  • If such derogation from the right to reduce the taxable amount for VAT purposes is permissible, must there nevertheless be a right to reduce the taxable amount for VAT purposes on the ground of non-payment where the taxable person is able to demonstrate that, even if he had lodged a claim in the bankruptcy proceedings, it would not have been satisfied, or is able to demonstrate that there were reasonable grounds for not lodging a claim?
  • Does Article 90(1) of the VAT Directive have direct effect even if the legislature of a Member State has exceeded the scope of the possibilities for derogation established by Article 90(2)?


Source: MinBuza (Dutch)