ECJ C-154/20 (Kemwater ProChemie) – Questions – Right to the VAT deduction on services supplied by an unknown entity

Date plus intro

Article in the EU VAT Directive

Articles 168(a), 178(a), 226 of the EU VAT Directive 2006/112/EC


The Czech Supreme Administrative Court made a reference for a preliminary ruling to the ECJ related to the right to deduct the VAT on services supplied by an unknown entity.

Czech company Kemwater ProChemie has been supplied advertisement services. Tax administrator did not dispute the actual provision of services, but disputes that the alleged supplier has supplied them. Subsequently the tax administrator refused the company’s input VAT claim.

CSAC reminds basic substantive conditions for the right to deduction, one of them being that the supply is provided by another taxable person. CSAC questions in this relation ECJ rulings Signum Alfa Sped and Maks Pen (which conclude that VAT claim cannot be disputed just based on the fact that the issuer of the invoice is not actual service provider) as contradicting former ECJ rulings e.g. Enkler, Evita-K, Barlis 06. Those rulings concluded that the proof of burden of complying with the substantive conditions lies upon the supply recipient.

CSAC asks the ECJ whether

  • VAT claim is conditioned by proving that the supply has been provided by another concrete taxable person
  • If so, and a taxable person does not fulfil its above-mentioned obligation, is it possible to refuse the right to deduction unless proven that the supply recipient knew or might have known about their participation in the VAT fraud.

Source: Czech Supreme Administrative Court


It is in accordance with Directive 2006/112/EC 1 that the exercise of the right to deduct value added tax paid upstream is conditional on the taxable person’s obligation to prove that the benefit received by him in a taxable transaction was carried out by a taxable person. another taxable person, concrete?

If the answer to the first question is in the affirmative, if the taxable person has not fulfilled the burden of proof, he may be denied the right to deduct value added tax paid upstream, even if it has not been established that that taxable person knew or could to know that by acquiring goods or services, she will be involved in a tax fraud?

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