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ECJ case C‑684/18 (World Comm Trading) – Judgment – Global rebates required local adjustments

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Summary (thanks to Silviya Ivanova)

The Court of Justice of the EU delivered its judgment in the Romanian case C‑684/18, World Comm Trading. The background facts to the case depict a common situation whereby a rebate or a retrospective discount is provided to a client upon meeting a target or fulfilling certain conditions. In particular, in this case, the rebate related to both intra-Community acquisitions of goods and local purchases made from separate VAT registered persons (in other Member States and locally in Romania). However, at the time the rebates were given, the local Nokia supplier had already discontinued activities in Romania and deregistered, so the whole rebate was given via the VAT registration number of the supplier (Nokia) in Finland. The Court ruled that the Member State’s tax authorities are required to demand an adjustment in the input VAT initially deducted as a result of the reduction of the tax base to the extent it related to the local purchases. That is in accordance with Article 185 of the PVD. The adjustment is required even where the suppler had discountined activities and is no longer able to issue a credit note in respect of the reduction of the tax base given via the rebate.

Decision

Article 185 of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that national tax authorities revise a taxable person’s deduction of the tax deduction originally applied should impose value added tax (VAT) where those authorities consider, after having obtained rebates for domestic supplies of goods, that the VAT deduction originally applied is higher than the deduction that that taxable person was entitled to apply.

Article 185 of Directive 2006/112 must be interpreted as meaning that a taxable person established in a Member State is required to revise the VAT deduction originally applied even if the supplier of that taxable person has ceased to operate in that Member State and that supplier has thereby cannot claim a refund of part of the VAT paid by him.

Source: Curia (unofficial translation)

See also ECJ Case C-684/18 (World Comm Trading Gfz) – Questions – Local and intra-Community purchases; Discounts invoiced on one invoice; VAT deduction

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