The ECJ issued its decision in 14 cases related to the Right to deduct VAT/Refund of VAT.
ECJ Cases decided in 2021 on ”Right to deduct VAT/Refund of VAT”
- Article 17 (2) (a) of Sixth Council Directive 77/388 / EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes – System common value added tax: uniform base, must be interpreted in the sense that it does not preclude a national regulation which does not authorize the deduction of the value added tax (VAT) paid upstream for the acquisition of goods and services used for the needs of exempt activities and which therefore provides that the right to deduct VAT of a mixed taxable person is calculated on the basis of a pro rata corresponding to the ratio between the amount of transactions giving rise to the right to deduct and the total amount of transactions carried out during the year in question,including exempt medical and health services.
- Article 20, paragraph 1, of Council Directive 2008/9 / EC of 12 February 2008, defining the modalities for the reimbursement of value added tax, provided for by Directive 2006/112 / EC, in favor of taxable persons who are not established in the Member State of reimbursement, but in another Member State, read in the light of the principles of fiscal neutrality and good administration, must be interpreted as meaning that it precludes the tax administration of the Member State of the refund, if the latter has acquired certainty, where applicable in the light of additional information provided by the taxable person, that the amount of value added tax actually paid upstream, as mentioned in the invoice attached to the reimbursement request, is greater than the amount shown on this request,refund the value added tax up to the latter amount only, without having previously invited the taxable person, with diligence and using the means which they deem the most appropriate, to rectify their refund request with a deemed request be made on the date of the initial request.
- Article 168, Article 213(1), Article 214(1) and Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2010/45/EU of 13 July 2010 and the principle of value added tax (VAT) neutrality, read in the light of the principles of legal certainty, the protection of legitimate expectations and proportionality, must be interpreted as not precluding, where the identification of a taxable person for VAT purposes has been revoked because no taxable transactions have been indicated in the VAT returns filed for six consecutive months but where that taxable person continues his or her activities notwithstanding that revocation, national legislation under which the competent tax authority may require that taxable person to pay the VAT due on his or her taxed transactions, provided that he or she can re-register for VAT purposes and deduct the input VAT paid. The fact that the director of the taxable person is a partner in another company which is the subject to insolvency proceedings cannot, in itself, be put forward to systematically refuse the re-registration of that taxable person for VAT purposes.
- Article 168 (a) of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that a taxable person may deduct the tax on the input value added (VAT) paid for advertising services when such provision of services constitutes a transaction subject to VAT, within the meaning of Article 2 of Directive 2006/112, and it presents a direct and immediate link with one or more taxable downstream operations or with all of the taxable person’s economic activity, in respect of his overheads,without taking into account the fact that the price invoiced for such services would be excessive compared to a reference value defined by the national tax administration or that these services would not have given rise to an increase of the turnover of this taxable person.
- 1) The provisions of Council Directive 79/1072 / EEC, of December 6, 1979, Eighth Directive on the harmonization of the laws of the Member States relating to taxes on turnover – Modalities of refund of income tax added value to taxable persons not established within the country, and the principles of Union law, in particular the principle of tax neutrality, must be interpreted as not opposing the refusal of a refund request of the value added tax (VAT) when the taxpayer has not submitted to the competent tax administration, within the set deadlines, not even at its request, all the documents and information required to prove their right to a VAT refund , regardless of whether the taxpayer submits, on his own initiative, such documents and information on the occasion of the economic-administrative claim or the jurisdictional appeal filed against the decision denying that right to refund, as long as the principles of equivalence are respected. and effectiveness, an end that corresponds to verify the referring court.2) Union law must be interpreted in the sense that it does not constitute an abuse of law that a taxable person requesting the refund of value added tax (VAT) does not provide the documents required by the Administration during the administrative procedure. tax, but it does spontaneously contribute them in subsequent procedural phases.
- Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in conjunction with the principle of fiscal neutrality, must be interpreted as meaning that a taxable person must be refused the right to deduct value added tax (VAT) relating to the acquisition of goods supplied to that taxable person where he or she has knowingly mentioned a fictitious supplier on the invoice which that taxable person him- or herself has issued in respect of that transaction under the reverse charge procedure, if, taking into account the factual circumstances and the evidence provided by that taxable person, the information necessary to verify that the true supplier had the status of taxable person is lacking, or if it is established to the requisite legal standard that the taxable person has committed VAT fraud or knew or ought to have known that the transaction relied on as a basis for the right of deduction was connected with such a fraud.
- Articles 137, 168, 184 to 187, 189 and 192 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as precluding national legislation which requires a property owner who was granted the right to benefit from the optional tax liability scheme during the construction of a building that he or she intended to let out, and who deducted the input value added tax (VAT) charged on the purchases relating to that building project, to repay immediately all that VAT, plus any applicable interest, on the ground that the planned project that gave rise to the right of deduction did not result in any taxed activity, but as not precluding national legislation which, in such a situation, establishes an obligation to adjust the input VAT paid.
- Articles 184 to 186 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as precluding national legislation or practice whereby the initiation of insolvency proceedings in respect of an economic operator, entailing the liquidation of its assets for the benefit of its creditors, automatically places an obligation on that operator to adjust the value added tax deductions which it has made in respect of goods and services acquired before it was declared insolvent, where the initiation of those proceedings is not such as to prevent that operator’s economic activity, within the meaning of Article 9 of that directive, from being continued, in particular for the purposes of the liquidation of the undertaking concerned.
- Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that the right to deduct input value added tax (VAT) must be refused, without the tax authorities having to prove that the taxable person committed VAT fraud or that he or she knew, or ought to have known, that the transaction relied on to establish the right of deduction was connected with such fraud, where, the true supplier of the goods or services concerned not having been identified, that taxable person fails to adduce proof that that supplier had the status of taxable person, provided that, taking into account the factual circumstances and the evidence produced by that taxable person, the information needed to verify that the true supplier had that status is lacking.
- Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as not precluding a national practice whereby the right to deduct input value added tax (VAT) paid is refused to a taxable person who has acquired goods having been the subject of input VAT fraud committed upstream in the supply chain and who knew or should have known of it, even though he or she did not actively participate in that fraud.
- 1) within the meaning of directive 2006/112, as amended by directive 2010/45, relating to the purchase of the goods concerned. It is only if a document is vitiated by defects such as to deprive the national tax administration of the data necessary to base a request for reimbursement that it is possible to consider that such a document does not constitute an “invoice”, within the meaning of directive 2006/112, as amended by directive 2010/45.2) Articles 167 to 171 and 178 of Directive 2006/112, as amended by Directive 2010/45, as well as Article 14 (1) (a), first hypothesis, of Directive 2008/9 must be interpreted in the sense that they oppose a request for a refund of value added tax (VAT) relating to a given refund period from being rejected on the sole ground that this VAT has become payable during the course of the period. ” a previous repayment period, when it was only invoiced during this given period.
3) Articles 167 to 171 and 178 of Directive 2006/112, as amended by Directive 2010/45, as well as Directive 2008/9 must be interpreted as meaning that the unilateral cancellation of an invoice by a supplier, subsequent to the adoption by the Member State of the reimbursement of a decision rejecting the request for reimbursement of value added tax (VAT) which was based on it, and whereas this decision has already become final , followed by the issue by this supplier, during a subsequent reimbursement period, of a new invoice for the same deliveries, without these being called into question, has no impact on the existence the right to reimbursement of VAT which has already been exercised nor over the period for which it must be exercised.
- Article 168(a) .. must be interpreted as not precluding national provisions interpreted by a national court in such a manner that where a taxable person has the right to decide to allocate an asset to his or her business assets and where, at the latest upon expiry of the statutory period for submitting the annual turnover-tax return, the competent national tax authority has not been put in a position to establish such an allocation of that asset by means of an express decision or sufficient evidence, that authority may refuse the right to deduct value added tax in respect of that asset on the ground that it has been allocated to the taxable person’s private assets, unless the specific legal arrangements under which that option may be exercised show that it does not comply with the principle of proportionality.
- 1) Article 2 (1) (c) of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that the activity of a national public service broadcaster in providing audio-visual media services for viewers, which is financed by the state in the form of a subsidy and for which viewers do not pay fees for television broadcasting, does not constitute a supply of services for remuneration within the meaning of this provision.(2) Article 168 of Directive 2006/112 must be interpreted as meaning that a national public service broadcaster may deduct value added tax (VAT) paid on supplies received in respect of purchases of goods and services used for the purposes of its activities, which give the right to deduct, and that he cannot deduct VAT paid on supplies received for the purchase of goods and services used for the purposes of his activities which do not fall within the scope of VAT. Member States should determine the methods and criteria for allocating the amount of VAT paid on supplies received between taxable transactions and transactions not falling within the scope of VAT, taking into account the purpose and structure of this Directive, respecting the principle of proportionality.
- Articles 167 and 178 of Council Directive 2006/112 / EC of November 28, 2006 on the common VAT system in the version amended by Council Directive 2010/45 / EU of July 13, 2010 are to be interpreted as meaning that they are a national regulation, according to which the exercise of the right to deduct the VAT due on an intra-Community acquisition in the same tax period as that in which the VAT is to be paid is made dependent on the VAT owed being registered in the tax return, which is submitted within a period three months from the end of the month in which the tax liability for the purchase of the goods arose.
See also historical overview of ECJ cases on ”Right to deduct VAT/Refund of VAT” (Art. 167-192)
- Focus on ”Right to deduct VAT on good and services supplied” (Art. 168(a))
- Focus on ”Right to deduct VAT – VAT paid on the importation of goods” (Art. 168(e))
- Focus on Proportional VAT Deduction (Art. 173)
- Focus on Refund or Carry-Over of VAT in case the amount of deductions exceeds the amount of VAT due(Art. 183)
- Focus on ”Right to deduct VAT by Holding companies related to their subsidiaries” (Art. 167, 168, 173)
- Focus on ”Right to deduct VAT on Public Construction works”
- Focus on ”Right to Deduct VAT” and ”Substance over form” concept
- Focus on ”Right to Deduct VAT if VAT on prior transactions have not been paid”
Check also the previous articles on ”Looking back @2021”
- E-Commerce VAT Directive launched in the EU per July 1, 2021
- Next to the EU, 14 countries implemented VAT on E-Commerce, another 7 will implement in 2022
- Saudi-Arabia is the first country in the Middle East launching E-Invoicing, UAE may follow
- The concept of Fixed Establishments remains a major risk, and even why?
- Intrastat: Major updates applicable as of Jan 1, 2022
- Implementation/changes E-Invoicing & Real Time Reporting during 2021
- ECJ cases decided in 2021 on ”Taxable Amount”
- 49 ECJ VAT Cases decided (incl. orders) in 2021
- Split Payments
- Poland and France to introduce optional taxation of Financial Services – Exemption may not longer be applied
- Activities of the VAT Expert Group
- ECJ cases decided in 2021 on ”Exemptions”
- Pre-Filled VAT returns
- SAF-T (or equivalent) regulations, some more countries will implement
- Environmental Tax – Will Plastic Tax stop pollution?
- VAT Grouping, a tool to avoid VAT leakage, optimize VAT receivables and simplify processes
- EU VAT Committee met twice and a proposal to transform it into comitology committee was discussed