Complete input tax refusal when involved in VAT evasion

The Nuremberg Fiscal Court, after previously referring the matter to the European Court of Justice (ECJ) in its ruling of September 21, 2021 (VAT directly digital 3/2022, p. 3 with note Gehm), has now decided on the issue of whether the input tax deduction should be completely denied to a person who knew or should have known that their input transaction was involved in VAT fraud, regardless of the amount of damage caused to the tax authorities by the tax evasion. The ECJ had previously ruled on the reference submitted by the Nuremberg Fiscal Court in the case “Finanzamt M” on November 24, 2022 – C-596/21 (VAT directly digital 2023/4, p. 5 with note Mann), providing the basis for the Nuremberg Fiscal Court to finally conclude its legal assessment of the case. This decision is also relevant for the provision of § 25f of the German VAT Act (UStG), as it gives important indications of when there is a “need-to-know” in this regard.

Source: nwb.de

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