Comments on ECJ C-227/21: ECJ ruling on VAT deduction in bankruptcy proceedings

• The European Court of Justice (ECJ) addressed the question of whether the acquirer of a bankruptcy estate should be denied the right to deduct input VAT paid if the seller did not remit the VAT to the state budget.
• The case involved a Lithuanian bank that provided a loan to a seller for real estate development. The seller encountered financial difficulties and sold the mortgaged property in bankruptcy to the bank.
• The seller issued an invoice with VAT, which was paid by the bank. The bank deducted the paid VAT through the tax return, but the seller did not remit the output VAT to the state budget.
• The EU legal framework aims to prevent tax evasion and transfer the tax liability to the buyer or acquirer of the bankruptcy estate.
• Lithuania did not adopt the exception into their tax legislation, while Slovakia transposed it into their Value Added Tax Act.
• The Slovak provision  ensures that the seller transfers the tax liability to the acquirer of the bankruptcy estate, preserving the neutrality of the VAT system and preventing VAT evasion.

Source: accace.com

See also ECJ C-227/21 (HA.EN.) – Judgment – No Denial of input VAT if the seller would not pay output VAT

---

• Join the Linkedin Group on ECJ VAT Cases, click HERE
• VATupdate.com – Your FREE source of information on ECJ VAT Cases

---

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

---

---