Revocation of Permission for Cash Accounting due to Abuse; Creation and Exercise of Input Tax Deduction Right

• The case involves the revocation of the permission for the taxation of turnover based on received payments (Ist-Besteuerung).
• The revocation was based on the suspicion of abuse due to the non-payment of invoices by related parties.
• The court states that if a recipient of services is already entitled to deduct input tax, even if no VAT has yet been incurred by the supplier due to the permission for Ist-Besteuerung, this is not a result of abusive behavior by the parties involved, but rather a result of incorrect implementation or application of Article 167 of the VAT Directive by Germany.
• The court leaves open the question of whether the term “due” in the context of VAT law contains a temporal component and therefore must be understood to mean that the VAT must already be due from the supplier in order to be deducted as input tax by the recipient.
• The court overturns the decision of the lower court and revokes the revocation of the permission for Ist-Besteuerung.
• The costs of the proceedings are to be borne by the defendant.

Source: bundesfinanzhof.de

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.

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