- The issue at hand is the deduction of import VAT by a taxable business, as per the Principal VAT Directive Article 168.
- The directive requires that the ‘goods and services’ must be used in the taxpayer’s downstream supplies for the VAT to be deducted.
- There are differences between the Principal VAT Directive and the UK’s VAT Act 1994 in this regard, which could be of interest to businesses, advisers, and HMRC in the future.
- The CJEU’s case law has established principles for deducting VAT, with specific conditions for import VAT.
- The case of DSV Road (Case C-187/14) highlighted that the right to deduct import VAT exists only if the imported goods are used for the taxable person’s economic activities.
- The CJEU’s interpretation of the Principal VAT Directive in this regard is considered clear, and there are implications for businesses, advisers, and HMRC.
Source Taxadvisersmagazine
