Comments on ECJ case C-429/23: The supplementary return as a means of extending the deadlines for VAT deduction

CJEU Ruling on VAT Deduction Timeliness: The Court of Justice of the European Union (CJEU) ruled that VAT deductions must be exercised within national deadlines, and submitting a supplementary VAT return after these deadlines does not allow for late deductions.
Case Details: The case involved a Bulgarian company that attempted to deduct VAT after the national deadline for its November 2020 return, which led to a dispute with the tax authority regarding the compatibility of Bulgarian rules with EU law.
Principles Established: The CJEU emphasized that while the right to deduct VAT is fundamental, it must be exercised within a set timeframe to maintain legal certainty. Limitation periods that penalize inactivity are compatible with VAT legislation if they apply equally to domestic and EU rights.
Compatibility with National Rules: The CJEU found Bulgaria’s 12-month limitation period for VAT deductions compatible with EU law, stating it does not render exercising the right to deduct excessively difficult or impossible.
Contrast with Italian Tax Authorities: The Italian tax authorities’ guidance allows for VAT recovery via supplementary returns beyond the standard deadlines, which may not conflict with CJEU principles, as the Italian rule provides for longer deduction periods based on the timing of the VAT return submission.

Source PwC