Challenging VAT Deduction on Preliminary Contracts Without Final Deed: A Legal Misstep?

• A recent Supreme Court ruling, n. 5421/2025, has caused concern regarding VAT deduction on preliminary agreements without final deeds.
• A company paid 2.4 million euros for a property purchase that was never completed due to the seller’s bankruptcy.
• The tax agency challenged the buyer’s VAT deduction, and the court agreed, requiring the buyer to adjust the deduction.
• The court dismissed the buyer’s argument about violating tax neutrality, as the buyer might bear the tax burden due to the seller’s insolvency.
• The buyer must pay an additional 400,000 euros, recoverable only legally, not practically, for a property they will never own.
• Typically, article 26 allows deduction adjustments as an option for the seller, with a corresponding obligation for the buyer.
• The court referenced a higher directive, omitting parts that state conditions set by member states, which Italy has codified.
• Credit notes are usually issued by the seller, so the buyer’s independent adjustment would not affect the seller’s tax debt, challenging the tax neutrality principle.

Source: eutekne.info

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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