No VAT Deduction Despite Formal Invoices When Tax Fraud Indicators Present

• The Münster Tax Court ruled on input tax deduction in a case where a taxpayer was involved in a tax evasion chain despite taking security measures to prevent involvement in VAT fraud systems
• Input tax deduction must be denied on material grounds when objective circumstances show the taxpayer knew or could have known they were participating in transactions involving VAT evasion
• The taxpayer had implemented security measures to avoid being incorporated into a VAT fraud system, but these very measures provided evidence suggesting the main supplier was a buffer in a VAT carousel scheme
• The main supplier allegedly reduced their VAT liability through cover invoices as part of the fraudulent scheme
• The determination of whether someone should have known about involvement in VAT fraud depends solely on objective circumstances that create a duty to investigate for the taxpayer

Source: datenbank.nwb.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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