Audit Documentation Procedures: Distinguishing Abusive Practices from VAT Fraud under Kittel Jurisprudence

• The article analyzes audit documentation procedures that distinguish between abusive practices and VAT fraud, focusing on the “knowledge or should have known” criterion from Kittel case law.
• It presents a practical documentation framework based on International Auditing Standards to properly categorize cases and avoid unjustified criminalization.
• VAT is a key revenue source but is vulnerable to abuse and organized fraud, with significant losses reported annually in the EU.
• The Kittel decision introduced the loss of VAT deduction rights if the taxpayer knew or should have known about fraud, shifting some cases from administrative to criminal.
• Auditors must both detect signs of artificiality or fraud and clearly document qualitative elements (intent, knowledge) to differentiate case categories and ensure proportionality.

Source: taxheaven.gr

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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