VAT Neutrality and Tax Fraud: Implications of Recent Jurisprudence

• The principle of VAT neutrality, essential for fair taxation, requires that the economic burden of VAT does not fall on compliant taxable persons, yet recent rulings suggest that in cases of tax fraud, the consideration assessed may still include VAT, potentially disadvantaging compliant businesses.
• Recent ECJ and Spanish Supreme Court rulings highlight inconsistencies in determining the taxable base during tax fraud cases, raising questions about whether a clear taxable base or the impossibility of passing on VAT should prevail in assessing VAT obligations.
• To ensure fair competition, future doctrine and jurisprudence may need to reinforce VAT neutrality principles, ensuring that entities operating under fraudulent conditions are taxed similarly to those complying with tax regulations, maintaining equity in the marketplace.

Source Marcos Álvarez Suso

See also

• Briefing document & Podcast C-521/19 (CB) – Undeclared transactions must include VAT, preserving neutrality despite tax fraud circumstances – VATupdate
• Flashback on ECJ Cases C-249/12 (Tulică) & C-250/12 (Plavoşin) – Price is assumed to include VAT in case not mentioned in the agreement – VATupdate

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