Lithuanian Supreme Court: Taxpayer Liable for VAT Fraud Due to Lack of Due Diligence

• The Supreme Administrative Court of Lithuania ruled that a company was involved in VAT fraud due to ignoring clear signs of fraud and failing to perform basic due diligence on its contractors.
• The court emphasized that taxpayers are directly responsible for verifying the identity and authority of their contracting parties and cannot rely solely on state institution assessments.
• The court held that expenses related to transactions with fraudulent documents cannot be recognized for tax purposes unless independent evidence is provided.
• The applicant failed to collect necessary information about its contractors and continued transactions even after the death of a contractor’s director, with documents still being issued in the deceased’s name.
• The court agreed with the tax administrator that the applicant likely knew or should have known about the VAT fraud.

Source: vatabout.com

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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