- The European General Court (EuG) overturned the principle that input VAT deduction is only allowed when both the service is performed and the invoice is received.
- Now, input VAT deduction is permitted in the reporting period when the underlying transaction occurs, as long as the invoice is received by the time the tax return is filed.
- This decision challenges existing practices in both tax administration and businesses, especially in Germany, where deduction was previously tied to invoice receipt within the same period.
- The ruling aims to uphold VAT neutrality and proportionality, preventing businesses from temporarily bearing the VAT burden.
- The change raises practical questions for businesses about whether to follow EU law or national regulations, particularly regarding annual tax returns.
Source: nwb-experten-blog.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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