Comments on T-638/24: Double dip alert – an incorrect invoice can create multiple VAT liabilities

Expensive consequences of using the wrong VAT number in an intra-community transaction

Can showing VAT on an invoice contrary to the rules of taxation of intra-Community supplies change the tax situation of both parties to the transaction?

The Court of Justice of the European Union ruled that using the wrong VAT number in intra-community transactions can result in both the supplier and the purchaser being liable for VAT due to incorrect invoicing, even if the transaction should be exempt from VAT.
The judgment clarified that Article 41 and Article 203 of the VAT Directive can be applied simultaneously, allowing a Member State to tax an intra-community acquisition if the taxable person used their VAT number, regardless of erroneous VAT displayed on invoices.
The Court emphasized the importance of correcting invoicing errors to maintain the principle of neutrality and proportionality in the VAT system, indicating that mechanisms for correction prevent unjustifiable taxation and ensure compliance with VAT regulations.

Source MDDP

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Incorrectly invoiced VAT on intra-Community supplies can create multiple VAT liabilities: one from the invoice itself and another from the “safety net” mechanism if the wrong VAT number is used.
The General Court confirmed that both liabilities can legally coexist, even if this results in what feels like double taxation in the same Member State.
This outcome arises from two separate legal mechanisms: Article 203 VAT Directive (VAT liability from invoice) and Article 41 VAT Directive (safety net for intra-Community acquisitions).
The case highlights the complexity and potential pitfalls in the intra-Community VAT system, especially regarding the use of VAT numbers and correct invoicing.

Source: vat-consult.be

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