Comments on C-9/20 : Discrepancy between when input VAT is deductible and when supplier VAT becomes chargeable

The ECJ interprets Article 167 of the VAT Directive in such a way that it conflicts with a national provision under which the right to deduct input VAT already exists at the time the transaction is completed if the VAT entitlement vis-à-vis the supplier of the goods or services, in accordance with a national deviation under Article 66 (1) (b) of Directive 2006/112, only exists upon payment of the fee, which has not yet been paid.

Deductions must be made at the time of delivery, according to the tax authorities. The Court ruled that if the tax is paid only after the service provider receives payment, the national law on the provisional VAT deduction at the time of sale is invalid. 

The Board’s directive on the unified VAT system should be seen as inconsistent with national rules that allow for the right to deduct sales tax at the point of sale.

Source GlobalVATcompliance