To remember: Circular 2017/C/64 on the invoice, condition for exercising the right of deduction in relation to VAT

Administrative guidelines on the consequences for Belgian administrative practice of the recent case law of the Court of Justice of the European Union regarding the exercise of the right of deduction and the importance that must be attached to the possession of a regular invoice.

• Regular Invoice Requirement for VAT Deduction: To exercise the right to deduct VAT, taxpayers must possess a regular invoice that meets specific formal requirements outlined in Belgian tax law. This includes compliance with Article 5 of Royal Decree No. 1, ensuring that the invoice contains all necessary information about the goods or services provided.
• Substance Over Form Principle: Recent European Court of Justice rulings emphasize the principle of “substance over form,” allowing for VAT deductions even if certain formal conditions are not met, as long as the material conditions are satisfied. This means that if the tax authorities have sufficient information to verify compliance with the substantive requirements, they cannot impose additional conditions that would prevent the exercise of the right to deduct VAT.
• Flexibility in Belgian Practice: The Belgian tax administration may exercise flexibility when assessing irregular or incomplete invoices. They will consider corrected invoices and additional documentation (e.g., contracts, correspondence) submitted by taxpayers to establish the validity of the VAT deduction, provided that the material conditions are met and there is no indication of fraud or abuse.

Source Fisconet

See also

• Roadtrip through ECJ Cases – Right to Deduct VAT and ”Substance over form” concept – VATupdate
• C-368/09 (Pannon Gép Centrum Kft. ) – Right to deduct VAT in case of incompliant invoices
• C-280/10 (Polski Trawertyn) – VAT deduction by a partnership when the invoice, drawn up before the registration and identification of the partnership, was issued in the name of the partners of that partnership
• C-271/12 (Petroma) – No Right to deduct VAT in case of incompliant invoices
• C-516/14 (Barlis) – Vague description of the services and the dates may not lead to refusal of VAT deduction
• C-518/14 Senatex – VAT deduction for non-compliant invoices

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