- The European Court of Justice addressed joint liability for VAT not paid by the supplier in a case involving VAT fraud.
- Article 205 of the VAT Directive does not prevent holding the recipient liable for unpaid VAT.
- FAU, a Czech company, purchased fuel from Verami, another Czech company, involved in VAT fraud.
- The tax authority issued VAT payment notices to Verami, which were not paid.
- Verami was denied the right to deduct input VAT due to involvement in VAT fraud.
- The court examined if joint liability and denial of input VAT deduction for the same transactions are proportional.
- The court ruled that national practices can impose joint liability on the recipient for unpaid VAT if they knew or should have known about the fraud.
- Denying input VAT deduction and imposing joint liability serve to combat tax evasion and ensure effective VAT collection.
- Requiring the tax authority to choose between these measures would undermine these goals.
- Joint liability does not result in unjust enrichment of the tax authority.
Source: blogs.pwc.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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