Fiscal neutrality EU VAT case law

154 cases of the Court of Justice and the General Court of the European Union on this point of VAT law, from 1998 to 2026.

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Provisions these cases interpret most

Article 168 of Directive 2006/112/EC Origin and scope of right of deduction · 43 of these cases
Article 167 of Directive 2006/112/EC Origin and scope of right of deduction · 28 of these cases
Article 273 of Directive 2006/112/EC Obligations of taxable persons and certain non-taxable persons · 26 of these cases
Article 2 of Directive 2006/112/EC Subject matter and scope · 22 of these cases
Article 178 of Directive 2006/112/EC Rules governing exercise of the right of deduction · 20 of these cases
Article 183 of Directive 2006/112/EC Rules governing exercise of the right of deduction · 15 of these cases
Article 90 of Directive 2006/112/EC Taxable amount · 15 of these cases
Article 203 of Directive 2006/112/EC Persons liable for payment of VAT to the tax authorities · 14 of these cases

The 154 cases, most recent first

Under each case, what the Court decided, from its summary. The summaries are AI-generated and are not official documents: open the case for the Court’s own text.

C-167/26 RX Dyrektor Krajowej Informacji Skarbowej

Opinion of the Advocate General · 10 September 2026 · Poland

Review, when the right to deduct is exercised where the invoice arrives in a later period

Advocate General’s proposal, not a ruling. The Advocate General proposes that the Court hold that the judgment of the General Court of 11 February 2026 in Dyrektor Krajowej Informacji Skarbowej (T-689/24) affects the unity and consistency of EU law. On the substance she proposes that the provisions and principles at issue be interpreted as meaning, first, that the right to deduct input tax must be exercised in respect of the period during which the two required conditions are satisfied for the first time, the goods have been delivered or the services performed and the taxable person holds the relevant invoice, and, second, that they do not preclude national legislation under which a taxable person may not assert the right in a return for a period in which the substantive conditions were met but the invoice had not yet been received, even where the invoice arrived before that return was submitted.

C-308/25 Isolanti Group

Opinion of the Advocate General · 11 June 2026

Simplified resolution of pending VAT disputes as a tax amnesty

Advocate General’s proposal, not a ruling. Advocate General Rantos proposes that Article 4(3) TEU, Articles 2 and 273 and fiscal neutrality preclude such legislation, given its very broad scope (any dispute, any instance, any amount, including fraud, however short-lived), the waiver of penalties and interest, and the absence of any substantive power to object. Belvedere Costruzioni and Degano Trasporti are distinguished as exceptional, specific and limited. Article 250 is irrelevant, and no temporal limitation of effects is warranted.

T-198/25 G Kft. (Adjustment of VAT after a tax inspection)

Judgment · 3 June 2026

Adjustment of VAT wrongly invoiced after a tax inspection

The Court answers that it does not. Such national legislation is compatible with EU law provided that the taxable person had, in real terms, a genuine opportunity and a reasonable period in which to adjust the VAT before the inspection was opened, during the inspection itself, or when challenging the decision closing it. The Court regarded it as relevant that the taxpayer had had several years in which to act and that there were no objective circumstances that had prevented it from doing so. The judgment confirms that the neutrality of VAT does not, on its own, override national procedural requirements where those requirements respect the principle of effectiveness and legal certainty.

C-409/24 J-GmbH (Selective application of the reduced rate of VAT)

Judgment · 5 March 2026 · Germany

Selective reduced rate for hotel accommodation and ancillary supplies

Article 98(1) and (2) with Annex III, point 12 does not preclude such national rules, provided the legislation confines the reduced rate to concrete and specific aspects of the accommodation category, identified by objective, clear and precise criteria, and fiscal neutrality is respected. Where a Member State has exercised that discretion, whether the elements form a single supply for the average consumer is not decisive. Stadion Amsterdam concerned the situation where no such selective choice had been made. Hoteliers, holiday parks and campsites in Member States that split out non-accommodation elements can no longer rely on single-supply reasoning to pull breakfast, parking, wifi, gym and spa access into the reduced rate.

T-638/24 Finanzamt Österreich (Intra-Community acquisition and supply – double taxation)

Judgment · 25 February 2026 · Austria

Article 41 taxation of intra-Community acquisitions alongside liability for VAT wrongly shown on the invoice

They do not preclude it. Articles 41 and 203 have distinct conditions and purposes and may apply simultaneously. The Dyrektor Izby Skarbowej w W. case is distinguished because there the supply had been definitively treated as non-exempt and taxed, whereas an Article 203 liability arises from the invoice alone, not from taxation of the supply, and can in principle be corrected. The second question was not examined. Businesses that quote the departure Member State's VAT number on cross-border purchases can face acquisition tax there under Article 41 even where the supplier has also been made liable for VAT wrongly shown on the invoice. Relevant to periods before Directive 2018/1910.

T-575/24 Digipolis

Judgment · 25 February 2026 · Belgium

VAT status of an intermunicipal commissioning association

Such an association is a taxable person on its supplies to members, with no distinction by reference to members' VAT status, provided the supplies are for consideration and the association independently carries on an economic activity, matters for the national court. Cost-covering, pre-set lump sum contributions do not break the direct link. Article 13(1) does not shelter it. Telematics is telecommunications within Annex I and not negligible, and non-taxation could distort competition. The "emanation" theory cannot override that status. The Belgian "emanation" tolerance for commissioning associations and intermunicipal structures is incompatible with the Directive where the entity has its own legal personality, organs, staff, assets and risk.

T-689/24 Dyrektor Krajowej Informacji Skarbowej

Judgment · 11 February 2026 · Poland

Late-received invoices and the period in which deduction may be exercised

Those provisions and the principles of neutrality and proportionality preclude such national rules. The right to deduct arises when the tax becomes chargeable and depends only on the substantive conditions. Possession of an invoice is a formal condition governing exercise. Where the taxable person holds a compliant invoice when filing the return for the period concerned, deduction must be allowed for that period. Article 273 does not justify a blanket measure ignoring the circumstances of each case. Polish taxable persons receiving supplier invoices after period end but before the filing deadline may claim in the earlier period, removing the cash-flow cost of a one-period deferral. Relevant to energy trading, clearing houses and any business with month-end invoicing lags, and to advisers reviewing historic Polish returns for repayment claims.

T-363/25 UNIX Autó és Autóalkatrészkereskedelmi

Order · 30 October 2025 · Hungary

Deduction refused for an unreliable invoice where the chain paid the tax in full

The General Court holds that the directive precludes that practice. To refuse deduction the tax authority must establish to the requisite legal standard that the taxable person actively participated in VAT fraud, or knew or should have known that the invoice issuer had committed such a fraud. The absence of any loss to the public purse and the reality of the supply weigh against a refusal. Notable as one of the first VAT preliminary rulings delivered by the General Court under its new jurisdiction.

C-602/24 W. (Export without the knowledge of the taxable person)

Judgment · 1 August 2025 · Poland

Export exemption where the customer exports without the supplier's knowledge

The exemption applies. Where the right to dispose as owner passed, the goods physically left the European Union and there was no consumption inside it, the objective conditions of Article 146(1)(b) are met. The parties' original intention to make an intra-Community supply and the supplier's ignorance of the export are subjective factors and irrelevant, as is the fact that the tax authorities, not the supplier, produced the proof. The limits remain because formal breaches preventing conclusive proof of the substantive conditions, or the supplier's knowing participation in evasion. Relevant wherever a supplier zero-rates on the basis of the customer's transport documents and the goods turn out to have gone to a third country instead.

C-375/24 Keesing Deutschland

Judgment · 1 August 2025

Sudoku books fall within tariff heading 4902 and the reduced rate

The Court holds that such goods come under tariff heading 4902. The publications appear at regular intervals under the same title and so display the characteristics of a periodical, and their content, consisting mainly of puzzle grids, does not take them outside that heading. The reduced rate that the national legislation attaches to that heading therefore applies to their supply. A reminder that where a Member State uses the Combined Nomenclature to delimit a reduced rate category, as Article 98(3) expressly allows, customs classification decides the VAT rate and the customs case law governs.

C-640/23 Greentech

Judgment · 13 March 2025 · Romania

Deduction refused after reclassification as a transfer of a going concern

Deduction may be refused. The right to deduct exists only for tax actually due, so where the transaction is definitively outside the scope of VAT there is nothing to deduct, and the absence of any risk of revenue loss does not change that. The qualification is that a claim for reimbursement is distinct from a deduction claim. Where recovery from the seller is impossible or excessively difficult, neutrality and effectiveness require the buyer to be able to apply directly to the tax authorities for repayment. Where an acquisition is recharacterised as a transfer of a going concern, the point is not a deduction dispute but a direct repayment claim against the tax authorities, once recovery from the seller is time-barred or otherwise blocked. Relevant to asset deals and intra-group transfers of business assets, and to Member States whose rules rely solely on invoice correction plus a civil claim.

C-270/24 Granulines Invest

Order · 14 February 2025 · Hungary

A fictitious invoice label does not replace proof of the buyer knowledge of fraud

The Court answers no on both counts. To refuse deduction the authority must establish to the requisite legal standard that the taxable person actively participated in VAT fraud, or knew or should have known that the invoice issuer had committed such a fraud. A defective date on the invoice cannot found a refusal where the authority has all the information needed to check the substantive conditions, and correcting the invoice cannot be made a precondition. A recent restatement, in a reasoned order, of the two pillars of the deduction case law.

C-331/23 Dranken Van Eetvelde

Judgment · 12 December 2024 · Belgium

Joint and several liability for another trader's VAT fraud

Article 205 permits liability for the entire VAT debt, with no apportionment by degree of participation, provided the taxable person can show it took all reasonably required measures to ensure its transactions were not part of the fraud. The underlying presumption must be rebuttable. No account need be taken of the actual debtor's deduction right, since in fraud cases that right is refused anyway. Article 50 does not apply because conduct in different tax years is not the same facts, whatever national law says about a continuing offence. Confirms that Member States may collect the full VAT loss from any knowing or negligent participant in a chain fraud, without civil style apportionment. Relevant to wholesale distribution and any sector exposed to missing trader arrangements.

C-527/23 Weatherford Atlas Gip

Judgment · 12 December 2024 · Romania

Deduction of VAT on intra-group administrative services

Article 168 precludes such a refusal where it is established that the services are used by the taxable person for the purposes of its own taxed output transactions. Simultaneous supply to other group members is irrelevant, as is the necessity or economic profitability of the purchase. But the national court must verify that the share of costs borne corresponds to the services actually received for its own transactions. VAT on expenditure serving third parties' transactions is not deductible. Useful for groups operating shared service or management charge arrangements across borders, where local authorities challenge deduction on "benefit to the group" or "no business need" grounds.

C-624/23 SEM Remont

Judgment · 21 November 2024 · Bulgaria

Deduction where the supplier registered late and issued no corrected invoice

Neither the Directive nor the neutrality principle precludes such national legislation. The report was not provided to the recipient, cannot be equated with a contract capable of serving as an invoice, and the recipient neither paid nor was liable to pay the input VAT. The loan arrangement created no such liability and was not an invoice correction. Substantive conditions for deduction were therefore unmet, and the case law on retroactive correction, which presupposes input VAT actually borne, does not apply. Confirms that formal-defect tolerance does not rescue a deduction where the recipient never bore VAT.

C-741/22 Casino de Spa and Others

Judgment · 12 September 2024 · Belgium

VAT exemption for online lotteries but not other online gambling

Differentiated treatment is permissible provided objective differences (chance alone determining winners, the waiting period, stakes and odds, cultural factors) considerably influence the average consumer's choice. The identity, legal form, licence category, regulatory regime and legislative objectives of providers are irrelevant. National courts must disapply provisions incompatible with Article 135(1)(i), a constitutional court's maintenance of effects being irrelevant. Tax wrongly levied is refundable unless refund unjustly enriches the taxable person. No damages equivalent to the VAT paid on unlawful State aid grounds. Relevant to gambling operators in Member States that split the exemption by game type.

C-73/23 Chaudfontaine Loisirs

Judgment · 12 September 2024 · Belgium

VAT exemption for online gambling and the limits of national discretion

Differentiating between online non-lottery gambling and lotteries or offline gambling is compatible with Article 135(1)(i) and neutrality, provided the objective differences are liable to have a considerable influence on the average consumer's choice. That is for the national court to verify. Article 135(1)(i) has direct effect, so a constitutional court's decision to maintain the effects of annulled provisions is irrelevant and they must be disapplied. Refund of VAT levied in breach is due, unless it would unjustly enrich the taxable person. Operators of online casino and betting products in Member States that tax electronic gambling while exempting lotteries and land based play now have a harder neutrality argument. Relevant to gambling advisers and to anyone litigating retrospective effects of annulled tax legislation.

C-709/22 Syndyk Masy Upadłości A

Judgment · 12 September 2024 · Poland

Blocked VAT account under the split payment mechanism in insolvency

The restriction is compatible with Articles 273 and 395 and the implementing decision. No provision of the Directive imposes obligations on Member States as to split payment, and the mechanism is not a derogation from Article 206. VAT is not paid to the State early, and the funds remain usable to pay suppliers' VAT and State liabilities, so there is no absolute blocking and no excess pre-financing. The Charter and TEU questions were inadmissible. Payment of municipal property tax is not governed by the Directive. Confirms that Polish split payment survives EU scrutiny, including where the account holder has ceased trading and is in insolvency.

C-429/23 NARE-BG

Judgment · 12 September 2024 · Bulgaria

Time limit for deducting pre-registration input VAT

Those provisions and principles do not preclude the refusal. A 12-month limitation period running from VAT registration is compatible. Direct taxes and VAT are fundamentally different in nature and not comparable for equivalence purposes, so extending direct tax deadlines only was permissible, and the state of emergency covered only part of the deduction window. The adjustment mechanism in Articles 184 and 185 cannot create a right of deduction that has already been lost by lapse of time, and neutrality does not override that. Confirms that pandemic-era relief for direct taxes gives no read-across to VAT deduction deadlines, and that a correcting return filed out of time cannot revive a forfeited deduction. Relevant to newly registered businesses, particularly property developers and others incurring substantial pre-registration input tax, which must claim within the domestic window.

C-639/22 Inspecteur van de Belastingdienst Utrecht

Judgment · 5 September 2024 · Netherlands

Investment risk and the fund management exemption for defined benefit pension funds

Members bear the investment risk only where the amount of pension entitlements and benefits depends primarily on investment performance. Benefits largely predefined by salary and years of service do not qualify. Years of accrual and interruption of accrual are irrelevant. Individual or collective bearing of risk, bankruptcy exposure and a temporary employer guarantee are relevant but not decisive. Neutrality also requires comparison with other non-UCITS funds the Member State treats as special investment funds. The comparability test is narrowed for defined benefit schemes.

C-83/23 H GmbH (Direct right to a refund of VAT)

Judgment · 5 September 2024 · Germany

Limits of the direct claim against the tax authority for VAT wrongly invoiced

The recipient has no direct claim against the tax authority in those circumstances. Where the tax authority has already refunded the wrongly invoiced VAT to the supplier, it cannot be required to pay it a second time to the recipient, and the Reemtsma case law does not apply. The supplier's liquidation is irrelevant because that case law does not disturb the ranking of creditors, and the authority need not absorb the disruption to the normal refund chain. The direct claim remains an exception, available only where the recipient has exhausted its available remedies against the supplier. Recipients of invoices bearing the wrong Member State's VAT must act promptly against the supplier, including suing for a corrected invoice showing the VAT of the place of supply, before the supplier is refunded or dissolved. Relevant to cross-border leasing and sale and leaseback structures, and to anyone relying on HUMDA.

C-746/22 Slovenské Energetické Strojárne

Judgment · 16 May 2024 · Hungary

Late replies to requests for additional information in cross-border VAT refund claims

The Court held that such a national prohibition is precluded. The one-month period in Article 20(2) is not a limitation period, and the taxpayer must be able to regularise its claim by producing the information on appeal, whether administrative or judicial. Discontinuation of the procedure is, however, permissible, provided it is treated as a decision refusing the refund application under Article 23(1), with reasons notified, and is open to an appeal meeting Article 23(2). Businesses reclaiming VAT in other Member States under the electronic refund procedure can rely on this where a claim has been closed for a missed one-month deadline.

C-532/23 Lear Corporation Hungary

Order · 10 April 2024 · Hungary

Late payment interest on VAT refunds withheld under an unlawful national condition

By reasoned order under Article 99, the Court held that Article 183 does not preclude national law from treating a refund claim as including an interest claim. The authority may confine itself to the period stated in a timely interest claim. However, it may not treat a second claim as new and time-barred where it concerns interest on VAT retained through the same breach of EU law and the taxpayer only learned of the wider period from a later national decision following a Court ruling. Such a claim supplements the first. Relevant to taxpayers pursuing interest on VAT withheld under national conditions later found incompatible with EU law, particularly the long-running Hungarian "paid consideration" claims.

C-606/22 Dyrektor Izby Administracji Skarbowej w Bydgoszczy (Possibility of adjustment in the case of incorrect rate)

Judgment · 21 March 2024 · Poland

Correcting an incorrect VAT rate where only till receipts were issued

Such a practice is precluded. VAT is automatically included in the agreed price under Article 78(a), even where the rate was wrongly determined, but that does not deprive the supplier of a right to a refund, notably where the excessive rate cost it sales volume or margin. Refusing correction solely because till receipts, not invoices, were issued breaches effectiveness where cash register memory allows accurate correction. Unjust enrichment may be invoked only if the authorities establish, by economic analysis of all relevant circumstances, that the burden was completely neutralised. Retailers and consumer facing businesses across sectors (leisure, hospitality, food) that have charged too high a rate on till receipt sales can pursue adjustment by amended return.

C-37/23 Giocevi

Order · 18 March 2024 · Italy

Disaster relief reduction of VAT payable and fiscal neutrality

By reasoned order under Article 99, the Court held those provisions preclude such legislation. Member States must collect all VAT due. A reduction lets affected traders keep VAT charged to final consumers while others pay in full, breaching neutrality. That the reduction was smaller than the 90% measure in Nuova Invincibile, and that the authorities retained powers of verification, made no difference. The mechanism was the same. Confirms that natural disaster and emergency relief packages may defer VAT payment but cannot forgive part of the net VAT due, whatever the percentage and whatever audit safeguards accompany it.

C-341/22 Feudi di San Gregorio Aziende Agricole

Judgment · 7 March 2024 · Italy

Denial of deduction to "non-operating" companies

Status as a taxable person depends solely on whether an economic activity is actually carried on. It cannot be made conditional on output transactions exceeding a pre-set income threshold. Nor may deduction be refused on the ground that output transactions are insufficient. A volume-based presumption is unconnected to the criteria for establishing fraud or abuse and goes beyond what is necessary under Article 273. Deduction may still be refused where fraud or abuse is established on objective evidence, not by assumption. Italian companies caught by the Article 30 Law No 724/1994 shell company regime can challenge refusals of VAT credits, refunds, offsets and carry-forwards based purely on turnover falling short of the asset-based threshold.

C-674/22 Gemeente Dinkelland

Judgment · 22 February 2024 · Netherlands

Interest on VAT refunded after the taxable person's own errors

No interest is required from the date of payment. VAT levied on the basis of the taxable person's own return is not levied in breach of EU law merely because errors in its accounts meant the deduction right was not fully exercised. A retroactive change of allocation method gives rise to interest only if the original method was incompatible with EU law because of national legislation or a tax authority requirement. Here the key was set under the taxable person's sole responsibility. Under Article 183, an eight week processing period is not unreasonable. Distinguishes refunds triggered by unlawful national rules or authority insistence, which carry interest from payment, from refunds triggered by the taxable person's own errors or freely chosen methodology, which do not.

C-733/22 Valentina Heights

Judgment · 8 February 2024 · Bulgaria

Reduced rate for hotel accommodation conditional on a tourism categorisation certificate

The Court held that Article 98(2) with point 12 of Annex III precludes such a categorisation requirement in so far as the legislation does not confine the reduced rate to concrete and specific aspects of the accommodation category or, if it does, breaches fiscal neutrality. Where national law requires all accommodation facilities to be categorised, categorised accommodation cannot be a separately identifiable aspect. The referring court must verify this and, if applicable, assess neutrality from the average consumer's viewpoint. Member States may still apply the reduced accommodation rate selectively, but only to a genuinely separable subset.

C-377/23 Sancra

Order · 5 February 2024 · Portugal

A price invoiced at a wrong zero rate is treated as including the correct VAT

The Court holds that the invoiced price must be regarded as already including VAT, unless national law gives the taxable person the possibility of passing the corrected tax on to the final consumers and recovering it from them. VAT is a tax borne by the final consumer, and adding the tax on top of a price already paid would make the supplier bear a burden the system does not intend. The natural companion to Tulica and Plavosin and to the Galicia case.

C-537/22 Global Ink Trade

Judgment · 11 January 2024 · Hungary

Due diligence and the burden of proof in denying deduction

A lower court must disregard higher court rulings inconsistent with the Court's interpretation, whether given by judgment or reasoned order. An obligation merely to give reasons for departing is permissible. Refusal for lack of diligence assessed by circular is allowed only if the authority still proves, by objective evidence, fraud and the taxable person's knowledge. No complex, far-reaching checks on counterparties may be required. The authority must follow its own circular, which must be unequivocal and foreseeable. Establishing a circular invoicing chain alone is insufficient. Fraud must be accurately described, though not every operator identified. Relevant to traders facing Hungarian (and comparable) deduction denials based on supplier unreliability or "passive fraud".

C-146/22 Dyrektor Krajowej Informacji Skarbowej (VAT on hot milk-based drinks)

Judgment · 5 October 2023 · Poland

Different reduced rates for hot milk-based drinks and shop-bought dairy drinks

The Court held that Article 98 does not preclude such legislation, provided the foodstuffs do not in fact have similar properties despite the shared main ingredient, or the differences between them, including the support services accompanying supply, significantly influence the average consumer's purchasing decision. Using two classification sources and distinguishing by reference to accompanying services is not in itself contrary to EU law. Whether neutrality is respected is for the national court, assessing temperature, taste, added ingredients and immediacy of consumption. Confirms Member States may split a single Annex III category across two reduced rates and may distinguish retail foodstuffs from hot prepared drinks.

C-151/23 ZSE Elektrárne

Order · 5 October 2023 · Slovakia

Default interest on a late VAT refund and where the clock starts

Ruling by reasoned order, the Court confirmed that the taxable person is entitled to default interest where the credit is not repaid within a reasonable period. The detailed arrangements fall within the procedural autonomy of the Member States, framed by the principles of equivalence and effectiveness, but national rules on the starting point for the calculation must not have the effect of depriving the taxable person of adequate compensation for the loss caused by the late repayment. The companion to Kovozber on the same Slovak rule, and expressed in more general terms.

C-453/22 Schütte

Judgment · 7 September 2023 · Germany

Direct claim against the tax authorities for VAT overcharged by suppliers

The Directive and those principles require that the purchaser be able to claim reimbursement directly from the tax authority. Where the purchaser is guilty of no fraud, abuse or negligence and recovery from the suppliers is impossible or excessively difficult, here because of limitation, a direct claim against the tax authorities must be available, with default interest if reimbursement is not made within a reasonable time. Supplier insolvency is only one example of impossibility. The double refund risk is excluded. Suppliers who first invoked limitation and then sought repayment would be acting abusively. Confirms that Reemtsma style direct claims are not confined to insolvent suppliers.

C-426/22 SOLE-MiZo

Order · 20 June 2023 · Hungary

Interest on wrongly withheld VAT credits must compensate for the passage of time

The Court holds that they do preclude that practice, in so far as it is liable to deprive the taxable person of adequate compensation for the loss caused by not having the sums available, and fails to offset the economic burden of the wrongly withheld tax. The interest must cover the whole period during which the taxable person was deprived of the money, up to actual payment. The third instalment of the Hungarian interest saga, after Delphi Hungary and the first Sole Mizo judgment.

C-114/22 Dyrektor Izby Administracji Skarbowej w Warszawie (VAT – Fictitious acquisition)

Judgment · 25 May 2023 · Poland

Deduction refused because the transaction is void under national civil law

The Court held that those provisions preclude such legislation. Invalidity under national civil law cannot in itself justify refusal. The authority must either show that the criteria for a fictitious transaction under EU law are met (no actual supply, chargeability under Article 63 never arising) or, where the transaction did take place, that the deduction is claimed fraudulently or abusively. Civil-law sham status may be evidence of fraud or abuse, but nothing more. Relevant wherever national anti-abuse or anti-avoidance rules key deduction off civil-law nullity, notably Article 88(3a)(4)(c) of the Polish VAT Law.

C-418/22 Cezam

Judgment · 17 May 2023 · Belgium

Penalties calculated on gross VAT before deduction

Article 273 and those principles do not preclude such legislation, subject to the referring court's assessment of proportionality in the individual case. Neutrality is not infringed where the fine does not itself deny or hinder the right of deduction. Here input VAT was allowed of the authorities' own motion. EN.SA. is distinguished because there the output tax had been paid and no revenue was at risk, whereas here declaration and payment were withheld over a prolonged period. Confirms that Member States may compute VAT penalties on gross output tax rather than on the net amount payable, provided the right of deduction itself remains intact.

C-677/21 Fluvius Antwerpen

Judgment · 27 April 2023 · Belgium

VAT on electricity taken unlawfully from the distribution network

Unlawful consumption of electricity is a taxable supply of goods for consideration under Article 14(1). Consumption of electricity coincides with disposal as owner, and the legal relationship criterion is met by the applicable energy legislation and connection regulation, so Article 14(2)(a), a lex specialis, does not apply. It is an economic activity under Article 9(1) because the loss is a risk inherent in operating the network. Even for a public law body acting as a public authority, the activity is negligible only if so minimal in space or time that resulting competitive distortion is insignificant. Where a network operator or utility recovers the cost of energy theft or unmetered consumption, the energy element of the compensation is consideration for a taxable supply and not damages outside VAT. Relevant to advisers on energy, water, gas and heat recovery billing.

C-42/22 Generali Seguros

Judgment · 9 March 2023 · Portugal

Sale of salvage by an insurer, no insurance exemption

No on all three points. The resales rest on contracts separate from, and separable from, the insurance policies, are made to persons other than the insured, involve no coverage of risk and raise no difficulty in determining the taxable amount. The salvage value is the residual value of the vehicle, not part of the compensation, so there is no single indivisible supply. Being a supply of goods, it cannot be a broker's or agent's related service. Goods bought merely to be resold unaltered are not "used" for the exempt insurance activity, and neutrality cannot widen an exemption. Where an insurer recovers and resells salvage, those sales are taxable supplies of goods whatever the domestic practice, and the salvage price cannot be treated as embedded in the claims settlement.

C-664/21 NEC PLUS ULTRA COSMETICS

Judgment · 2 March 2023 · Slovenia

Time limits for producing proof of an intra-Community supply

They do not preclude such legislation, provided the principles of equivalence and effectiveness are respected. The Court stressed the qualification. Where the evidence is offered before any assessment notice has been adopted, a refusal to take it into account must rest on particular circumstances, for instance an unjustified delay or a loss of tax revenue. Blanket exclusion at that early stage, ignoring the taxpayer's explanations, is hard to reconcile with proportionality and neutrality. The national court must assess this. National evidential cut-offs in audit procedures survive, but they cannot be applied mechanically.

C-519/21 DGRFP Cluj

Judgment · 16 February 2023 · Romania

Unregistered association without legal personality, who is the taxable person and who deducts

The parties to an association contract without legal personality that was not registered with the tax authorities before the activity began cannot be treated as taxable persons alongside the person liable on the taxable transaction. The sales' legal effects concerned only the registered owners. Absence of an invoice in the claimant's own name is not fatal, but deduction depends on objective evidence that the goods and services were actually supplied to her by taxable persons for her own taxed transactions, avoiding double deduction. The third question was inadmissible. Relevant to property developers and joint ventures structured as contractual associations or silent partnerships, particularly where individuals pool land and finance.

C-482/21 Euler Hermes

Judgment · 9 February 2023 · Hungary

Bad debt relief claimed by a trade credit insurer

Article 90(1) and fiscal neutrality do not preclude such legislation. The portion of the debt for which the insurer paid compensation was in fact received by the suppliers as consideration (consideration may come from a third party), so there is no non-payment for that part and no relief for the suppliers either. Assignment under civil law does not make the insurer the taxable person entitled to reduce the taxable amount. Treating it as such would breach neutrality. Credit insurers and factoring or debt purchase businesses cannot recover the VAT element of indemnified debts by standing in the supplier's shoes.

C-512/21 Aquila Part Prod Com

Judgment · 1 December 2022 · Hungary

Proving participation in carousel fraud and the limits of the duty of diligence

The authority cannot rely merely on the existence of a circular invoicing chain. It must accurately describe the constituent elements of the fraud, prove the fraudulent conduct and establish either active participation or that the taxable person knew or ought to have known, though it need not identify every operator. Where fraud indicators exist, greater diligence may be required, but not complex checks equivalent to the authority's own investigations. Food safety breaches cannot alone justify refusal, but may be one element among others. Relevant to any business facing deduction refusals in chain transaction cases, particularly in Hungary and in the food sector.

C-607/20 GE Aircraft Engine Services

Judgment · 17 November 2022 · United Kingdom

Retail vouchers awarded free of charge to employees under a reward scheme

The free award of retail vouchers to employees under a programme designed to recognise and reward the most deserving and high-performing staff falls outside Article 26(1)(b). The scheme was dictated by the proper conduct of the business and the pursuit of profit through improved employee motivation and performance. The personal advantage to employees was merely incidental. Employees could not be certain of receiving vouchers, awards resting on strictly professional criteria applied by colleagues. Fiscal neutrality is preserved because the retailers account for output VAT on redemption. Employers running performance-based recognition schemes funded with third-party retail vouchers need not account for deemed output tax on the award, provided the scheme is genuinely driven by business objectives and any private benefit is incidental. Relevant to HR, reward and employment tax advisers, and to groups recharging vouchers between entities.

C-397/21 HUMDA

Judgment · 13 October 2022 · Hungary

Direct claim against the tax authority for VAT invoiced in error by an insolvent supplier

Such national legislation is precluded where recovery from the supplier is impossible or excessively difficult due to liquidation and no fraud or abuse is attributable to either party, so there is no risk of revenue loss. Under Article 183, read with neutrality, interest is due if the refund is not made within a reasonable period after the request. The rules for calculating it are for national law, subject to equivalence and effectiveness and to giving adequate compensation. The VAT was not levied in breach of EU law, since Article 203 makes invoiced VAT payable. Confirms and extends Reemtsma beyond reverse charge and deduction disputes. Relevant to construction, events and other property related services where place of supply is misapplied, and to anyone holding claims against insolvent suppliers.

C-227/21 HA.EN.

Judgment · 15 September 2022 · Lithuania

Deduction where the vendor is insolvent and cannot pay the output VAT

Article 168(a), read with fiscal neutrality, precludes such a practice. Mere failure to pay duly declared VAT is not fraud, so the purchaser cannot be treated as knowingly participating in fraud, nor is there abuse, since a secured creditor taking over the property after a failed auction pursues debt recovery, not a tax advantage. The Court distinguished ALTI is that a purchaser in a court supervised compulsory sale is not in the position of a contractual counterparty of the principal VAT debtor. Member States may instead use the Article 199(1)(g) reverse charge. Purchasers of real estate in enforcement and insolvency sales, and secured creditors taking assets in satisfaction of debt, keep their deduction even where the vendor's inability to pay is obvious. Relevant to distressed debt, restructuring and property advisers.

C-696/20 Dyrektor Izby Skarbowej w W. (Incorrect classification of chain transactions)

Judgment · 7 July 2022 · Poland

Article 41 safety net where a chain transaction is misclassified

Article 41 applies even where the Member State of identification is the Member State of departure, and taxation there is not excluded merely because the customers taxed the separate later transaction at destination. It does, however, preclude such taxation where the intra-Community supply giving rise to the acquisition has not been treated as exempt in that Member State. Taxing both breaches proportionality and neutrality, and no risk of avoidance arises.

C-146/21 DGRFP Bucureşti

Judgment · 30 June 2022 · Romania

VAT registration as a condition for applying the domestic reverse charge

The Directive and the principle of fiscal neutrality do not preclude such a condition. A Member State authorised to derogate from Article 193 may set conditions for applying the reverse charge, including prior VAT registration, provided fiscal neutrality is respected. Article 199(2) supports this and the exception must be read strictly. The case law treating registration as a mere formality applies to the right of deduction. Refusing the reverse charge does not deprive the customer of deduction, and the condition is objective and proportionate given control difficulties in the timber market. Confirms that the formalities case law on deduction does not transfer automatically to reverse charge eligibility.

C-56/21 ARVI ir ko

Judgment · 30 June 2022 · Lithuania

Option to tax immovable property conditional on the buyer's VAT registration

Those provisions and principles preclude neither of the two national rules. Article 137(2) gives Member States wide discretion to set the detailed rules for, and restrict, the option to tax. A registration condition serves legal certainty and correct collection of VAT and does not affect the right to deduct, which without a valid option would not arise. The seller must therefore adjust. The purchaser's actual use of the property for taxed activities is irrelevant, but the authorities must still check for fraud or abuse by the seller. Confirms that formal conditions attached to the option to tax are not the same as formal conditions on the right to deduct: the Dobre line on VAT identification as a mere formality does not rescue a seller whose option fails. Relevant to property developers and vendors of second-hand commercial property in Member States with registration-based option regimes, notably Lithuania.

C-582/20 SC Cridar Cons

Judgment · 24 February 2022 · Romania

Suspension of a tax appeal pending criminal proceedings

No preclusion, subject to three conditions: the suspension must not push the complaint beyond a reasonable time. The suspension decision must state its reasons in fact and law and be open to judicial review, and, if the refusal turns out to breach EU law, the taxable person must be repaid within a reasonable time with default interest where appropriate. Suspension of enforcement need not be automatic, but must be available where there is serious doubt as to lawfulness and serious, irreparable harm would otherwise result. Confirms that tax authorities may pause appeal proceedings to await criminal evidence, but fences the practice.

C-487/20 Philips Orăştie

Judgment · 10 February 2022 · Romania

Bank guarantees and the refund of disputed VAT, the principle of equivalence

Articles 179 and 183, together with the principle of equivalence, preclude national procedural rules governing VAT refund claims based on breach of the common VAT system that are less favourable than those applicable to comparable claims founded on domestic law concerning other taxes and duties. The Court left it to the referring court to identify genuinely comparable domestic actions and to verify that the VAT rules are in fact less favourable, and likewise to assess whether the financial burden lasts an unreasonable period. Effectiveness was not in issue. Confirms that Member States' procedural autonomy over excess VAT refunds is bounded by equivalence. Relevant to businesses in Romania and elsewhere disputing VAT assessments while running repayment positions, and to advisers structuring guarantees pending appeal.

C-515/20 Finanzamt A

Judgment · 3 February 2022 · Germany

Reduced rate for wood used as firewood and the limits of selective application

Article 122 covers any wood which, by objective properties such as a predetermined degree of dryness, is intended exclusively for burning. Because Article 122 is a derogation from the standard rate under Article 96, Member States may apply it selectively and may use the Combined Nomenclature to do so, even though Article 122 does not say so, provided fiscal neutrality is respected. Excluding wood chips while relieving other firewood is therefore permissible only if wood chips are not interchangeable with other firewood for the average consumer, a matter for the national court. Relevant to biomass and wood fuel suppliers, sawmills, forestry operators and energy service providers in Member States still applying the transitional firewood reduced rate.

C-598/20 Pilsētas zemes dienests

Order · 1 December 2021 · Latvia

Compulsory ground leases outside the exemption for the letting of immovable property

Ruling by reasoned order, the Court held that those provisions do not preclude such legislation. Article 135(2) allows Member States to apply further exclusions to the scope of the exemption in Article 135(1)(l), and the Court has consistently read that as conferring a broad discretion, exercisable by a general rule. Latvia had laid down precisely such a general rule, so the exclusion was within the discretion the directive confers. There was no need to answer the second question. A useful reminder that the letting exemption is not a floor.

C-281/20 Ferimet

Judgment · 11 November 2021 · Spain

Deduction where the invoice names a fictitious supplier under the reverse charge

Naming the supplier is a formal condition, but the supplier's status as a taxable person is a material one. Deduction must be refused where, on the facts and the evidence the taxable person produces, the information needed to verify that the true supplier was a taxable person is lacking, or where it is established to the requisite legal standard that the taxable person committed VAT fraud or knew or should have known the transaction was connected with such fraud. Neither a risk of revenue loss nor a tax advantage need be shown. Relevant to scrap, metals and waste traders and anyone self-billing under domestic reverse charges.

C-396/20 CHEP Equipment Pooling

Judgment · 21 October 2021 · Hungary

Duty to invite correction of a cross-border VAT refund application

Article 20(1), read with fiscal neutrality and good administration, precludes the refund State, where it is certain (if need be from additional information supplied) that the input VAT actually paid per the attached invoice exceeds the amount claimed, from refunding only the lower claimed amount without first diligently inviting the taxable person to rectify the application. A corrected application is deemed lodged on the date of the original. No further information request is required where the information already held is genuinely sufficient. Refund authorities can no longer treat the figure in the claim as an absolute ceiling where the invoices plainly show more, provided the error is easily recognisable and the correct amount can be established with certainty. Relevant to any business making Directive 2008/9 claims, particularly groups with high invoice volumes, and to advisers handling refused or partially refused refunds.

C-45/20 Finanzamt N and Finanzamt G (Communication of the allocation decision)

Judgment · 14 October 2021 · Germany

Deadline for communicating the allocation of mixed-use assets to business assets

The allocation decision itself is a substantive condition. Communicating it is only formal. Nevertheless, a Member State may refuse deduction where, by expiry of the statutory annual return deadline, the authority has not been put in a position to establish allocation by an express decision or sufficient evidence, unless the arrangements for exercising the option breach proportionality. Intention may be shown implicitly, so the national court must weigh less onerous penalties such as administrative fines against outright refusal. Time limits for signalling allocation of mixed-use capital goods survive, but only subject to a proportionality review that national courts must actually carry out.

C-717/19 Boehringer Ingelheim

Judgment · 6 October 2021 · Hungary

Reduction of the taxable amount for voluntary payments to a State health insurance agency

Article 90(1) of the VAT Directive precludes both conditions. Article 90(1) is not limited to price reductions imposed by law. A voluntary contractual payment reducing the consideration actually retained is a price reduction after the supply, the health insurance agency being treated as final consumer. Member States' discretion cannot extend to conditions that deny the reduction to an entire category of taxpayers. Where no invoice has been issued, neutrality and proportionality require the taxpayer to be allowed to prove the transaction by other means, particularly where the counterparty is a State entity. Confirms and extends Boehringer Ingelheim Pharma (C-462/16) to voluntary rebate arrangements with public payers, relevant to pharmaceutical and medical device suppliers operating under price volume or clawback agreements with State reimbursement bodies across the EU.

C-406/20 Phantasialand

Judgment · 9 September 2021

Mobile fairground entertainers and fixed theme parks, taxed differently

The Court held that Article 98, read with point 7 of Annex III, does not preclude such national law, subject to compliance with the principle of fiscal neutrality. A Member State which exercises the option of applying a reduced rate to a category in Annex III may confine it to concrete and specific aspects of that category, provided that it does not tax differently supplies which are similar from the point of view of the average consumer. Similarity is assessed by reference to that consumer, taking account of the context in which the supply is made, so that circumstances distinguishing a travelling fair, held for a limited period at changing locations, from a permanent installation may be taken into account. EU law does not preclude the referring court from seeking an expert opinion under the conditions of its national law. The judgment confirms that a Member State may split a category in Annex III and apply the reduced rate to part of it, and it puts the weight of the analysis on similarity as perceived by the average consumer rather than on the abstract description of the activity.

C-294/20 GE Auto Service Leasing

Judgment · 9 September 2021 · Spain

Late production of evidence in a non-resident VAT refund claim

The Court held that refusal is not precluded where the claimant failed, despite formal requests, to produce the documents proving the substantive conditions before the authority decided. Member States may but need not admit later evidence. This is a matter of national procedural autonomy, subject to the principles of equivalence and effectiveness, which the national court must verify. Producing the documents spontaneously in later proceedings is not, in itself, an abuse of rights. Relevant to non-established claimants and their advisers under the refund regimes.

C-695/19 Rádio Popular

Judgment · 8 July 2021 · Portugal

Warranty extension commissions in the deductible proportion

Subject to national verification, the retailer is in direct contact with both insurer and insured and performs the essential functions of an insurance agent, so the commissions are exempt under Article 135(1)(a). Article 174(2) does not refer to point (a), and Article 135(1) clearly separates insurance from financial transactions. An insurance transaction therefore cannot be an incidental financial transaction, whether or not it is incidental. Fiscal neutrality cannot widen an exemption or derogation absent clear wording. Retailers, motor dealers and other suppliers earning insurance commissions on extended warranties, payment protection or similar cover must include that exempt turnover in the denominator of their partial exemption fraction.

C-521/19 Tribunal Económico Administrativo Regional de Galicia

Judgment · 1 July 2021 · Spain

Undeclared consideration in a fraud is treated as VAT inclusive

The Court holds that they must be regarded as a price already including VAT, unless national law allows the taxable person to pass on and deduct the VAT afterwards notwithstanding the fraud. VAT is a tax on consumption borne by the final consumer, and treating the reconstituted sum as net would make the supplier bear a tax burden contrary to neutrality, even though the concealment was deliberate. An important judgment for the arithmetic of assessments, and a Spanish one.

C-844/19 technoRent International and Others

Judgment · 12 May 2021 · Austria

Default interest on late VAT refunds where national law is silent

Articles 90(1) and 183, read with fiscal neutrality, require interest where either type of refund is not made within a reasonable period. A refund following a reduction of the taxable amount is treated exactly like excess input VAT. Article 27(2) of Directive 2008/9 is a catch-all for non-established claimants and cannot be applied by analogy outside its scope. The conditions (rate, starting point) remain for national law, and the referring court must interpret domestic law in conformity, short of contra legem. Silence in national law is no answer to an interest claim.

C-868/19 Finanzamt für Körperschaften Berlin

Judgment · 15 April 2021 · Germany

Germany could not require every partner in a partnership to be financially integrated

The Court holds that Article 11 precludes such a condition. The anti avoidance power in the second paragraph of that article allows measures needed to prevent evasion or avoidance, but a blanket requirement of this kind applies irrespective of any risk of abuse and goes beyond what is necessary. It also treats partnerships less favourably than companies without objective justification. One of the series of German grouping cases that also produced Norddeutsche Gesellschaft fur Diakonie and Finanzamt T.

C-935/19 Grupa Warzywna

Judgment · 15 April 2021 · Poland

Proportionality of automatic VAT penalties

Article 273 and the principle of proportionality preclude such a penalty where it applies without distinction to an error of assessment by both parties as to the taxable nature of the transaction, absent any evidence of evasion or loss of revenue, and to cases where those circumstances are absent. Member States may still penalise wrongly claimed deductions. The defect is the automatic calculation, which leaves the authorities unable to adjust the amount to the individual circumstances. Neutrality was not examined. Relevant to anyone facing fixed-rate surcharges on disallowed input tax or overstated refunds, in Poland and in other Member States with automatic percentage penalties.

C-48/20 P (Fuel cards)

Judgment · 18 March 2021 · Poland

Adjusting VAT wrongly shown on fuel card invoices

They do preclude such legislation. Where the issuer acted in good faith, here relying on a consistent practice of the Polish authorities treating fuel card arrangements as chain supplies rather than exempt financing, Member States must provide a means of adjustment. Denying it while the underlying supplies by the service stations are themselves taxed imposes a tax burden contrary to neutrality. Member States otherwise remain free to set the conditions for adjustment. Relevant to fuel card and similar intermediation structures reassessed after Vega International, and more broadly to anyone facing an Article 203 assessment on invoices issued in reliance on published rulings or settled administrative practice.

C-895/19 A. (Exercise of the right of deduction)

Judgment · 18 March 2021

A three-month deadline that split the deduction from the tax on an intra-Community acquisition

The Court held that Articles 167 and 178 preclude such national legislation. The right to deduct arises at the time the deductible tax becomes chargeable, and in the case of an intra-Community acquisition the tax due and the deduction relate to the same period. A national rule making the exercise of the deduction in that period dependent on compliance with a declaration deadline subjects the substantive right to a formal requirement, produces a charge to interest on a sum which the taxable person did not in fact owe to the treasury, and goes beyond what is necessary to ensure the correct collection of the tax and to prevent evasion. The judgment applies to the reverse charge on intra-Community acquisitions the distinction between formal and substantive requirements that runs through Ecotrade and its line.

C-507/20 FGSZ

Order · 3 March 2021 · Hungary

When the limitation period for bad debt relief starts to run

By reasoned order under Article 99, the Court held that where a Member State imposes a limitation period for asserting the right to reduce the taxable amount in respect of a definitively irrecoverable debt, that period must run from the date the debt became definitively irrecoverable, not from the date performance of the payment obligation was originally due. A diligent taxable person, here applying six days after the liquidator's finding, and absent abuse, cannot be deprived of the reduction. Article 90(1) has direct effect.

C-656/19 BAKATI PLUS

Judgment · 17 December 2020 · Hungary

Retail export scheme and goods carried in travellers' personal luggage

The traveller exemption does not cover goods carried out of the EU for commercial purposes with a view to resale in a third State. Article 147 targets natural persons not acting as economic operators and promotes tourism. But Article 147 is only a special case of Article 146(1)(b), so failure of its conditions does not defeat the export exemption, which turns on objective criteria, not customs formalities or intention. Automatic refusal is precluded, unless the breach prevents proof of actual export or the taxable person knew or should have known of fraud jeopardising the VAT system. Relevant to retailers and wholesalers operating retail export (tax free shopping) schemes near external borders, and to their advisers.

C-371/19 Commission v Germany (VAT refund – Invoices)

Judgment · 18 November 2020 · Germany

Germany could not reject refund claims without first asking for the missing invoices

The Court finds the infringement established. Rejecting such claims without first inviting the applicant to supply the copies, if necessary after 30 September, or to provide appropriate information, breaches the principle of fiscal neutrality and deprives the right to a refund of its practical effect. Germany infringed Articles 170 and 171 of the VAT Directive and Article 5 of Directive 2008/9. The action was dismissed as to the remainder. An important judgment for anyone running cross border refund claims.

C-610/19 Vikingo Fővállalkozó

Order · 3 September 2020 · Hungary

Refusal of deduction where invoices are held implausible in a supply chain

Ruling by reasoned order under Article 99, the Court held that the Directive precludes that national practice. None of those four grounds, alone or together, justifies refusal. The concept of supply of goods is objective and is satisfied even if the goods were neither made nor supplied by the invoice issuer and the actual source is unidentified. Refusal requires the authorities to prove, on objective evidence, active participation in fraud or that the taxable person knew or should have known of fraud upstream. The penalty and Charter questions were inadmissible. A further restatement, in order form, of Mahagében and Signum Alfa for advisers handling Hungarian and other chain-supply deduction denials, especially in goods trading and machinery purchases.

C-611/19 Crewprint

Order · 3 September 2020 · Hungary

Fraud cannot be inferred from contractual structure, subcontracting chains or personal links

The Court holds that the directive precludes that practice. To justify a refusal it must be established, otherwise than by suppositions based on predetermined criteria, that the taxable person actively participated in a fraud or that it knew or should have known that the transactions were connected with a fraud committed by the invoice issuer. Verifying that is a matter for the referring court. The order is the clearest statement that the indicia so often relied on by tax authorities, an unusual contractual route, a long subcontracting chain, related parties, are starting points for an investigation and not findings of fraud.

C-835/18 Terracult

Judgment · 2 July 2020 · Romania

Correcting invoices after a final tax assessment where reverse charge applied

The Directive and those principles preclude such legislation or practice. Where the reverse charge applied, the supplier was never the person liable, no risk of loss of revenue arises (the recipient can deduct), and refusal to refund imposes a burden contrary to neutrality. Finality of the earlier assessment cannot bar correction while the five-year limitation period runs, particularly where the relevant facts emerged only after the assessment and the complaint window was days. Negligence may attract a penalty, but not outright denial of refund. Fraud or abuse would be different. Relevant to suppliers in reverse charge sectors (cereals, industrial crops and other Article 199a categories) and to anyone who has paid an assessment rather than appeal it.

C-146/19 SCT

Judgment · 11 June 2020 · Slovenia

Bad debt relief where the claim was not lodged in the debtor's insolvency

Extinction of the claim through failure to lodge it produces a definitive reduction of the debtor's obligations, so this is not "non-payment" under Article 90(2) but falls under Article 90(1). Requiring lodgement is in principle a legitimate formality under Articles 90(1) and 273, but refusal is precluded where the taxable person shows the claim would not have been recovered even if lodged. Article 90(1) has direct effect. National courts must interpret national law consistently or disapply it. Creditors in Member States that condition bad debt relief on procedural steps in the debtor's insolvency now have an escape route. Relevant to insolvency practitioners, credit control and finance teams, and advisers handling write-offs.

C-430/19 C.F. (Tax inspection)

Judgment · 4 June 2020 · Romania

Access to the audit file and evidence beyond the invoice

Denial of access to file information relied on requires annulment only where the national court finds that, absent the irregularity, the outcome of the procedure might have been different. Where the authority has merely uncorroborated doubts that the invoiced transactions occurred, deduction cannot be refused for want of evidence additional to the invoice. Refusal requires objective evidence that the taxable person knew or should have known of fraud, established by the authority without imposing checks that are not the customer's responsibility. Useful for anyone facing assessments built on suppliers' apparent lack of resources or a more favourable tax status.

C-684/18 World Comm Trading Gfz

Judgment · 28 May 2020 · Romania

Adjustment of input tax following volume discounts

The Court recharacterised the questions as concerning Article 185. Where a discount obtained on domestic supplies means the initial deduction exceeded the entitlement, the national authorities must impose an adjustment. The absence of a separate credit invoice from the domestic supplier, and the fact that only a global invoice from the intra-Community supplier exists, does not release the taxable person from adjusting. Adjustment is also required even though the supplier has ceased trading in that Member State and cannot claim partial reimbursement of its output VAT. No such derogation appears in Article 185(2). Recipients of group-wide or pan-European rebates must apportion credits between domestic supplies and intra-Community acquisitions and adjust deduction accordingly, whatever the invoicing practice of the supplier. Relevant to distribution and electronics supply chains operating central rebate arrangements, and to anyone relying on symmetry.

C-446/18 Agrobet CZ

Judgment · 14 May 2020 · Czechia

Withholding an undisputed portion of excess VAT during a tax inspection

Excess VAT is not an indivisible whole. An undisputed portion can in principle be identified and refunded early, and legislation preventing a taxable person from adducing evidence of one breaches the principle of good administration. But there is no refund obligation unless it can be established clearly, precisely and unequivocally that excess VAT (possibly less than the amount relating to the unexamined transactions) will remain whatever the inspection's outcome. That is for the national court to verify. Relevant to any business, particularly commodity traders in repayment positions, facing prolonged inspections aimed at a narrow set of supplies.

C-661/18 CTT - Correios de Portugal

Judgment · 30 April 2020 · Portugal

Changing the input tax apportionment method after the final pro rata is fixed

A blanket national prohibition on changing the deduction method after the final proportion has been fixed is compatible with Article 173(2)(c). But Articles 184 to 186 preclude refusing correction where the Member State allows the actual use method, the taxable person was unaware and acting in good faith when choosing its method that a supply treated as exempt was taxable, the general national limitation period has not expired, and the change gives a more precise measure of deductible VAT. Mixed businesses whose output VAT treatment is retrospectively revised, whether by ruling, legislative change or liberalisation, can reopen the apportionment method itself and not merely recompute the turnover pro rata. Relevant to postal, financial, insurance, healthcare and public bodies sectors, and to anyone relying on an outdated binding ruling.

C-258/19 EUROVIA

Judgment · 30 April 2020 · Hungary

Jurisdiction over deduction on pre-accession supplies

The Court declined jurisdiction. The supply took place on 16-11-1998, before Hungary's accession on 01-05-2004, so the chargeable event occurred and the tax became chargeable pre-accession, and the right to deduct has a direct substantive and temporal link to that chargeability. That the exact price was fixed by judgment, paid and invoiced only after accession was not enough. Those events were inextricably linked to a pre-accession supply. No continuous supply or Article 66 derogation was in point. A jurisdictional ruling, not a substantive one, so it settles nothing about when limitation runs where an invoice is delayed by litigation over the price.

C-756/19 Ramada Storax

Order · 29 April 2020 · Portugal

Bad debt relief cannot be refused because the insolvency was declared abroad

The Court holds that those provisions preclude such legislation. Article 90(1) reflects the principle that the taxable amount is the consideration actually received, and a Member State cannot confine bad debt relief to insolvencies declared before its own courts under its own law. A finding of irrecoverability made by a court of another Member State must be given effect. An important order for cross border trade, where the customer insolvency will normally be handled abroad.

C-13/18 Sole-Mizo and Dalmandi Mezőgazdasági

Judgment · 23 April 2020 · Hungary

Interest on excess deductible VAT withheld in breach of EU law

The base rate approach fails effectiveness and fiscal neutrality where that rate is below what a taxable person other than a credit institution would pay to borrow the same amount, and where interest stops at the end of the reporting period with nothing to compensate for monetary erosion until actual payment. However, a five-year limitation period running from entry into force of the corrective legislation is compatible, as is requiring a specific request for default interest, which then runs only from expiry of the 30 or 45 day processing deadline. Businesses holding historic interest claims against Member States for VAT withheld contrary EU law now have a benchmark. Relevant to Hungarian claims and to comparable interest disputes elsewhere.

C-94/19 San Domenico Vetraria

Judgment · 11 March 2020 · Italy

Secondment of staff at cost as a supply for consideration

Article 2, point 1 precludes such national legislation, provided the amounts paid by the subsidiary and the secondment are interdependent, that is, the secondment was made only on condition of payment and the payment made only in return for the secondment. That is for the national court to verify. Whether the consideration equals, exceeds or falls short of the provider's costs is irrelevant and does not break the direct link. Groups that second staff between entities on a pure cost recharge basis cannot assume the recharge is outside the scope.

C-211/18 Idealmed III

Judgment · 5 March 2020 · Portugal

Private hospitals and comparable social conditions

Those contractual and funding features are relevant factors in assessing comparable social conditions, alongside the public interest nature of the services. Price fixing is not a precondition, its absence does not defeat exemption. The proportion of contracted services within the provider's total activity is irrelevant. The test attaches to the services, not the provider. Once supplies fall within Article 132(1)(b) exemption is mandatory, and the national option to tax, including any unexpired minimum period, cannot keep them taxed. Relevant to private hospitals, clinics and diagnostic centres, particularly in Portugal, that hold an option to tax while progressively contracting with public health bodies or social security schemes.

C-292/19 Porr Építési Kft.

Order · 29 January 2020 · Hungary

Definitively irrecoverable debts must give a reduction of the taxable amount

The Court holds that a Member State must allow the reduction where the taxable person can show that the claim is definitively irrecoverable, which is for the referring court to verify. Such a situation is not a case of non payment capable of falling within the derogation in Article 90(2), because that derogation rests on the uncertainty of whether payment will eventually be made, and here that uncertainty is gone. The order draws the line that makes Article 90(2) workable.

C-715/18 Segler-Vereinigung Cuxhaven

Judgment · 19 December 2019 · Germany

Reduced rate and the letting of boat moorings

The reduced rate does not apply to the letting of boat moorings. Point 12 of Annex III is an exception and must be read strictly. Mooring is not mentioned in its wording and is not intrinsically linked to "accommodation", its primary purpose being to keep boats immobile and secure. The social objective of facilitating access to accommodation is absent, since sailing and motor boats do not principally serve as accommodation. Neutrality is not infringed because moorings and camping pitches perform different functions and do not compete. In Member States that applied a reduced rate to overnight mooring charges, marinas, yacht clubs and harbour operators are standard rated, whether or not the fee is tied to overnight stays.

C-653/18 Unitel

Judgment · 17 October 2019 · Poland

Export exemption where the actual customer is not identified

Such a blanket practice is precluded. Identification of the acquirer is not a condition of a supply of goods, which depends on the objective criteria of transfer of the right to dispose as owner and physical exit from the European Union. The exemption may nonetheless be refused where the failure to identify the acquirer prevents proof that those substantive conditions are met, or where the taxable person knew or should have known the transaction formed part of a fraud damaging the common VAT system. Fraud in a third country does not automatically exclude this. If refused, there is no taxable transaction and no input tax deduction. Exporters facing assessments because the invoiced customer turns out to be a front cannot be denied the zero rate on that ground alone. Relevant to electronics and other high risk export trades.

C-242/18 UniCredit Leasing

Judgment · 3 July 2019 · Bulgaria

Reduction of the taxable amount on termination of a finance lease

A final notice of adjustment does not bar reduction under Article 90(1). It is not a formality justified by Article 273. Both the arrears up to termination and the termination compensation (itself taxable consideration for the leasing supply) are cases of non-payment, so a Member State which has not legislated for reduction on non-payment may refuse it. But the derogation cannot apply where the taxable person shows a reasonable probability that the debt will not be honoured, subject to upward re-evaluation if payment occurs. Lessors and other suppliers in Member States which exclude bad debt relief cannot be refused relief indefinitely.

C-597/17 Belgisch Syndicaat van Chiropraxie and Others

Judgment · 27 June 2019 · Belgium

Medical exemption for unregulated professions and reduced rates for aesthetic treatments

The exemption is not restricted to professions regulated by national law. Member States define the qualifying professions but must ensure adequate quality of care and respect fiscal neutrality, and other means of verifying qualifications may exist. Member States may apply the reduced rate selectively within Annex III, and therapeutic and purely aesthetic uses are not similar supplies, so the differentiation is permissible. The national court may not maintain the effects of the annulled provisions, whether for legal certainty or to avoid reverting to an earlier non-compliant regime. Providers of therapeutic care outside regulated professions, chiropractors, osteopaths and comparable practitioners, can rely on Article 132(1)(c) where their qualifications and quality of care are verifiable and their services compete with exempt care.

C-185/18 Oro Efectivo

Judgment · 12 June 2019 · Spain

Non-harmonised transfer duty on purchases of gold from private individuals

The Directive does not preclude such a tax. The duty is not a turnover tax within Article 401. It does not apply generally to all transactions in goods or services and is not charged at each stage of production and distribution with deduction of tax paid at earlier stages. EU law permits concurrent systems of taxation, even where this results in double taxation of the same transaction. Fiscal neutrality does not extend beyond the harmonised VAT system, so a non-harmonised duty of this kind cannot undermine it. Confirms that businesses cannot use fiscal neutrality to attack national transfer or registration duties charged on inputs bought from private individuals. Relevant to gold, scrap, second-hand goods and jewellery dealers, and to auction and antiques traders, in Member States levying stamp or asset transfer duty on such acquisitions.

C-566/17 Związek Gmin Zagłębia Miedziowego

Judgment · 8 May 2019 · Poland

Apportionment of input tax where national law provides no method

Article 168(a) precludes such a practice. The obligation to apportion follows from the wording of Article 168(a) itself, and the absence of national apportionment rules cannot extend the right of deduction to costs of activities outside the scope of VAT. Fiscal legality, as a general principle of EU law, requires only the essential features of the tax to be laid down by law, not every technical aspect. Apportionment is an ancillary pre-condition, particularly where the taxable person can choose a method or seek a ruling. Relevant to public bodies, associations of municipalities, waste and utilities operators, charities and holding structures carrying on both economic and non-economic activities.

C-127/18 A-PACK CZ

Judgment · 8 May 2019 · Czechia

Bad debt relief where the insolvent debtor has lost taxable person status

Article 90 precludes national legislation denying correction of the taxable amount for total or partial non-payment on the ground that the debtor is no longer a taxable person. The derogation in Article 90(2) exists only to address uncertainty as to whether non-payment is definitive. Loss of taxable person status in insolvency points the other way. Article 273 cannot justify a rule that forces a supplier to pay VAT it never received, absent any particular evasion risk.

C-691/17 PORR Építési Kft.

Judgment · 11 April 2019 · Hungary

Deduction refused where reverse charge should have applied

Deduction was rightly refused. The VAT paid to the suppliers was not due and a substantive condition of the reverse charge, payment of the tax by the recipient to the authorities, was unmet. The authority need not check first whether the suppliers could correct the invoices or recover the tax. The qualification is that where recovery from the supplier is impossible or excessively difficult, notably on the supplier's insolvency, the recipient must be able to claim reimbursement directly from the tax authority, by a claim distinct from deduction.

C-214/18 PSM K

Judgment · 10 April 2019 · Poland

Whether statutory fees are treated as VAT inclusive

Those provisions and principles do not preclude such a practice. The Directive contains no rule on whether such fees include VAT, so it is for Member States to decide. Where national law does not permit VAT to be added to the statutory fee, the fee must be regarded as VAT inclusive. That respects neutrality and ensures the taxable amount does not exceed the consideration actually paid. Macikowski, which concerned an officer liable for another person's tax, is distinguished. The answer assumes the officer is a taxable person outside Article 13 and cannot gross up. Confirms that where a regulated tariff is silent on VAT, the taxable person, not the customer, absorbs the tax.

C-201/18 Mydibel

Judgment · 27 March 2019 · Belgium

Adjustment of input tax on a sale and lease back of buildings

Subject to the national court's verification of the facts and national law, no adjustment is required. Creating an emphyteutic right not subject to VAT is not in itself a change in the factors determining the deduction, and where the emphyteutic right and the leaseback are so closely linked as to form a single transaction, no supply of goods occurs because the institutions cannot dispose of the buildings as owner. Had adjustment been due, it would nevertheless respect neutrality and equal treatment. Relevant to businesses using sale and lease back of real estate as a financing tool, and to their lenders and lessors.

C-491/18 Mennica Wrocławska

Order · 13 December 2018 · Poland

An error in describing the goods on an invoice does not defeat deduction

The Court holds that those provisions preclude such a refusal, where the taxable person supplied the authorities, before their decision, with the documents and explanations needed to determine the real subject matter of the transactions and to show that they had actually taken place. Deduction may still be refused where the right is invoked fraudulently or abusively, but the referring court had found no fraud here. A clear application of Barlis 06 and Senatex.

C-672/17 Tratave

Judgment · 6 December 2018 · Portugal

Prior notice to the debtor as a condition for reducing the taxable amount

The Court held that neutrality and Articles 90 and 273 do not preclude such a prior notification requirement. It falls within the Member States' discretion over formalities, contributes to correct collection, prevention of evasion and elimination of the risk of revenue loss, and allows the State to act in time in the insolvency proceedings. The requirement is subject to not being excessively onerous, which the referring court must verify. No particular form is prescribed. The second question was not answered. On a claim for bad debt relief the domestic notification formalities operate as substantive preconditions rather than administrative afterthoughts, and they have to be evidenced contemporaneously.

C-648/16 Fontana

Judgment · 21 November 2018 · Italy

Assessing VAT on turnover estimated by sector studies

No objection in principle. Article 273 leaves Member States discretion, and extrapolation from sector studies to assess additional VAT where declared and estimated revenue differ seriously is permissible. The qualification is that the studies must be correct, reliable and up to date, the discrepancy can create only a rebuttable presumption, the taxable person must be able to contest the study's accuracy and its relevance to his situation with any contrary evidence and without an excessive standard of proof, and must still exercise deduction under Title X. Verification is for the national court. Relevant wherever indirect assessment methods, standard margins, sectoral benchmarks or turnover reconstruction are used, notably in Italy but also in other Member States operating similar presumptive tools.

C-664/16 Vădan

Judgment · 21 November 2018 · Romania

Proving input tax without invoices

No deduction may be granted solely on the basis of an assessment resulting from a court-commissioned expert report where the taxable person cannot evidence the input VAT actually paid by invoices or any other document. Formal defects need not be fatal where the authorities have the information to verify the substantive conditions, but the burden of proof rests on the claimant. Objective evidence, including documents held by suppliers, is required. An expert report may supplement or reinforce such evidence, never replace it. Relevant to property developers and any taxable person reconstructing historic input tax after a retrospective registration or assessment, and to advisers arguing substance over form.

C-81/17 Zabrus Siret

Judgment · 26 April 2018 · Romania

Correcting VAT returns for periods already audited

Those provisions and principles preclude such legislation. Where an inspection follows shortly after filing, the shortened window makes deduction impossible or excessively difficult. Refusal of deduction for a remediable formal failure, absent evasion or loss to the exchequer, is disproportionate. Legal certainty cannot be invoked by the authorities here, since the system also permits correction on their initiative and reopening on new information, so it serves the efficiency of inspections rather than taxpayers' rights. Fatorie distinguished. Member States may instead impose administrative fines on negligent taxpayers. Member States may keep a limitation period for claiming deduction, but cannot truncate it by treating a closed audit as a bar to taxpayer-initiated corrections.

C-8/17 Biosafe - Indústria de Reciclagens

Judgment · 12 April 2018 · Portugal

Start of the deduction period for additional VAT charged on rectified invoices

Those provisions and the principle of fiscal neutrality preclude such legislation. Where the customer held no rectifying documents and did not know additional VAT was due, exercise of the right to deduct was objectively impossible before the adjustment, so a period running from the initial invoices cannot bar it. That depends on the customer having shown no lack of diligence and on the absence of abuse or fraudulent collusion, which national courts assess. The second question did not require an answer. Suppliers who face a rate reclassification on assessment and pass the additional tax down the chain can no longer be met with the argument that the customer's deduction window closed years ago.

C-533/16 Volkswagen

Judgment · 21 March 2018 · Slovakia

Start of the limitation period for refunds where VAT is invoiced years late

EU law precludes a Member State from refusing a refund on the ground that a limitation period running from the date of supply had expired, where the VAT was charged to and paid by the taxable person only several years after the supply. The right arises when the tax becomes chargeable but is exercisable only once an invoice is held. The qualification is that this applies where the claimant showed no lack of diligence and there was no abuse, fraudulent collusion or risk of non-payment. Relevant to non-established businesses making Directive 2008/9 claims and to any taxable person receiving late corrective invoices after a supplier reclassifies an exempt transaction as taxable.

C-387/16 Nidera

Judgment · 28 February 2018 · Lithuania

Reduction of default interest on late VAT refunds

Article 183, read with fiscal neutrality, precludes such a reduction. Interest merely compensates unavailability of funds, so neither its size relative to the principal nor the length of the delay can justify cutting it, and a refusal later shown to be unlawful is no different from ordinary administrative delay. Member States may set a flat rate, which by nature may exceed or fall short of actual loss, but having chosen a flat rate, they cannot then substitute compensation for proven actual loss. Relevant to any business pursuing repayment interest where a Member State has withheld a VAT credit pending inspection or on a ground later found contrary to EU law.

C-305/16 Avon Cosmetics

Judgment · 14 December 2017 · United Kingdom

Direct selling through unregistered resellers and the scope of an Article 27 derogation

The derogation is valid and is not precluded by Articles 17 and 27, even though it makes no allowance for input VAT on demonstration items borne by the unregistered resellers. The derogation touches only the taxable amount. The deduction rules remain intact, and non-taxable resellers simply have no right to deduct. Giving credit would itself be an unauthorised derogation from Article 17(2). No obligation existed to notify the Commission of that point. Direct selling groups operating under open market value directions cannot claw back the sticking VAT suffered by their unregistered representatives on demonstration items or third party purchases.

C-246/16 Di Maura

Judgment · 23 November 2017 · Italy

Bad debt relief and the length of insolvency proceedings

The derogation does not allow a Member State to impose such a condition. The derogation lets Member States address the uncertainty as to whether non-payment is definitive, but does not allow them to exclude reduction altogether, and it must be construed strictly. That objective can be met by granting relief once the taxable person shows a reasonable probability that the debt will not be paid, with upward re-evaluation if payment later occurs. Requiring certainty obtainable only after some ten years is disproportionate and creates a cash-flow disadvantage. Confirms an outer limit on national bad debt relief regimes.

C-314/17 „Geocycle Bulgaria“

Order · 23 November 2017 · Bulgaria

The same VAT cannot be collected twice on a single supply under reverse charge

The Court holds that those principles do preclude such a refusal, in circumstances where national law provides no possibility of correcting the VAT once a tax adjustment decision exists. Collecting the tax twice on a single supply and denying deduction leaves the burden on the taxable person, contrary to neutrality, and the absence of any corrective mechanism makes the right to deduct impossible to exercise in practice. The order governs wherever a reverse charge has been mishandled and both parties have accounted for the tax.

C-499/16 AZ

Judgment · 9 November 2017 · Poland

Shelf life as a criterion for the reduced rate on pastry goods

Article 98 does not preclude such legislation. Member States may apply a reduced rate selectively to a concrete and specific aspect of an Annex III category, and the CN is only one permissible means of delimitation. The qualification is that this holds only if fiscal neutrality is respected, which the national court must verify. If the average Polish consumer regards longer-life and shorter-life pastries as similar and interchangeable, the differential rate is precluded. If the shelf life criterion does not favour one over the other, they are not competing goods. Confirms that reduced-rate boundaries within a food category may rest on national criteria unrelated to the CN, so producers challenging such lines cannot simply point to a common tariff classification.

C-534/16 BB construct

Judgment · 26 October 2017 · Slovakia

Guarantee required on VAT registration where the director has links to a company with tax debts

Article 273 and Article 16 of the Charter do not preclude such a guarantee, provided it goes no further than necessary. That assessment is for the national court. Proportionality requires the amount to correlate with the future risk of non-payment and the earlier debts, and to reflect the person's actual role in both companies. Automatic calculation the taxable person cannot see or contest may exceed what is needed. Equal treatment is not breached because those linked to companies with tax debts differ from those with other debts. Articles 49 and 50 do not apply, as the guarantee is not a penalty. Confirms that Member States may make VAT registration conditional on security based on the registration applicant's directors' history, and that such security is not a penalty, so ne bis in idem and non-retroactivity arguments fail.

C-262/16 Shields & Sons Partnership

Judgment · 12 October 2017 · United Kingdom

Exclusion of a farmer from the flat-rate scheme

Article 296(2) is exhaustive because exclusion is possible only for certain categories of farmers or farmers for whom the normal or simplified arrangements would cause no administrative difficulty. Article 299 operates globally on the compensation percentages and cannot support individual exclusion, and fiscal neutrality, an objective rather than an independent principle here, cannot either. A category must rest on objective, clear, precise criteria set in advance. "Substantially more" fails that test. HMRC cannot cancel a flat-rate certificate because an individual farmer has over-recovered, and over-compensation as such is not contrary to EU law.

C-254/16 Glencore Agriculture Hungary

Judgment · 6 July 2017 · Hungary

Default interest where a VAT refund is delayed by a tax investigation

EU law precludes such legislation. The refund period may be extended for an investigation, but only so far as necessary to complete it. If its duration is excessive and not attributable wholly to the taxable person, interest cannot be refused. A trader who genuinely obstructed the procedure cannot claim interest for the delay he caused, so the portion of the delay attributable to his conduct must be identified. National courts must interpret domestic law accordingly or disapply conflicting provisions. Relevant to any business in a repayment position facing a protracted verification, particularly in Member States where interest is switched off by a penalty or by the mere opening of an audit.

C-38/16 Compass Contract Services

Judgment · 14 June 2017 · United Kingdom

Different transitional limitation periods for repayment and deduction claims

The Court held that the principles do not preclude such legislation. The right to repayment of overpaid VAT derives from general EU law and neutralises a wrongly imposed burden. The right to deduct is inherent in the VAT system and presupposes tax actually due. The two are not comparable, so equal treatment permits different transitional dates. Neutrality was not engaged (no differing treatment of competing traders), and a three-year period with non-retroactive transitional arrangements is reasonable. Confirms that overpayment claims and input tax claims are legally distinct for limitation purposes, so a taxpayer cannot borrow the more generous cut-off applying to the other category.

C-699/15 Brockenhurst College

Judgment · 4 May 2017 · United Kingdom

Training restaurant and student performances as supplies closely related to education

Such activities may be exempt as closely related to the principal supply of education, provided they are supplied by a qualifying body, are essential to the students' education (without them the education would not be of equivalent value), and their basic purpose is not to obtain additional income through transactions in direct competition with commercial enterprises liable for VAT. Here the limited public, booking thresholds and below-cost pricing pointed away from competition. The national court must verify these conditions. Confirms that the "closely related" exemption is not confined to supplies consumed by the students themselves.

C-564/15 Farkas

Judgment · 26 April 2017 · Hungary

Reverse charge applied to the wrong transaction, deduction and penalty

Article 199(1)(g) applies only to immovable property sold by a judgment debtor in a compulsory sale. Deduction of VAT that was not due may be refused even though the seller paid it to the Treasury. The purchaser must seek reimbursement from the seller. But where that is impossible or excessively difficult, notably on the seller's insolvency, he must be able to claim directly from the tax authority. A 50% penalty for a purely administrative error causing no revenue loss appears disproportionate, subject to the national court's assessment. Confirms that domestic reverse charges cannot be extended beyond the categories listed in Article 199 without an Article 395 derogation, which is where national insolvency and auction regimes are exposed.

C-211/16 Bimotor

Judgment · 16 March 2017 · Italy

A cap on offsetting tax debts against VAT credits is permissible if full recovery remains possible

The Court holds that it does not preclude such legislation, provided the national legal order in any event allows the taxable person to recover the whole of the VAT credit within a reasonable period. A cap is not on its face an inappropriate anti fraud measure, given how easily offsetting can be used for large debts of different kinds before the VAT claim has been verified. It is for the referring court to assess proportionality against the national rules taken as a whole. The judgment restates the boundary drawn in Mednis and Enel Maritsa Iztok 3.

C-573/15 Oxycure Belgium

Judgment · 9 March 2017 · Belgium

Reduced rate for oxygen concentrators and the limits of fiscal neutrality

Those provisions do not preclude such legislation. Reduced rates are an option, to be construed strictly, and Member States may apply them selectively within Annex III or not at all. Concentrators are not pharmaceutical products within point 3, and fall outside point 4 unless shown to be for the exclusive personal use of the disabled, a matter for the national court. Fiscal neutrality is an interpretative principle only and cannot extend a reduced rate to goods outside Annex III, even if consumers see them as similar. Confirms that neutrality arguments fail where the competing product sits outside Annex III altogether. Relevant to suppliers of medical devices, home healthcare equipment and rental businesses, and to advisers challenging rate distinctions between clinically equivalent products.

C-576/15 Maya Marinova

Judgment · 5 October 2016 · Bulgaria

Estimated assessment where supplies and revenue are concealed

They do not preclude such legislation. Failure to keep accounts and to record invoices may be treated as tax evasion, and Article 273 leaves Member States discretion to re-establish the position that would have existed absent evasion, estimating the taxable amount as closely as possible to the consideration actually received. Fiscal neutrality cannot be invoked by a taxable person who intentionally concealed transactions. The national court must still verify that the rules go no further than necessary. Article 80 was irrelevant, concerning tied parties. Confirms that estimated or "analogous" assessments based on suppliers' invoices, stock absences and typical margins are compatible with the Directive, even though they depart from Article 73 and identify no customer.

C-123/14 Itales

Order · 15 July 2015 · Bulgaria

Deduction cannot be refused for unproven origin of the goods without evidence of fraud

The Court holds that they do preclude it. A tax authority may not refuse the deduction on those grounds where it has not established that the purchaser took part in VAT fraud and knew or should have known that the transaction was involved in such a fraud. The burden of showing the objective evidence of participation in fraud lies with the authority, not with the taxable person. One of the reasoned orders applying Mahageben and David and Bonik to Bulgarian practice.

C-159/14 Koela-N

Order · 15 July 2015 · Bulgaria

Deduction where goods go straight to the final customer, and what proves knowledge of fraud

Ruling by reasoned order, the Court held that the principle of fiscal neutrality precludes the authorities from denying that a supply took place, and from refusing deduction on that basis, merely because the goods travelled directly to the ultimate customer without passing through the hands of the intermediate acquirers. On the second question, it held that those two circumstances are not by themselves sufficient objective evidence of knowledge or means of knowledge, although both may be taken into account in an overall assessment of all the facts and circumstances. Two points that recur in Bulgarian and Romanian deduction disputes.

C-209/14 NLB Leasing

Judgment · 2 July 2015 · Slovenia

Repossession under a finance lease and reduction of the taxable amount

Where the lease provides for transfer of ownership on expiry, or the lessee enjoys all essential powers of ownership with substantially all risks and rewards and the present value of the payments is practically identical to market value, the transaction is an acquisition of capital goods. Article 90(1) does not permit reduction where the taxable person has in fact received all the consideration, or where, absent refusal or cancellation, the recipient is no longer liable for the price. Neutrality does not bar separate taxation of the lease and the onward sale unless they form a single supply, for the national court to decide. Relevant to lessors and to sale and lease back structures over immovable property.

C-111/14 GST - Sarviz Germania

Judgment · 23 April 2015 · Bulgaria

Reverse charge applied in error where the supplier had a fixed establishment

Where the services are supplied from a fixed establishment in the Member State of taxation, the supplier alone is liable. Article 194 does not permit the authorities to treat the recipient as liable, even where the recipient has already paid on a mistaken assumption. Refusing the supplier a refund breaches fiscal neutrality where the recipient's deduction has been definitively denied and invoices cannot be adjusted. The outcome would differ if national law allowed the supplier to adjust its invoices and recover the VAT from the recipient. Relevant wherever a fixed establishment is asserted retrospectively on audit and the customer has meanwhile self-accounted.

C-499/13 Macikowski

Judgment · 26 March 2015 · Poland

Obligations of the court enforcement officer as paying agent on compulsory sales

None of these provisions precludes the Polish mechanism. The officer is a mere intermediary collecting tax on the taxable person's behalf, not a person liable, jointly liable or a tax representative under Article 204. The scheme falls within Article 273. Personal liability with all his assets is proportionate only if the officer actually has all the legal means to discharge the obligation in time, which the national court must verify. The supplier retains its right to deduct and may claim repayment of any overpayment. Confirms that Member States may use third party collection agents under Article 273 without engaging the liability rules in Articles 193 to 205. Relevant to enforcement officers, insolvency practitioners and auctioneers in Member States operating similar withholding mechanisms, and to advisers on compulsory sales of land.

C-219/13 K

Judgment · 11 September 2014 · Finland

Reduced rate for books limited to paper format

Selective application is permitted. The 2009 amendment did not oblige Member States to extend the reduced rate to all supports. They may determine which supports qualify, subject to fiscal neutrality. The national court must decide whether the average consumer in that Member State regards printed and other-support books as similar, having similar characteristics, meeting the same needs and comparable in use. Support type, content and technical properties are factors in that assessment, not separate answers. Publishers, audiobook producers and library suppliers cannot assume a single rate across formats.

C-500/13 Gmina Międzyzdroje

Order · 5 June 2014 · Poland

Ten-year capital goods adjustment period and the refusal of a one-off adjustment

By reasoned order, the Court held that those provisions and the neutrality principle do not preclude such rules. Article 187 applies where goods initially used for non-deductible purposes are later put to deductible use, and its terms are binding. An adjustment period of at least five years (extendable to twenty for immovable property) is an essential element of the system. A ten-year period running from first use is a proper transposition, and Article 187 precludes any one-off adjustment within a single tax year. Confirms that a change of use of immovable property from non-economic or exempt to taxable activity gives access to input VAT only in annual fractions over the national adjustment period, not as an immediate lump-sum credit.

C-599/12 Jetair and BTWE Travel4you

Judgment · 13 March 2014

Standstill taxation of travel agents' services for journeys outside the EU

The standstill provisions do not preclude legislation adopted during the transposition period imposing VAT on travel agents' non-EU journeys. The Directive expressly fixed 01-01-1978 as the reference date, so such a law did not seriously compromise its result. A Member State taxing those services on 01-01-1978 need not apply Article 309. Article 370 with Annex X, Part A, point 4 is valid despite the resulting divergence, harmonisation being still partial. Treating margin-scheme travel agents differently from intermediaries is lawful, the two not being comparable. Confirms that Belgium may continue to tax margin-scheme supplies relating to journeys outside the EU, closing off refund claims built on Article 309 for periods since 1978.

C-204/13 Malburg

Judgment · 13 March 2014 · Germany

Deduction by a partner on assets provided free of charge to a new partnership

The partner cannot deduct that input VAT. Making the client base available free of charge is neither a supply for consideration under Article 2(1) nor exploitation of property for continuing income under Article 4, so it falls outside VAT entirely and there is no direct and immediate link with a deductible output transaction. Polski Trawertyn is distinguished because there the contribution was an exempt transaction within the scope of VAT and neither partners nor partnership could deduct. Fiscal neutrality is an interpretative principle only and cannot extend the right of deduction. Relevant to professional partnerships and family businesses restructuring by splitting client bases, goodwill or other intangibles between partners.

C-454/12 Pro Med Logistik and Pongratz

Judgment · 27 February 2014 · Germany

Selective reduced rate for taxi but not minicab transport

Selective application is permissible where, because of the different statutory obligations, taxi transport is a concrete and specific aspect of the passenger transport category and those differences decisively influence the average user's choice between the two. The opposite applies to services supplied under a special agreement binding taxi and minicab operators indiscriminately on the same fares and without additional taxi obligations. There taxi transport is not a distinct aspect and is similar in the average user's eyes, so differentiated rates are precluded. Verification is for the national court.

C-424/12 Fatorie

Judgment · 6 February 2014 · Romania

Deduction where reverse charge VAT is wrongly paid to the supplier

The right to deduct may be refused in those circumstances. This was not merely a formal invoicing defect. By paying the VAT to the supplier instead of accounting for it to the tax authorities, the recipient breached a substantive condition of the reverse charge regime, and deduction is available only for tax actually due. The supplier's insolvency does not alter that. The recipient's remedy is a civil claim against the supplier under national law. Legal certainty does not preclude revocation of an earlier favourable decision and reassessment with default interest within the limitation period, subject to proportionality. Confirms the limit of the Bockemühl and Ecotrade line. Relevant to construction and other domestic reverse charge sectors, where the remedy for a recipient is correction of the invoice rather than payment of tax shown in error.

C-572/11 Menidzherski biznes reshenia

Order · 4 July 2013 · Bulgaria

No deduction on invoices for transactions that never took place, even if the issuer paid the tax

The Court holds that they do not preclude such a refusal. The right of deduction is linked to the actual carrying out of the supply, and it does not extend to tax which is due solely because it appears on an invoice under Article 203. That the issuer paid the tax, so that no loss of revenue arises, does not change the position. The referring court must make a global assessment of the facts. The order marks the boundary of the substance over form case law.

C-259/12 Rodopi-M 91

Judgment · 20 June 2013 · Bulgaria

Penalty for belated adjustment following cancellation of an invoice

Fiscal neutrality does not preclude such a fine, even where the taxable person has since remedied the omission and paid the tax with interest. The fine sanctions belated rectification of a deduction that had ceased to have a basis, not a transaction, so no double taxation arises. Proportionality is for the national court, having regard to the time taken to rectify, the seriousness of the irregularity and any evasion or circumvention. Late payment alone is not evasion. Confirms that Member States may penalise late adjustment of deductions at up to 100% of the tax, and that voluntary correction plus interest does not itself neutralise the penalty. Relevant to any business making credit note or cancellation adjustments in Member States with fixed percentage penalty regimes, and to those handling Bulgarian ZDDS assessments.

C-444/12 Hardimpex

Order · 16 May 2013 · Hungary

An upstream irregularity does not defeat deduction absent proof of knowledge

The Court holds that it does preclude that refusal, where it has not been established to the requisite legal standard that the taxable person knew or should have known of the irregularity. The mere fact that the company did not check where the goods came from cannot be a ground for refusing deduction. Subject to the verifications for the referring court, no such knowledge had been shown. One of the Hungarian orders that consolidated the Mahageben and David line into settled practice.

C-271/12 Petroma Transports and Others

Judgment · 8 May 2013 · Belgium

Late correction of incomplete invoices and the right to deduct

Correction of defective invoices is not prohibited, but the decisive point is timing. Where the supplementary information reaches the authority only after the refusal decision has been adopted, deduction may be refused. Member States could, under the Sixth Directive, require particulars beyond the listed minimum, provided these are limited to what is necessary and do not make deduction practically impossible. Neutrality gives no right to a refund to the supplier. The services were actually performed, so the VAT was due and correctly paid. Confirms that the Pannon Gép window for regularising invoices closes when the authority takes its decision. Relevant to intra-group service and management charge arrangements, where lump sum invoicing without hours or unit rates remains a common audit target.

C-138/12 Rusedespred

Judgment · 11 April 2013 · Bulgaria

Refund of VAT invoiced in error where the customer's deduction has been definitively refused

Neutrality precludes refusal of the refund in those circumstances. Article 203 exists to remove the risk of loss of tax revenue. Where deduction has been definitively refused that risk is wholly eliminated, and conditioning the refund on a correction that national law makes impossible goes beyond what is necessary. The obligation is unconditional and sufficiently precise, so the taxable person may rely on the principle against the national provision. Suppliers who wrongly charge VAT on exempt supplies, notably on older buildings and associated works, have a route to recovery once the customer's deduction has been finally refused, even if the domestic correction or credit note mechanism has by then closed.

C-424/11 Wheels Common Investment Fund Trustees and Others

Judgment · 7 March 2013 · United Kingdom

Defined benefit pension funds and the special investment fund exemption

Such a fund is not a special investment fund. It is not a UCITS because it is not open to the public but is an employment benefit confined to employees, and it is not sufficiently comparable to be in competition with UCITS. The decisive features is that scheme members bear no risk from the fund's management, their pension being fixed in advance, and the employer's contributions discharge his legal obligations to employees rather than constituting an investment. Management services supplied to defined benefit occupational pension funds remain taxable, and trustees of such schemes cannot rely on neutrality to claim parity with authorised unit trusts, OEICs or investment trust companies. Relevant to pension scheme trustees, fund managers and their UK VAT advisers.

C-642/11 Stroy trans

Judgment · 31 January 2013 · Bulgaria

Asymmetry between invoice issuer's liability and recipient's deduction

VAT entered on an invoice is payable by the issuer regardless of whether a taxable transaction exists, and no acknowledgement of a real transaction can be inferred from the mere absence of correction in a notice addressed to the issuer. Refusal of deduction to the recipient is not precluded by neutrality, proportionality or legitimate expectations. But where non-performance rests on fraud or irregularities of the issuer or upstream, it must be shown on objective factors that the recipient knew or should have known of the connection with fraud. Confirms that a supplier's unadjusted VAT assessment is only one evidential factor, not proof of supply, so recipients cannot rely on the tax treatment of their supplier to secure deduction. Relevant to fuel, commodity and other chain trading where authorities allege missing supplies from documentary gaps upstream.

C-643/11 LVK

Judgment · 31 January 2013 · Bulgaria

Asymmetric treatment of issuer and recipient of an invoice where no supply took place

VAT entered on an invoice is payable under Article 203 regardless of whether a taxable transaction exists, and no inference of acceptance arises from the authorities leaving the issuer's declaration unadjusted. Issuer and recipient are not in comparable situations. Deduction may therefore be refused for want of an actual transaction. But where the finding of no supply rests on fraud or irregularities by the issuer or upstream, the authorities must establish on objective factors that the recipient knew or should have known of the fraud, without demanding checks that are not his responsibility. Customers cannot defend a deduction simply by pointing to the supplier having declared and been assessed on the same VAT. Relevant to agricultural, commodity and other chain-supply trades facing missing-trader challenges.

C-310/11 Grattan

Judgment · 19 December 2012 · United Kingdom

No retrospective reduction of the taxable amount under the Second Directive

Article 8(a) confers no such right. Under Article 5(5) the chargeable event occurred on delivery and the tax debt arose on the basis of assessment fixed at that moment. The Second Directive contained nothing allowing regularisation afterwards. Fiscal neutrality cannot supply what Article 11C(1) of the Sixth Directive later added. Since the sub-customers, as final consumers, paid the unreduced catalogue price and the commission went to the agents, the taxable amount was that full price. Closes off pre-1978 repayment claims resting on post-supply rebates, credits or agents' commission, a Fleming-style claim pattern familiar to UK retailers and their advisers.

C-174/11 Zimmermann

Judgment · 15 November 2012 · Germany

Recognition of private providers as charitable for the welfare exemption

Article 13A(1)(g), read in the light of fiscal neutrality, precludes making the exemption for out-patient care supplied by commercial providers subject to a condition such as the one at issue, that in the preceding calendar year the costs were borne by the statutory social security or social welfare authorities in at least two thirds of cases, where that condition is not capable of ensuring equal treatment in recognising the charitable character of bodies other than those governed by public law. Member States keep a discretion in granting that recognition, and the extent of public funding is a factor they may weigh, but the discretion is exercised within the limits of neutrality. The same care exempted without any threshold when supplied by listed welfare associations cannot be taxed when supplied by a commercial provider. The judgment fixes that the discretion Member States hold in recognising a body as charitable under Article 13A(1)(g) is bounded by fiscal neutrality, and that a funding-mix threshold fails where it separates providers of the same care by their status rather than by the care itself.

C-324/11 Tóth

Judgment · 6 September 2012 · Hungary

Deduction where the subcontractor's trading licence was withdrawn and its workers undeclared

No refusal on any of those grounds alone. Status as a taxable person under Article 9(1) turns on facts, not on any licence or registration, so deduction stands where the invoice carries the Article 226 particulars. Undeclared workers by the supplier, and the customer's failure to check the workforce, do not of themselves show knowledge of fraud absent material grounding suspicion. Where the authority produces specific evidence of fraud, the national court may examine whether the issuer performed the supply, but refusal still requires objective evidence of knowledge. Confirms and extends Mahagében and Dávid to services and to withdrawn trading licences.

C-284/11 EMS-Bulgaria Transport

Judgment · 12 July 2012 · Bulgaria

Limitation period for exercising the right to deduct on late-accounted intra-Community acquisitions

Limitation periods for exercising the right to deduct are compatible with those articles provided they do not make exercise of the right impossible or excessively difficult in practice. The national court assesses this, taking account of a later substantial extension of the period and of the time taken by a registration procedure that had to be completed inside it. Fiscal neutrality precludes refusal of deduction as a penalty for late accounting. Default interest is permitted if proportionate, and not if it equals the deductible tax. Confirms that non-registration cannot defeat deduction where the substantive conditions are met, registration being a formal verification requirement. Relevant to businesses that account for acquisition or reverse charge VAT late, and to advisers challenging domestic deduction windows.

C-588/10 Kraft Foods Polska

Judgment · 26 January 2012 · Poland

Acknowledgment of receipt of a credit note as a condition for reducing the taxable amount

The requirement is a condition within Article 90(1) and, in principle, neutrality and proportionality do not preclude it. It helps ensure correct collection, prevent evasion and avoid loss of revenue. But where obtaining the acknowledgment within a reasonable period is impossible or excessively difficult, the supplier must be allowed to prove by other means that he took all necessary steps to satisfy himself that the customer has and knows of the correcting invoice, and that the transaction was actually carried out on the corrected terms. Member States may condition credit note relief on customer acknowledgment, but cannot apply it rigidly where customers are under no legal duty to acknowledge.

C-117/11 Purple Parking and Airparks Services

Order · 19 January 2012 · United Kingdom

Off-airport parking with a transfer bus as a single supply of parking

Ruling by reasoned order, the Court held that in circumstances such as those in the main proceedings the parking and the transfer form a single, complex supply of services in which the parking is predominant. The transport is not an end in itself for the customer but the means of better enjoying the parking, so it follows the treatment of the parking service and cannot be carved out to attract the zero rate applicable to passenger transport. A clean application of the single-supply doctrine to a pricing structure built around a favourable rate.

C-259/10 Rank Group

Judgment · 10 November 2011 · United Kingdom

Fiscal neutrality and the gambling exemption for slot machines and mechanised bingo

A difference in treatment of supplies identical or similar from the consumer's viewpoint, meeting the same needs, suffices. No separate proof of competition or distortion is needed. Licensing categories, regulatory regimes, legality, operator identity, venue and unharmonised taxes are irrelevant. For two slot machine types, comparability is judged from the average consumer's perspective, notably stakes, prizes and chances of winning. No repayment where the comparator exemption was merely an unlawful administrative practice. No due diligence defence. Operators of gaming machines and similar gambling products can challenge selective taxation without economic evidence of competition, and cannot be answered by pointing to different gambling licensing regimes. Relevant to gambling operators, betting shops and advisers handling historic overpayment claims.

C-107/10 Enel Maritsa Iztok 3

Judgment · 12 May 2011 · Bulgaria

Default interest on delayed refunds of excess VAT

Article 183 precludes retrospective extension of the refund period where it deprives the taxable person of an accrued right to default interest. It also precludes deferring the start of interest to completion of a tax investigation where the excess has already been carried forward for three tax periods. The option of posting cash security does not save that regime. A 45 day normal refund period is compatible. Refund by set-off is permitted, provided effective remedies exist to contest the debt relied on. Relevant to any business holding persistent VAT credits in Member States that suspend refund clocks during audits.

C-41/09 Commission v Netherlands

Judgment · 3 March 2011 · Netherlands

Reduced rate on supplies of live horses

The Court declared the infringement established. Given divergence between language versions, the scheme and purpose of point 1 mean the qualifier "normally intended for use in the preparation of foodstuffs" applies to live animals too. Horses are not usually and in general so intended. Only the supply of a horse for slaughter for use in preparing foodstuffs may benefit. Point 11 likewise covers only horses intended for use in agricultural production. Slaughter horses and racehorses or pet horses are not similar, so different rates do not breach neutrality. Member States cannot apply a blanket reduced rate to equine supplies.

C-94/09 Commission v France

Judgment · 6 May 2010 · France

Selective application of a reduced rate to part of a category in Annex III

The Court dismissed the action. A Member State may apply a reduced rate selectively to concrete and specific aspects of an Annex III category, provided fiscal neutrality is respected. The single or composite supply criteria, including typical consumer expectations, are not decisive when a Member State exercises that rate discretion. General and objective criteria apply instead. Vehicle transport of a body is separately identifiable and, taxed at the same reduced rate whether supplied alone or with other funeral services, does not breach neutrality. Confirms that reduced rates need not cover an entire Annex III category, and separates rate design from the composite supply analysis. Relevant to funeral operators and any sector where national law reduces the rate on one element only (utilities, water, transport).

C-174/08 NCC Construction Danmark

Judgment · 29 October 2009 · Denmark

Sales of self-built property and the deductible proportion

The sales are not incidental where they constitute the direct, permanent and necessary extension of the business, which is the case where a builder plans on a regular basis to construct properties for its own sale. That being established, there is no need to examine how far the sales activity itself uses taxed goods and services. Fiscal neutrality does not preclude the partial restriction of deduction on general costs, the exemption being permitted and the treatment aligning builders with developers. Confirms that property developers and contractors selling self-built stock cannot strip that turnover out of their partial exemption fraction. Relevant to construction and real estate groups and their partial exemption calculations.

C-566/07 Stadeco

Judgment · 18 June 2009 · Netherlands

Correcting VAT wrongly shown on an invoice

VAT mentioned on an invoice is payable in the Member State to which that VAT relates, even if the transaction is not taxable there. The referring court must identify that Member State from all relevant circumstances (rate shown, currency, language, content and context, places of establishment, conduct of the parties). Fiscal neutrality does not in principle preclude requiring a corrected invoice where the taxable person has not itself wholly and in good time eliminated the risk of revenue loss. National law may also refuse repayment causing unjust enrichment. Confirms that liability follows the VAT shown on the invoice, not the place of supply, so incorrectly domestic-style invoicing of cross-border services creates a real debt in the Member State whose VAT is stated.

C-302/07 J D Wetherspoon

Judgment · 5 March 2009 · United Kingdom

Rounding of VAT amounts by retailers selling at tax-inclusive prices

Community law contains no specific requirement as to the method or the level of rounding. Both are for Member States, subject to fiscal neutrality and proportionality. It neither precludes national rules requiring rounding up at 0.50 or above nor requires that taxable persons be permitted to round down. Traders pricing inclusive of VAT are in a different situation from those pricing exclusive of VAT, because systematic rounding down before the periodic return would let them retain part of the tax collected, so they cannot invoke neutrality to claim the same concession. Retailers and other B2C businesses quoting VAT-inclusive prices cannot rely on EU law to compel a rounding-down method, nor to import concessions given to businesses invoicing on VAT-exclusive prices. Relevant to hospitality, food and drink, and high-volume retail with till-based VAT calculation, and to advisers negotiating bespoke retail schemes.

C-25/07 Sosnowska

Judgment · 10 July 2008 · Poland

Extended repayment period for newly registered taxable persons

Article 18(4) and the principle of proportionality preclude such rules. Combating fraud is a legitimate aim, but a general, preventive regime applied to a whole category of taxable persons with no opportunity to show the absence of any risk of fraud goes too far, particularly where 180 days is not shown to be necessary and the fixed guarantee bears no relation to the credit or the trader's size. Absent unanimous Council authorisation, the rules cannot be Article 27(1) derogations. Confirms that repayment of VAT credits must be made within a reasonable time and by means carrying no appreciable financial risk for the trader. Relevant to advisers dealing with repayment-position businesses, new registrations and intra-Community traders facing extended verification periods.

C-162/07 Ampliscientifica and Amplifin

Judgment · 22 May 2008 · Italy

VAT grouping distinguished from simplified group declaration and payment

Applying the single taxable person option requires prior consultation of the VAT Committee and national rules under which the linked persons cease to be separate taxable persons, holding a single VAT identification number and alone able to file returns. Legislation merely simplifying declaration and payment while companies remain separate taxable persons is different in kind. A minimum holding period (one to two years) for that simplified regime offends neither neutrality, nor proportionality, nor the prohibition of abuse. Classification is for the national court. The note draws the line advisers still rely on. Relevant to groups using domestic consolidation regimes to net debit and credit positions, and to anyone assessing whether a national regime was validly introduced.

C-309/06 Marks & Spencer

Judgment · 10 April 2008 · United Kingdom

Recovery of VAT wrongly charged on nationally zero-rated supplies and the unjust enrichment defence

No directly enforceable Community-law right to zero-rating arises. The derogation is optional and national. But the general principles, including fiscal neutrality, do apply and give a right to recover tax mistakenly charged. An unjust enrichment defence is permissible in itself. Restricting it to payment traders and not repayment traders offends neutrality where similar goods are marketed, and offends equal treatment absent objective justification. Whether the trader suffered loss is irrelevant. The national court must remedy the discrimination, in principle by full repayment. Confirms that national derogatory zero rates and reduced rates sit inside the Community-law framework for repayment purposes, so taxpayers challenging misclassification can invoke neutrality and equal treatment even though the rate itself is purely domestic. Relevant to food, retail and any sector relying on legacy zero rates.

C-363/05 JP Morgan Fleming Claverhouse Investment Trust and The Association of Investment Trust Companies

Judgment · 28 June 2007 · United Kingdom

Management of closed-ended investment funds as special investment funds

Closed-ended funds are capable of being special investment funds. Legal form and mode of operation are irrelevant, and a fund choosing external management is objectively comparable to one obliged to use it. Member States may define which funds qualify, but not select some for exemption and exclude others in competition with them, notably UCITS funds. Any distortion suffices. It need not be substantial. The provision has direct effect and can be invoked against incompatible national law. Fund managers and closed-ended vehicles, including listed investment companies and comparable non-UCITS structures, can challenge national exemption rules drawn purely by reference to UCITS-type wrappers, and can rely on the exemption directly before national courts.

C-384/01 Commission v France

Judgment · 8 May 2003 · France

Selective reduced rate on the standing charge for gas and electricity

The action was dismissed. The Commission had merely voiced doubts and had adduced no evidence that the standing charge was not a supply of energy, or that a reduced rate on part only of the supply breached fiscal neutrality. Nothing in Article 12(3)(b) requires the reduced rate to cover all supplies of gas and electricity, provided there is no risk of distortion of competition. As the Commission made no finding of such a risk within three months, that risk was deemed absent and France could implement. Confirms that Member States may apply a reduced rate selectively to concrete and specific aspects of gas and electricity supplies, here the standing charge giving entitlement to a minimum quantity, subject to the no distortion condition. Relevant to energy suppliers and their advisers dealing with two part tariffs, and to anyone relying on the notification procedure.

C-481/98 Commission v France

Judgment · 3 May 2001 · France

Different reduced VAT rates for reimbursable and non-reimbursable medicines

The action was dismissed. Reimbursable and non-reimbursable medicines are not similar products in competition with each other. Inclusion on the reimbursement list rests on objective criteria consistent with Directive 89/105 and gives the product a decisive advantage for the consumer, so the VAT rate does not drive the purchasing decision. Distortion could arise only if a not insignificant quantity of reimbursable medicines were bought without prescription, which was not alleged. Relieving the social security system and reducing household health expenditure is a social reason benefiting the final consumer. Confirms that a Member State relying on a pre-1991 super-reduced rate may confine it to reimbursable medicines without breaching fiscal neutrality. Relevant to pharmaceutical suppliers, pharmacies and advisers in Member States operating reimbursement lists and split rates for medicines.

C-454/98 Schmeink & Cofreth and Strobel

Judgment · 19 September 2000 · Germany

Adjustment of VAT improperly shown on an invoice

Where the issuer has in sufficient time wholly eliminated the risk of any loss of tax revenue (invoice retrieved and destroyed before use, or the tax accounted for and deductions reversed), neutrality requires that the improperly invoiced VAT be adjustable, without any good faith condition. Where that risk has not been wholly eliminated, Member States may require good faith. Procedures are for national law, but adjustment must not depend on the tax authorities' discretion. Penalties for bogus invoicing remain permissible. Confines Genius Holding: good faith matters only where a revenue risk persists. Relevant to anyone correcting invoices in intra-group, financing or grant-related arrangements, and to those facing separate fraud penalties, which survive the adjustment.

C-381/97 Belgocodex

Judgment · 3 December 1998 · Belgium

Withdrawal of the option to tax property lettings

Those provisions do not prevent a Member State from abolishing the right of option. Member States have a wide discretion under Article 13B and C, unlimited in time and unconstrained by an earlier contrary decision, so a right of option once introduced may be revoked and the exemption restored. Fiscal neutrality does not make the choice irreversible, and the Article 28 case law barring reintroduction of abolished transitional exemptions does not transpose. Whether retroactive repeal of a law whose implementing decree was never adopted breached legitimate expectations or legal certainty is for the national court. Confirms that an option to tax immovable property lettings is a policy lever Member States may pull in either direction, so property investors and landlords cannot treat the availability of an option as a settled entitlement when modelling recovery on development and renovation costs. Relevant to advisers on real estate structures, and to anyone with deductions claimed under an option later repealed with retroactive effect or never brought into operative form.

C-361/96 Grandes Sources d'Eaux Minérales Françaises v Bundesamt für Finanzen

Judgment · 11 June 1998 · Germany

Refund claims supported by a duplicate invoice where the original is lost

Refund applications must in principle be accompanied by originals, since the Eighth Directive aims to stop re-use of documents for further claims. However, Article 3(a) does not preclude Member States from accepting a duplicate in exceptional circumstances. The transaction must be established, the loss must not be attributable to the claimant and there must be no risk of further refund applications. Where established businesses may use duplicates or photocopies in such circumstances, non-discrimination requires the same treatment for non-established claimants on the same conditions. Relevant to any business claiming VAT refunds in a Member State where it is not established, and to advisers handling cross-border refund files where original invoices have been lost in transit or destroyed.