Formal requirements EU VAT case law

C-358/20 Promexor Trade

Judgment · 18 November 2021

Deregistration for VAT, continued trading, and the right to deduct that follows

The Court held that those provisions and principles do not preclude such national legislation, where the identification has been revoked because no taxable transactions were indicated in the returns filed for six consecutive months and the taxable person continues its activities notwithstanding the revocation, provided that the taxable person is able to re-register for VAT purposes and to deduct the input VAT paid. The Court added that the fact that the director of the taxable person is a partner in another company which is the subject of insolvency proceedings cannot, in itself, be relied on to refuse systematically the re-registration of that taxable person for VAT purposes. Identification is a formal requirement and not a substantive condition of the right to deduct, and the judgment keeps that distinction workable by making the compatibility of the national regime conditional on a real route back to registration.

C-332/15 Astone

Judgment · 28 July 2016 · Italy

Deduction refused where formal obligations are fraudulently ignored

The Directive precludes neither of the two national rules. A limitation period is compatible provided the principles of equivalence and effectiveness are respected. A two year period does not in itself make deduction impossible or excessively difficult. Formal breaches normally cannot defeat deduction where the substantive conditions are met, but wholesale non-compliance (no return, no accounts, no registration, no payment) may itself constitute the simplest form of evasion, and deduction may then be refused. Whether fraud is established is for the national court, on objective evidence. Confirms that the Ecotrade line protecting substance over form has a limit. Relevant to advisers handling Italian audits and criminal thresholds, and generally to disputes where late or unrecorded purchase invoices are produced retrospectively.

C-678/13 Commission v Poland

Judgment · 4 June 2015 · Poland

Failure of a Member State to fulfil obligations · VAT · Directive 2006/112/EC · Annex III · Reduced rate of VAT applicable to medical equipment, aids and other appliances and pharmaceutical products

C-590/13 Idexx Laboratories Italia

Judgment · 11 December 2014 · Italy

Formal versus substantive requirements for deduction under the reverse charge

Articles 18(1)(d) and 22 lay down formal requirements only: accounting, invoicing and return obligations. Non-compliance cannot cause loss of the right to deduct in circumstances such as these. The substantive requirements for intra-Community acquisitions flow from Article 17(2)(d). Acquisition by a taxable person liable for the VAT, goods used for taxable transactions. The position could differ if the formal breaches prevented conclusive proof that those substantive requirements were met. Here the authority had all the necessary information. Confirms and clarifies Ecotrade for businesses assessed on reverse charge acquisitions where registers or self-invoices were incomplete or missing entirely.

C-368/09 Pannon Gép Centrum

Judgment · 15 July 2010 · Hungary

Corrected invoices and the right to deduct

Those provisions preclude such legislation or practice. Article 226 lists exhaustively the details required, and Member States cannot make deduction conditional on invoice content requirements not laid down by the Directive. Article 273 does not allow additional invoicing obligations. Nothing prohibits correcting an incorrect invoice, and no rule requires corrected invoices and cancelling credit notes to fall in the same series. The qualification is that the material conditions for deduction must be met, and the corrected invoice, containing all Article 226 details, must reach the authority before it decides. Useful for anyone facing deduction refusals founded on invoice formalities. Relevant to construction and subcontracting chains, where completion dates routinely diverge between tiers, and to advisers handling audit correspondence.