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Refusal of the right to deduct EU VAT case law

14 cases of the Court of Justice and the General Court of the European Union on this point of VAT law, from 2012 to 2026.

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The 14 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-521/24 Aptiv Services Hungary

Judgment · 12 March 2026 · Hungary

Late receipt of invoices and the period for deducting acquisition VAT

The Court held that those provisions preclude such national rules and practice. Where the substantive conditions are met and the invoices, a formal condition, arrived only later, the two cumulative conditions for exercise are satisfied in the period of receipt, and confining the taxable person to a self-correction that has already expired makes the right practically impossible or excessively difficult. The qualification is that the taxable person must have acted in good faith, with no fraud established, and within the applicable limitation period. Relevant to any business making intra-Community acquisitions where supplier invoices arrive years late, and to groups with decentralised invoice capture.

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-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-596/21 Finanzamt M (Scope of the right to deduct VAT)

Judgment · 24 November 2022 · Germany

Refusal of deduction in full where the buyer ought to have known of upstream fraud

Deduction may be refused to the second purchaser who knew or ought to have known of the original seller's VAT fraud, and the first purchaser's own knowledge of that fraud does not prevent this. Refusal is not limited to the amount of the fraud or the tax loss. The right to deduct must be refused in its entirety, because absence of such knowledge, after checks reasonably required of any operator, is an implied material condition of deduction. No risk of revenue loss need be shown. Confirms that the knowledge test operates as an all or nothing material condition, not a proportionate sanction, and is separate from penalties under Article 273. Relevant to anyone dealing in high value movable goods, notably motor vehicles.

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-108/20 Finanzamt Wilmersdorf

Order · 14 April 2021 · Germany

Deduction may be refused for known upstream fraud even without active participation

The Court holds that the directive does not preclude that practice. A taxable person who knew or should have known that by his purchase he was taking part in a transaction connected with VAT fraud must be regarded as a participant in that fraud, irrespective of whether he profits from it or plays any active role. Refusing the deduction in those circumstances is compatible with the directive. A reasoned order that closes off a line of argument sometimes run in defence.

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-273/18 Kuršu zeme

Judgment · 10 July 2019 · Latvia

Refusing deduction in a supply chain requires proof of an undue tax advantage

Those two facts, a chain of successive sales and collection from a warehouse of someone other than the invoiced supplier, are not in themselves sufficient to establish an abusive practice. The authority must identify the undue tax advantage obtained by the taxable person or the other participants. Where no such evidence is adduced, deduction cannot be refused. Separately, the national court must still determine to which supply in the chain the single intra-Community transport is ascribed, which governs the extent of the deduction or refund right. Useful for anyone facing a Baltic or wider EU audit where deduction is denied simply because intermediaries appear economically pointless.

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-69/17 Siemens Gamesa Renewable Energy România

Judgment · 12 September 2018 · Romania

Deduction of VAT on acquisitions made while the taxpayer was declared inactive

The Court held that the Directive precludes such a refusal where it is based on the sole ground that the acquisitions fell within the period of de-activation. Registration and notification duties under Articles 213 and 214 are formal requirements only. Deduction must be allowed provided the substantive conditions of Article 168 are met and the right is not invoked fraudulently or abusively. The date of the return or invoice is not decisive. The national court must verify that the authorities had the data needed to establish the substantive conditions. Businesses whose VAT numbers have been cancelled for non-filing, a common Romanian practice and mirrored elsewhere, can recover input VAT incurred during the inactive period once reactivated, provided the substantive conditions are shown and there is no fraud or abuse.

C-101/16 Paper Consult

Judgment · 19 October 2017 · Romania

Deduction refused because the supplier was declared an inactive taxpayer

The Directive precludes such rules where the refusal is systematic and final and leaves the customer no opportunity to show that there was no evasion or loss of tax revenue. Requiring a trader to make the straightforward check of the published list is a legitimate and proportionate anti-fraud measure. Failure to file returns is indicative of evasion but does not prove it. No limitation of temporal effects. The Romanian authorities could not claim good faith.

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-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-80/11 Mahagében and Dávid

Judgment · 21 June 2012 · Hungary

Refusal of deduction for the supplier's misconduct and the buyer's duty of enquiry

The Directive precludes both national practices. Where the substantive and formal conditions for deduction are met, refusal requires the authority to establish, on objective evidence, that the taxable person knew or ought to have known that the transaction was connected with fraud by the invoice issuer or an earlier trader in the chain. No strict liability. General verification duties cannot be imposed where the trader holds no material giving grounds to suspect irregularities. Where there are such indications, enquiries may reasonably be required. The authority, not the taxpayer, bears the burden of proving knowledge or means of knowledge, and cannot shift its investigative function onto customers.

Related topics

Origin and scope of right of deduction · Right of deduction · Rules governing exercise of the right of deduction · Obligations of taxable persons · Intra-Community supply · Proof · Fiscal neutrality · Principles of neutrality, proportionality and effectiveness · Direct effect · Primacy of EU law