VATcodexEU VAT case law · Court of Justice and General Court

Restrictions on the right of deduction EU VAT case law

26 cases of the Court of Justice and the General Court of the European Union on this point of VAT law, from 2010 to 2026.

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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-515/24 Randstad España

Judgment · 12 March 2026 · Spain

Standstill clause and exclusions introduced on the date of accession

Article 176, second paragraph, does not preclude such national legislation. The standstill clause covers an exclusion entering into force on the accession date, provided its scope has not been widened. Here operators lost nothing, since no VAT deduction existed before. The Court added that excluding recreational and representation expenditure matches the Union legislature's own intention in the first paragraph, and that the exclusion was sufficiently precise rather than general. Deductibility for Spanish income tax purposes is irrelevant. Spanish blocks on deduction for sports and entertainment tickets and client, employee and third party hospitality survive, closing off a line of challenge based on the absence of a pre-accession VAT system.

C-475/23 Voestalpine Giesserei Linz

Judgment · 4 October 2024 · Romania

Deduction on equipment provided free of charge to a subcontractor

Free provision to the subcontractor does not of itself break the link. Deduction must be allowed where the cost forms a component of the taxable person's output transactions or general costs. The qualification is that if the making available goes beyond what is necessary for that purpose, the link is partly broken and deduction is limited to the objectively necessary part. Absence of separate accounts is a formal failing and cannot bar deduction where the authorities can verify the substantive conditions. Penalties may be imposed instead. Useful for manufacturers and toll processing structures where the principal supplies plant, tooling, cranes or premises to contractors at no charge, a common pattern in automotive, foundry and construction supply chains.

C-459/21 The Navigator Company and Navigator Pulp Figueira

Order · 9 December 2022 · Portugal

Blocked input tax compared with the deduction of the same costs for direct tax

Ruling by reasoned order, the Court held that the principle of equivalence does not preclude such legislation. Equivalence governs the procedural rules applicable to claims based on EU law as against comparable domestic claims. It does not require that the substantive deduction rules of VAT match the deduction rules of a national direct tax. The two taxes pursue different logics, and the comparison the companies proposed is not one that equivalence requires to be made. A neat containment of an argument that resurfaces periodically. Relevant to every Member State that still blocks input tax on cars, travel and entertaining.

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-837/19 Super Bock Bebidas

Order · 17 September 2020 · Portugal

Standstill exclusions on accommodation, meals, cars and fuel from the date of accession

Ruling by reasoned order, the Court held that those provisions do not preclude such legislation. The standstill in Article 176 allows a Member State to retain the exclusions from the right of deduction that its law provided for at the date of its accession, and the reference point for a State that joined later is the date of accession rather than 1 January 1979. That the expenditure is shown to have been used for taxed transactions does not displace the standstill. Confirms for later accession States the reading already applied to the founding Member States, and explains why blocked input tax on hotels, meals, cars and fuel persists across the Union in patterns that look arbitrary.

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-630/19 PAGE International

Order · 26 February 2020 · Portugal

A partial deduction on food costs is compatible with the standstill clause

The Court holds that they do not preclude such legislation. The second paragraph of Article 176 permits a Member State to retain the exclusions in force at the date of its accession, and a measure that narrows an existing exclusion by allowing a partial deduction moves in the direction the directive intends. It therefore falls within the standstill clause rather than outside it. The order confirms the ratchet built into Article 176.

C-225/18 Grupa Lotos

Judgment · 2 May 2019 · Poland

Standstill clause and the block on deducting VAT on accommodation and catering

Article 168(a) precludes the exclusion in so far as its scope was extended after accession, so a taxable person supplying tourism services cannot be denied deduction on accommodation and catering re-invoiced to other taxable persons. It does not preclude the exclusion, as it stood before accession and was maintained, for a taxable person not supplying tourism services who re-invoices such services. The standstill clause covers adequately defined categories, including strictly business expenditure. Confirms that pre-accession blocks on deduction survive even where the expenditure is wholly business related and is on-charged, provided the category is defined by reference to the nature of the services. Relevant to advisers in Poland and other later acceding States with sectoral deduction blocks, and to groups that recharge hotel and catering costs internally.

C-159/17 Dobre

Judgment · 7 March 2018 · Romania

Deduction after revocation of VAT identification

The Directive does not preclude such legislation where it is established that, because of the taxable person's infringements, the authorities could not obtain the information needed to verify that the substantive conditions for deduction were met, or that he acted fraudulently. Registration and notification duties remain formal requirements which do not of themselves defeat deduction. It is for the national court to determine whether the failures here prevented verification or amounted to evasion. Confirms that deregistration alone cannot extinguish deduction, but persistent non-filing can, because it may both block verification and constitute the simplest form of evasion.

C-132/16 Iberdrola Inmobiliaria Real Estate Investments

Judgment · 14 September 2017 · Bulgaria

Deduction on works to infrastructure owned by a third party

Deduction is available where there is a direct and immediate link with the taxable person's taxed output transactions, and the free benefit to the third party does not defeat it. Two qualifications: the works must not exceed what is necessary to enable the taxable person's taxable output transactions, and their cost must be included in the price of those transactions. If the works go further, the link is partially broken and deduction is limited to the objectively necessary part. Article 26 was not engaged. Confirms that a blanket national denial of deduction because a supply is free of charge, or because the improved asset belongs to someone else, cannot stand.

C-446/15 Signum Alfa Sped

Order · 15 December 2016 · Hungary

Doubts about who really performed the service do not by themselves defeat deduction

The Court holds that the directive precludes that practice, unless it is established on the basis of objective evidence, and without requiring of the taxable person checks which are not his responsibility, that he knew or should have known that the services were connected with VAT fraud. That is for the referring court to verify. The unreliability of the invoice issuer is not by itself a sufficient ground. A short order that matters because of how common the practice was.

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-277/14 PPUH Stehcemp

Judgment · 22 October 2015 · Poland

Deduction where the invoicing supplier is treated as non-existent

The Court held that the Directive precludes such national legislation. Existence or entitlement to issue invoices is not a condition of deduction. Taxable person status is a factual test and does not depend on registration, returns, tax payment, published accounts or a fuel licence. Goods actually delivered and used for taxed transactions constitute a supply, whatever the supplier's legal power to dispose of them. Deduction may be refused only if objective evidence shows the buyer knew or should have known of a connection with VAT fraud, without imposing checks that are not its responsibility. Confirms that national "non-existent trader" tests cannot be used as a shortcut to deny input VAT.

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-144/13 VDP Dental Laboratory and Others

Judgment · 26 February 2015 · Netherlands

Exemption of dental prostheses on intra-Community acquisition and importation

No cherry-picking: a taxable person cannot both use a national exemption that conflicts with the Directive and deduct input tax. The choice is exemption without deduction or taxation with deduction. Articles 140(a) and (b) and 143(a) do exempt intra-Community acquisitions and final importations of dental prostheses, but only where supplied by dentists or dental technicians and where the Member State of destination has not taken the Article 370 derogation. The position in the Member State of origin is irrelevant. The reference point is always the destination Member State's treatment. Relevant to dental supply chains and to advisers handling non-conforming national exemptions generally.

C-662/13 Surgicare

Judgment · 12 February 2015 · Portugal

Mandatory national anti-abuse procedure and VAT

Directive 2006/112 does not preclude the mandatory preliminary application of such a national administrative procedure where the authorities suspect an abusive practice. The Directive says nothing about how anti-abuse measures are to be implemented, so procedural autonomy applies, subject to equivalence and effectiveness. A procedure offering a three-year limitation period, a prior hearing, the right to submit evidence, senior authorisation and reasoned decisions is favourable to the taxpayer. Compatibility with those principles is for the national court. Confirms that domestic procedural safeguards surrounding abuse-of-rights findings apply to VAT as much as to direct taxes, and that taxpayers can invoke them against assessments.

C-131/13 Schoenimport Italmoda Mariano Previti and Others

Judgment · 18 December 2014 · Netherlands

Refusing deduction, exemption and refund for known evasion without a national rule

The Court held that it is for the national authorities and courts to refuse those rights even in the absence of any provision of national law providing for refusal, where it is established on objective factors that the taxable person knew or should have known that the transaction relied on formed part of evasion committed in a chain of supplies. It further held that the benefit may be refused notwithstanding that the evasion was carried out in a Member State other than the one in which the rights are claimed, and notwithstanding formal compliance with that State's legislation. The strongest statement of the anti-abuse principle in the VAT field.

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-33/13 Jagiełło

Order · 6 February 2014 · Poland

Deduction refused because the invoice issuer was a front company

The Court holds that it does preclude such a refusal, unless it is established on the basis of objective evidence, and without requiring of the taxable person checks which are not his responsibility, that he knew or should have known that the supply was connected with VAT fraud. Verifying that is for the referring court. The conduct of the invoice issuer is not, on its own, a sufficient ground for refusal. A reasoned order applying Mahageben and David and Bonik to front company arrangements.

C-124/12 AES-3C Maritza East 1

Judgment · 18 July 2013 · Bulgaria

Deduction on costs for hired-in staff and the standstill clause

Deduction cannot be refused merely because the workers are employed by another entity. The link required by Article 168(a) is purely economic, and the legal relationship with the persons working in the undertaking is irrelevant, provided the costs have a direct and immediate link with the taxable person's general costs. The standstill clause does not permit a new exclusion for supplies free of charge introduced on accession. The national court must read domestic law consistently or disapply it. Relevant to any business operating with hired-in, agency or seconded personnel, particularly industrial sites where transport, PPE and workwear are legally required.

C-563/11 Forvards V

Order · 28 February 2013 · Latvia

Deduction and an invoice from a company treated as fictitious

Ruling by reasoned order, the Court held that Article 17(2)(a) does preclude such a refusal, unless it is established on the basis of objective evidence, and without requiring of the recipient checks which are not its responsibility, that the recipient knew or should have known that the transaction was connected with VAT evasion. Whether that is so is for the referring court to verify. Squarely within the Mahagében and Dávid line.

C-504/10 Tanoarch

Judgment · 27 October 2011 · Slovakia

Deduction on assignment of a co-ownership share in an unpatented invention

A taxable person may in principle deduct input VAT on such an assignment, provided national law permits a co-inventor to assign his share. That question of national law is for the referring court. Lack of patent registration does not prevent the transaction being an economic activity, and the parties' intention to obtain a tax advantage is irrelevant to that classification. Whether the arrangement amounts to abuse of rights is a factual assessment for the national court on all the circumstances. Confirms that intangible rights transactions are judged objectively. Relevant to IP holding structures, research consortia and advisers handling deals in patent rights before grant.

C-438/09 Dankowski

Judgment · 22 December 2010 · Poland

Deduction where the supplier is not registered for VAT

Deduction is available: the supplier's failure to declare commencement of activity under Article 22(1) cannot defeat the recipient's right under Article 17(2), provided the invoices contain all the Article 22(3)(b) particulars, in particular enough to identify the issuer and the nature of the services. A tax identification number sufficed here. Article 17(6) does not save a general exclusion of deduction covering all transactions of an unregistered supplier. Such standstill derogations must be specific and are construed strictly. Confirms that registration is a formality on the supplier's side and cannot be turned into a substantive condition for the customer's deduction where the supply is real and used for taxed outputs.

C-395/09 Oasis East

Judgment · 30 September 2010 · Poland

Standstill clause and blanket exclusions for services from 'tax havens'

Article 17(6) does not permit a Member State to retain such legislation. The standstill clause presupposes exclusions that were lawful under the Second Directive and does not extend to general exclusions. Member States must sufficiently define the goods and services concerned. A blanket denial keyed to the supplier's place of establishment goes beyond what is authorised. Article 176 draws no different line for post-1979 accession States. The relevant date for Poland is 01-05-2004. Anti-evasion concerns do not widen the derogation. The Article 27 procedure exists for that. Taxpayers in Member States operating blanket, supplier-location-based deduction bans on reverse charge or imported services can challenge them and pursue refunds for periods from accession.

C-538/08 X Holding and Oracle Nederland

Judgment · 15 April 2010 · Netherlands

Standstill exclusions from deduction for staff benefits and business gifts

The categories are sufficiently defined: private means of transport, meals, drinks, accommodation, leisure activities offered to staff, and business gifts or other gratuities may all remain excluded. Member States may also restrict the exclusion, allowing deduction proportionate to business use, since that moves closer to the Directive's aim. An amendment generally narrowing an exclusion stays within the standstill even if its flat-rate mechanics could, exceptionally, produce a worse result in an individual year. Confirms that broadly worded staff-benefit and entertainment blocks survive the standstill provided they identify the nature or object of the supplies. Relevant to employers in Member States with pre-1979 blocking rules on staff catering, housing, company cars, corporate hospitality and gifts, and to advisers testing such rules.

Related topics

Right of deduction · Origin and scope of right of deduction · Standstill clause · Rules governing exercise of the right of deduction · Tax evasion and abuse · Fiscal neutrality · Accession to the European Union · Substantive requirements · Formal requirements · Supply of goods