VATcodexEU VAT case law · Court of Justice and General Court

Rules governing exercise of the right of deduction EU VAT case law

60 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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The 60 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.

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.

C-680/23 Modexel

Judgment · 5 December 2024 · Portugal

Carrying forward excess VAT after cessation and resumption of activity

Article 183 does not preclude such legislation. Cessation of economic activity ends taxable person status, so there is no "following period" to which the excess can be carried. On resumption the activity is new. Member States may therefore confine recovery to a refund claim within 12 months of cessation, provided the principles of equivalence and effectiveness are respected. The Court noted a 12 month period (and a fortiori four years) does not appear to make recovery impossible or excessively difficult. A business deregistering with a VAT credit has to claim the refund within the national time limit.

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-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-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-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-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-690/22 Shortcut

Order · 24 May 2023 · Portugal

Generic invoice wording such as 'application development services' and the right to deduct

Ruling by reasoned order, the Court held that those provisions preclude such a refusal. The particulars required by Article 226 exist to enable the authorities to check that the tax has been paid and, where appropriate, the existence of the right to deduct. They are not an end in themselves. Where the administration has the information it needs to establish that the substantive conditions are met, it cannot deny the deduction merely because the description on the invoice is expressed in general terms. The substance-over-form line applied to the wording of invoices, and a useful authority for service businesses whose output is hard to itemise.

C-289/22 A.T.S. 2003

Order · 9 January 2023 · Hungary

Deduction refused for fraud, regulatory breaches up the chain and the taxable person's duty of care

By reasoned order under Article 99. Cost reduction is legitimate because refusal requires a wholly artificial arrangement whose sole or essential aim is a tax advantage contrary to the Directive. A breach of national sector rules is not itself proof of fraud, but may be one indication in an overall assessment. The authority must characterise the fraud and prove participation or knowledge, though not identify every perpetrator. Taxable persons need not verify upstream compliance, unless indications of irregularity call for greater care.

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-188/21 Megatherm-Csillaghegy

Order · 3 June 2022 · Hungary

Forfeiture of input VAT deduction on revocation of a tax identification number

Ruling by reasoned order under Article 99, the Court held that those provisions and the principles of neutrality and proportionality preclude such automatic forfeiture where the substantive conditions for deduction are met and the taxable person has not acted fraudulently or improperly. The qualification is that refusal remains possible where the breach of formal obligations prevents conclusive proof that the substantive conditions are satisfied, or where fraud or abuse is established by the authorities. The national court must verify these matters. Confirms Siemens Gamesa and Promexor Trade for pre-revocation periods. Relevant to advisers handling Hungarian deregistration cases and any businesses whose VAT numbers have been cancelled and later reinstated, including historic claims.

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-154/20 Kemwater ProChemie

Judgment · 9 December 2021 · Czechia

Deduction where the true supplier is unidentified

Deduction must be refused, without proof of fraud or knowledge of fraud, where the true supplier has not been identified and the taxable person fails to show that the supplier was a taxable person. The qualification is that refusal is only permissible if, on the factual circumstances and the evidence produced, the information needed to verify that status is lacking. Taxable person status is a material condition and may follow from the facts, for example where the volume and price of supplies show the small business exemption cannot apply. Naming the supplier on the invoice is formal.

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-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-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-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-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-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-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-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-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-374/16 Geissel

Judgment · 15 November 2017 · Germany

Meaning of "address" on an invoice for input tax deduction

Articles 168(a) and 178(a), read with Article 226(5), preclude national legislation conditioning deduction on the invoice stating the address where the issuer carries out its economic activity. "Address" bears its ordinary broad meaning and covers any address, including a letterbox address, at which the issuer can be contacted. Identification of the issuer, principally via name and VAT identification number, is the purpose. The good faith questions were not answered. Member States cannot add invoice content requirements beyond Article 226, and cannot refuse deduction merely because the supplier's stated address is a postal or registered office address with no activity there. Relevant to any business trading with suppliers operating remotely, online or without business premises, and to German taxpayers whose deductions were denied on this basis.

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-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-516/14 Barlis 06 - Investimentos Imobiliários e Turísticos

Judgment · 15 September 2016 · Portugal

Invoice descriptions and refusal of deduction

"Legal services rendered from [a date] until the present date" does not a priori meet Article 226(6). Wording without any start date fails both points 6 and 7, since for supplies giving rise to successive statements of account the period must appear. Verification is for the national court. Deduction cannot be refused solely on those formal defects where the authorities have all the information to check the substantive conditions. They must consider additional information supplied, and may still impose proportionate penalties. Relevant to anyone facing deduction denials based on thin invoice narratives, and to professional firms billing periodic fees.

C-518/14 Senatex

Judgment · 15 September 2016 · Germany

Retroactive effect of invoice correction

Those provisions preclude such legislation. The correction has retroactive effect and the deduction belongs to the year the original invoice was drawn up. Holding a compliant invoice is a formal, not substantive, condition, and the trader here already held invoices and had paid the input VAT. Member States may penalise formal breaches under Article 273, but by fines proportionate to the offence, not by postponing deduction and charging late payment interest regardless of the circumstances. Removes the interest exposure that flowed from ex nunc correction rules where the only defect is a missing mandatory invoice detail such as the supplier's VAT identification number.

C-120/15 Kovozber

Order · 21 October 2015 · Slovakia

Interest on a delayed VAT refund cannot wait for the tax inspection to end

Ruling by reasoned order under Article 99 of the Rules of Procedure, the Court held that Article 183 does preclude such legislation. Member States retain procedural autonomy over the arrangements for repayment, but those arrangements must not make the taxable person bear, even in part, the financial burden of the tax. Where repayment is not made within a reasonable period, the losses caused by the unavailability of the sums must be compensated by default interest, and a rule tying the start of interest to the end of an inspection defeats that requirement. Part of the settled line running through Enel Maritsa Iztok, Delphi Hungary and Rafinăria Steaua Română.

C-272/13 Equoland

Judgment · 17 July 2014 · Italy

Virtual placement in a VAT warehouse and double collection of import VAT

A physical placement requirement is compatible with the Directive. It is a formal condition but an effective and proportionate means of ensuring correct collection and preventing evasion. However, where the tax has already been paid under the reverse charge with no evasion or loss to the exchequer, requiring payment again, without a corresponding deduction, breaches neutrality. A fixed percentage increase incapable of gradation may exceed what is necessary. Default interest may suffice. Proportionality is for the national court. Relevant to importers, freight forwarders and warehousekeepers using VAT warehousing regimes, particularly in Italy.

C-438/13 BCR Leasing IFN

Judgment · 17 July 2014 · Romania

Unrecovered leased goods after termination as a deemed supply

The situation is neither a supply of goods for consideration nor one treated as such. Article 16 does not apply. The goods are not in the taxable person's or staff's private use, the lessee's retention results from its own wrongful conduct rather than a disposal free of charge, and hiring out goods is the very essence of the lessor's business. Article 18 does not apply either, as input VAT was fully deductible, the goods were not applied to a non-taxable activity and the lessor did not cease activity. The Court added that the authorities' right to require adjustment under Articles 184 to 186 is unaffected. Leasing and hire purchase companies facing defaulting lessees cannot be charged output VAT on a deemed self-supply merely because the asset is not recovered.

C-18/13 Maks Pen

Judgment · 13 February 2014 · Bulgaria

Deduction refused where the invoiced supplier did not make the supply

Deduction may be refused on those facts only subject to a twofold condition: the facts amount to fraudulent conduct, and the authorities establish by objective evidence that the taxable person knew or should have known that the transaction was connected with that fraud. The absence of resources, missing cost entries and false signatures are not in themselves enough. Courts that may raise national law points of their own motion must do the same for the EU fraud rule. Article 273 permits accounting requirements based on international standards, but a revenue recognition test for the time of supply is precluded. Useful where an assessment rests solely on the invoiced supplier's lack of substance or defective paperwork. Relevant to businesses buying subcontracted services and to advisers handling deduction denials in Bulgaria and other Member States using substance-based challenges.

C-323/12 E.ON Global Commodities

Judgment · 6 February 2014 · Romania

Effect of a retained tax representative on Eighth Directive refunds

A supplier of electricity to taxable dealers in another Member State may rely on the Eighth Directive there for a refund of input VAT, and that right is not excluded merely by having designated a tax representative identified for VAT purposes in that State. A representative is not an establishment, and identification alone does not show that taxable supplies were actually made there. The national court must still verify that no supplies with a place of supply in Romania were in fact made. The provisions have direct effect. Relevant to energy traders and any business that retained a legacy tax representative or a VAT number in a Member State after reverse charge rules removed the need for one.

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-431/12 Rafinăria Steaua Română

Judgment · 24 October 2013 · Romania

Default interest where set-off decisions blocking a VAT refund are annulled

Article 183 precludes such national law. Where excess VAT is not refunded within a reasonable period, fiscal neutrality requires compensation by default interest, calculated from the date the refund should normally have been made (here, expiry of the 45 day period). From the taxable person's perspective the reason for the delay is irrelevant. There is no material difference between administrative delay in handling a claim and delay caused by measures unlawfully blocking the refund which are later annulled. Confirms and extends Enel Maritsa Iztok 3.

C-78/12 Evita-K

Judgment · 18 July 2013 · Bulgaria

Proof of a supply of goods and formal ownership of livestock

The concept of a supply of goods, and the evidence that one actually took place, are independent of how ownership was acquired. The national court must assess all facts overall, and may look at prior and subsequent transactions and accompanying certificates. Authorities cannot require documents from the issuer showing ear tags. Article 242 does not import IAS 41. Article 226(6) does not require ear tags on invoices. Article 185(1) permits adjustment only where a right to deduct existed initially under Article 168(a). Useful to advisers dealing with livestock, agri-commodity and other fungible goods trades where tax authorities equate defective sector paperwork with a non-existent supply.

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-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-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-525/11 Mednis

Judgment · 18 October 2012 · Latvia

Automatic deferral of part of a VAT refund credit

Article 183 does not authorise such a deferral. Although postponing a refund beyond the period in which the credit arose is not inherently incompatible with Article 183, a wait of a year or more breaches fiscal neutrality, and a generalised, preventive application of a percentage threshold, with no opportunity for the taxable person to show there is no evasion risk, is disproportionate, particularly where other anti-fraud powers already exist. No limitation of temporal effects. Relevant to any business in a structural repayment position, notably exporters and zero-rated suppliers, facing formula-based or automatic withholding of refunds.

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-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.

C-218/10 ADV Allround

Judgment · 26 January 2012 · Germany

Supply of staff and self-employed contractors

"Supply of staff" includes the supply of self-employed persons not employed by the supplier. A single place of supply avoids both double taxation and non-taxation and spares the customer any enquiry into the legal relationship between supplier and the staff supplied. The deduction provisions do not require Member States to change procedural rules to secure consistent treatment across different authorities. They do require measures ensuring accurate collection of VAT and respect for fiscal neutrality, with systematic divergence potentially amounting to a breach. Confirms that staffing and agency businesses placing self-employed contractors, drivers, IT specialists, medical locums and similar, fall within the staff supply rule and so within customer-location taxation for cross-border B2B placements, without regard to employment status.

C-274/10 Commission v Hungary

Judgment · 28 July 2011 · Hungary

Refund of excess input VAT conditional on payment of the supplier

Hungary infringed the Directive. Chargeability and the creation and exercise of the right of deduction are in principle independent of whether the consideration has been paid. Payment only matters in the specific cases the Directive expressly provides for, such as Article 66(b), which Hungary had not used. Payment of the supplier therefore cannot be a refund "condition" under Article 183. Carrying an excess forward over several periods is not inherently unlawful, but here it risked no refund within a reasonable period. Confirms that Member States' discretion over refund procedures under Article 183 is procedural only and cannot introduce substantive conditions bearing on the deduction itself.

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-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-385/09 Nidera Handelscompagnie

Judgment · 21 October 2010 · Lithuania

Deduction denied for want of prior VAT registration

Identification under Article 214, like the notification duty in Article 213, is a formal requirement for verification purposes, not a condition constituting the right of deduction. The only formal condition under Article 178(a) is holding a compliant invoice. Where the substantive conditions are met, deduction cannot be refused merely because the person was not identified before using the goods in his taxed activity, provided he identifies himself within a reasonable period. Member States may still impose reasonable time limits and administrative penalties. Relevant to exporters and traders established in one Member State buying locally for zero-rated export or intra-Community supply, who are not obliged to register locally but must do so to recover input VAT.

C-392/09 Uszodaépítő

Judgment · 30 September 2010 · Hungary

Retroactive invoicing formalities and the right to deduct under reverse charge

They do preclude it, where the tax authority already holds all the information needed to establish that the taxable person is liable to the VAT as recipient and to verify the deductible amount. Under a reverse charge only the formalities permitted by Article 178(f) apply, so no invoice meeting the Directive's formal invoicing conditions is required, and national formalities must not go beyond what is strictly necessary to check the reverse charge. Electing into the new law does not itself affect the right to deduct. Confirms, for construction and other reverse charge sectors, that under Article 178(f) the recipient's deduction does not depend on a formally compliant invoice, and that where substantive conditions are met and the authority has the information it needs, refusal for missing formalities is unlawful.

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.

C-472/08 Alstom Power Hydro

Judgment · 21 January 2010 · Latvia

Three-year time limit for claiming a VAT refund

Article 18(4) does not preclude such a rule. Silence in the provision does not mean the right to repayment can be exercised without temporal limit. Unlimited claims would offend legal certainty. In the absence of Union rules, national procedural conditions apply subject to equivalence and effectiveness, and a three-year period is reasonable: it normally allows a reasonably diligent taxable person to assert its rights, a fortiori since a two-year limit has already been accepted for deduction. Confirms that Member States may cap refund claims for excess input VAT by a domestic limitation period, and that three years is comfortably within tolerance.

Related topics

Right of deduction · Origin and scope of right of deduction · Fiscal neutrality · Refund of VAT · Invoicing · Proof · Obligations of taxable persons · Tax evasion and abuse · Refund of excess VAT · Refusal of the right to deduct