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Tax evasion and abuse EU VAT case law

31 cases of the Court of Justice and the General Court of the European Union on this point of VAT law, from 2008 to 2025.

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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-278/24 Genzyński

Judgment · 30 April 2025 · Poland

Joint and several liability of company directors for VAT arrears

They do not preclude such a system, provided liability is confined to arrears arising during the director's term and to amounts unrecovered from the company, and provided the director can genuinely rebut the presumption by showing he exercised all due diligence in managing the company's affairs. The escape route must not be merely theoretical. But the mere fact that the exchequer was the company's sole creditor when permanent insolvency arose is not by itself a defence. Confirms Member States may attach personal VAT liability to directors on a rebuttable presumption of knowledge and influence, without proof of fraud or bad faith, following Herdijk.

C-277/24 Adjak

Judgment · 27 February 2025 · Poland

Directors' joint and several liability and the rights of the defence

Exclusion of the potentially liable director from the company's assessment proceedings is permissible. At that stage liability is only a possibility, and participation could compromise confidentiality and delay collection. But the exclusion is lawful only if, in the subsequent joint and several liability proceedings, the director can effectively challenge the findings of fact and legal classifications made in the assessment proceedings and can access the tax authority's file, subject to the rights of others. Member States may keep assessment and derivative liability in separate tracks, but the second track must be a genuine opportunity to reopen the quantum and characterisation of the debt, not merely to test the statutory conditions of liability.

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-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-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-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-596/20 DuoDecad

Judgment · 16 June 2022 · Hungary

Identifying the recipient of technical support services and the limits of the Court's jurisdiction

The Court declined jurisdiction. WebMindLicenses (C-419/14) already provides the interpretative criteria for deciding whether a licence agreement is a wholly artificial arrangement. The referring court was in substance asking the Court to assess the facts and apply the law itself, which Article 267 TFEU does not permit. Double taxation of the same transaction in two Member States permits, and may oblige, a reference on interpretation, but not on the facts. The national court must also consider whether the support contract itself is abusive. A caution for advisers relying on divergent treatment between Member States as a route to Luxembourg.

C-213/19 Commission v United Kingdom (Action to counter undervaluation fraud)

Judgment · 8 March 2022 · United Kingdom

Undervalued imports, customs value, import VAT and own resources liability

For customs procedure 40 imports, an undeclared true customs value necessarily distorts the import VAT taxable amount, so Articles 2(1)(d) and 85 to 87 were breached. For procedure 42, there is no link between customs value and the taxable amount, which rests on the purchase price invoiced in the Member State of destination. Liability for uncollected VAT lies there, not with the Member State of importation. The claim for quantified VAT own resources losses failed. Undervaluation does not necessarily reduce net VAT receipts, since importers and traders recover input tax. Confirms that customs valuation failings automatically infect the import VAT base under Article 85, so a revaluation carries a parallel import VAT assessment.

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-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-583/20 EuroChem Agro Hungary

Order · 21 October 2021 · Hungary

A minimum fine of 30% of 40% of the value of the goods for a transport declaration error

Ruling by order, the Court held that Article 273 and the principle of proportionality do preclude such legislation. Member States may impose obligations and penalties to ensure the correct collection of VAT and prevent evasion, but the sanction must not go beyond what is necessary. A fine with an absolute floor calculated on the value of the goods, without regard to the nature and gravity of the breach or to whether any revenue was lost, exceeds those limits. The third question referred was declared manifestly inadmissible for want of sufficient explanation. One of the clearest applications of proportionality to the reporting obligations that surround electronic freight monitoring.

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-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-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-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-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-189/18 Glencore Agriculture Hungary

Judgment · 16 October 2019

Findings made against suppliers, and the conditions for using them against the customer

The Court held that such legislation or practice is not precluded, subject to three conditions. First, it must not relieve the tax authority of the obligation to disclose to the taxable person the evidence, including evidence originating in the related procedures, on which it intends to base its decision, and the taxable person must not be deprived of the right effectively to challenge those findings of fact and legal classifications in the procedure brought against him. Second, the taxable person must be able to have access, during that procedure, to all the evidence obtained in the related or other procedures on which the authority intends to rely or which may assist the exercise of the rights of the defence, unless objectives of public interest justify restricting access. Third, the court hearing the action against the decision must be able to review the legality of the way that evidence was obtained and used, and the findings in the decisions taken against the suppliers that are decisive for the outcome. The judgment accepts the administrative economy of reusing findings made against suppliers, but attaches to it a set of conditions that operate at three separate stages: disclosure by the authority, access by the taxable person, and review by the court.

C-329/18 Altic

Judgment · 3 October 2019 · Latvia

Food traceability duties and the right to deduct

Deduction cannot be refused on the sole ground of breach of the food traceability identification duty. That duty serves food safety, not fraud detection, and identification by name and address normally suffices. Such a breach may nonetheless be one of several consistent indications of knowledge of fraud, particularly where circumstances should have raised serious doubts about the supplier's existence or identity. Failure to verify suppliers' food business registration is irrelevant. That is a check the purchaser cannot be required to make. Relevant to agri-food, feed and commodity traders and their advisers facing denial of deduction based on sectoral regulatory failings.

C-531/17 Vetsch Int. Transporte

Judgment · 14 February 2019 · Austria

Import exemption under customs procedure 42 and downstream fraud

The exemption may not be refused. The import followed by the intra-Community transfer, and the later fraudulent intra-Community supply, are independent transactions. Where the fraud does not concern the transfer on which the import exemption depends, and there is no evidence that the importer knew or ought to have known of the recipient's fraud in the subsequent transaction, the exemption stands. It is for the Member State of the fraudulent supply (Bulgaria) to refuse exemption there. Useful for freight forwarders, customs agents and indirect representatives exposed to import VAT under procedure 42 arrangements.

C-108/17 Enteco Baltic

Judgment · 20 June 2018 · Lithuania

Import VAT exemption where the import is followed by an intra-Community supply

Naming a different purchaser is a formal breach only, so the exemption stands where the substantive Article 138(1) conditions are met and the change was notified, unless the importer knowingly participated in evasion or the breach prevents proof. E-AD drafts and CMR notes presented at importation can prove intended dispatch. E-ROR confirmations and reports of receipt can prove actual dispatch, including to a warehouse rather than the buyer. Good faith protects the importer unless he knew or should have known of the purchaser's fraud. Electronic communication alone proves nothing. Authorities need not gather information themselves. Relevant to fuel and commodity traders using customs procedure 42, and to their customs and excise advisers.

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-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-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-419/14 WebMindLicenses

Judgment · 17 December 2015 · Hungary

Offshore licensing of website know-how and abuse of rights

Common ownership, the licensor's founder exercising influence over the know-how and its exploitation, use of subcontractors and the licensor's own motives are not decisive. Abuse requires proof of a wholly artificial arrangement, assessed by whether the licensee genuinely had premises, human and technical resources and acted in its own name, on its own behalf, at its own risk. VAT paid abroad does not bar adjustment. A cooperation request is required where useful or essential. Covert criminal evidence may be used only if lawfully obtained and used, proportionate, and disclosed with a hearing. Otherwise it must be disregarded. Confirms that rate arbitrage through an offshore licensee is not abusive per se. Relevant to digital, gaming and adult content operators using Madeira or similar structures, and to intellectual property licensing generally.

C-589/12 GMAC UK

Judgment · 3 September 2014 · United Kingdom

Direct effect of bad debt relief where national law exempts the resale

Article 11C(1), first subparagraph, is sufficiently precise and unconditional to have direct effect, despite the discretion left to Member States over conditions. A Member State cannot refuse it on the ground that the combined result with national law is one neither system intended. The shortfall stems solely from the national exemption of the auction sale, and a State may not plead its own defective implementation. Whether that national treatment conforms is irrelevant. Abuse remains for the national court, but structuring to limit tax liability is legitimate. Confirms that taxable persons may rely on directly effective Directive provisions transaction by transaction, without the tax authority netting off advantages arising from national rules applied to a linked transaction.

C-107/13 FIRIN

Judgment · 13 March 2014 · Bulgaria

Adjustment of VAT deducted on a prepayment where the supply never happens

Deduction taken on a prepayment invoice must be adjusted where the supply is ultimately not made. That is a change in the factors determining the deduction under Article 185(1). It is irrelevant that the supplier remains liable under Article 203 and has not refunded the advance. The two traders need not be treated alike. Article 65 does not apply at all where the chargeable event was uncertain at the time of payment, for instance in fraud. Whether the taxpayer knew or should have known is for the national court. Relevant wherever advance payments are invoiced and deducted, notably commodity trading and construction.

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-103/09 Weald Leasing

Judgment · 22 December 2010 · United Kingdom

Abusive practice and intra-group leasing to spread non-deductible VAT

Choosing leasing over purchase, and thereby spreading the tax cost, is not in itself an advantage contrary to the Directive's purpose, provided output and input VAT are correctly accounted for. Two qualifications, for the national court. The contractual terms, especially rental levels, must be at arm's length and not economically unreal, and the interposed company must not operate to disapply the national provisions (here the open market value direction). Absence of leasing from the trader's normal operations is irrelevant. Redefinition must go no further than needed for correct charging and prevention of evasion. Confirms that partly exempt businesses, insurers, banks, charities, may fund equipment through a captive leasing company to spread irrecoverable VAT without that alone being abusive.

C-425/06 Part Service

Judgment · 21 February 2008 · Italy

Abuse where the tax advantage is the principal aim, not the only one

The Court held that there can be a finding of an abusive practice where the accrual of a tax advantage constitutes the principal aim of the transaction or transactions at issue. It is not necessary that the tax advantage be the only purpose pursued. Whether the arrangements before it amounted to abuse was left to the national court to determine in the light of that interpretation, taking account of the artificial nature of the operations and the links of a legal, economic or personal nature between the operators involved. The decisive refinement of Halifax.

Related topics

Right of deduction · Origin and scope of right of deduction · Proof · Obligations of taxable persons · Proportionality · Rules governing exercise of the right of deduction · Persons liable for payment of VAT · Right to an effective remedy and to a fair trial · Fiscal neutrality · Exemptions on importation and exportation