Comments on ECJ C-227/21: No denial of the right of deduction if vendor has difficulties in paying output tax

EU law precludes national practice under which a purchaser is denied the right of deduction if the purchaser knew or should have known of the vendor’s difficulties in paying output tax. Court of Justice

The question in the case at hand is whether knowledge of the supplier’s reorganisation proceedings and possible insolvency suffices for denying the purchaser the right to deduct the input VAT on the grounds that the purchaser knew or ought to have known that the supplier would not pay VAT on the relevant supply. The question at hand concerns the definitions of good faith and bad faith of the purchaser in the context of buying the immovable property from a person in economic difficulties and if the right to deduct could be prohibited on that ground.