Facts
- A company issued an invoice for the assignment of trade marks subject to VAT, which was declared and paid by another company.
- The tax authority later questioned the right to deduct the VAT on the basis that the assignment of trade marks was invalid under national civil law.
- The decision was appealed and annulled by a regional court, but the director of the tax authority brought an appeal against that judgment before the Supreme Administrative Court, which has doubts as to whether national law can automatically lead to the exclusion of the right to deduct VAT.
- The court notes that derogations from the right to deduct VAT are allowed only in cases expressly provided for by EU law and its general principles. Member States must exercise their power to ensure correct collection of VAT and prevent evasion in accordance with these principles.
Question
- Does national law that denies a taxable person the right to deduct VAT on an acquisition of an asset made under false pretences, regardless of whether it resulted in a tax advantage and whether it was the main objective of the contract, violate EU Directive 2006/112 and its principles of neutrality and proportionality (specifically, Articles 167, 168(a), 178(a), and 273)?
Decision
- National legislation cannot deprive a taxable person of the right to deduct input value added tax
- solely because a taxable economic transaction is regarded as fictitious and invalid under national civil law
- without establishing that the criteria for classifying the transaction as fictitious under EU law are met or
- that the transaction is the result of value added tax evasion or abuse of rights.
- This is in accordance with Article 167, Article 168(a), Article 178(a) and Article 273 of Council Directive 2006/112/EC, as amended by Council Directive 2010/45/EU, and the principles of fiscal neutrality and proportionality.
See also
