- In 2014, the Court of Justice ruled that tax authorities must refuse input tax deduction if an entrepreneur knew they were involved in VAT fraud.
- However, there could still be an argument for not imposing an offense fine. A recent case before the Supreme Court involved a Dutch BV that sold computer products to buyers outside the Netherlands.
- The BV used agents in other countries and declared the deliveries as intra-Community supplies with a zero rate VAT.
- The tax authorities later discovered that the BV had wrongly claimed input tax deduction on certain purchases related to these deliveries.
- The tax authorities claimed that the BV was aware of VAT fraud in another Member State involving missing traders who did not fulfill their VAT obligations.
- The Amsterdam Court of Appeal agreed with the tax authorities, but reduced the additional tax assessments and offense fine.
- However, the Supreme Court overturned this decision because the BV’s position was still arguable at the time of the deliveries, despite the 2014 ruling.
- The court clarified that tax authorities must refuse input tax deduction if there is established VAT fraud and the entrepreneur knew or should have known about it, even if not required by national law.
Source Taxence
