Case: Subcontractors – denial of deduction for purchase VAT and tax deduction – unusual circumstances

The case concerned whether the plaintiff met the requirements for deduction for purchase VAT and tax deduction in 2016 for three invoices issued by a claimed subcontractor of labor services, cf. the Danish VAT Act section 37, paragraph 1, and the Danish Tax Code section 6, paragraph 1, letter a.

The court found that the circumstances in the case were so unusual that the plaintiff was subject to a heightened burden of proof. The court found that the three invoices submitted did not meet the requirements of the VAT Regulations. The court noted that the plaintiff had not complied with the Danish Tax Agency’s requests to further document the claimed deliveries, and that it was therefore not possible to verify and control the invoices. The court took as its basis that the Danish Tax Agency, during a control of the claimed subcontractor, had found that the subcontractor had no employees, that the plaintiff’s payments to the subcontractor had been immediately or shortly after deposit transferred to a currency exchange bureau, and that the police, in connection with an investigation of the subcontractor, had found that the subcontractor had not provided labor and had been used to issue invoices and transfer the money back to payers after deduction of a commission.

Based on this, the court found that the plaintiff had not proven that the subcontractor had performed the work that the invoices, according to the plaintiff, covered.

The court therefore upheld the Danish Tax Agency’s motion for acquittal.

Source: info.skat.dk

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