Comments on ECJ C-341/22: No minimum threshold of output transactions subject to VAT as established by the Italian legislation

The Italian tax authorities, with the support of the Commission and AG Collins, argued that a non-operational taxable person cannot claim the protection of legitimate expectations to deduct input VAT if the goods and services acquired were not used for VAT-liable transactions, as required by Article 168 of the VAT Directive.
However, the CJEU rejected this argument, ruling that the Italian concept of an operational taxable person is overruled.
The CJEU stated that denying the right to deduct input VAT based on a revenue threshold unrelated to fraud or abuse is not acceptable.
Indeed, it is clear from the case law of the CJEU that the existence of a right to deduction cannot be made conditional on the size of the turnover, namely by making it subject to a criterion relating, in particular, to the result of the economic activity (CJEU, Marle Participations SARL v Ministre de l’Économie et des Finances, 5 July 2018, Case C-320/17, paragraph 44 and Volkswagen Financial Services judgment, 18 October 2018, C-153/17, paragraph 46).