- The Bulgarian company SEM Remont hired the Russian company Gidrostroy for dredging work, but Gidrostroy issued invoices without VAT because it was not registered for VAT in Bulgaria at the time. Subsequent tax audits revealed Gidrostroy should have registered for VAT earlier, making it liable for VAT from December 2019 until its actual registration in November 2020.
- The Bulgarian tax authority required Gidrostroy to pay VAT for the period before its registration and provide a protocol. Gidrostroy complied and paid the VAT using funds from a loan provided by SEM Remont. SEM Remont then attempted to deduct this VAT in its December 2021 tax return, but the tax authority denied the deduction, stating the protocol was not a valid document for deduction purposes.
- The Court of Justice of the European Union (CJEU) ruled that under EU VAT law, a member state can deny a service recipient the right to deduct VAT if the service provider failed to register for VAT and issued invoices without VAT. Additionally, member states can prohibit the correction of such invoices if the VAT was not initially included and was only documented in a protocol during a tax audit.
Source BTW jurisprudentie
See also
- Join the Linkedin Group on ECJ VAT Cases, click HERE
- VATupdate.com – Your FREE source of information on ECJ VAT Cases
