- CJEU ruling discussed VAT deduction rights related to a transaction between Bulgarian company SEM Remont and Russian company Gidrostroy Russia
- The transaction involved dredging works in Varna port during August 2020
- Gidrostroy Russia was not VAT registered in Bulgaria when the invoices were issued and did not charge VAT
- Post-audit in December 2020, it was found Gidrostroy Russia exceeded the VAT registration threshold in December 2019
- Bulgarian tax authorities demanded VAT payment for December 2019 to December 2020 from Gidrostroy Russia
- Gidrostroy Russia issued a memorandum for the VAT amount under the reverse charge mechanism
- The memorandum had errors including incorrect listing of parties and was submitted to the tax authority instead of the counterparty
- Bulgarian tax authority refused VAT deduction for SEM Remont citing formal errors and incorrect initial invoices
- SEM Remont appealed to the administrative court in Varna which referred questions to the CJEU
- CJEU stated that the right to deduct VAT is fundamental and should not be restricted without proper basis
Source: mddp.pl
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
