- Allegations and Previous Inspections: The taxpayer, a drinks merchant, was accused by the Tax Authority of issuing false invoices for drinks supplied to taxable customers (hotels and restaurants) who resold them on the black market without declaring VAT. Similar infringements had been found in two previous inspections, and the taxpayer had been fined.
- ECJ Ruling on Liability: The ECJ ruled that strict joint and several liability for VAT fraud is contrary to the principle of proportionality. A taxpayer should only be held liable if they knew or should have known about the VAT fraud. Taxpayers must have the opportunity to prove they took reasonable measures to prevent fraudulent transactions. Article 205 does not prevent Member States from legislating for joint and several liability.
- Fiscal Neutrality and Penalties: The ECJ found that fiscal neutrality does not preclude joint and several liability, even if it affects the right to deduct input VAT in cases of fraud. Additionally, domestic legislation can impose both criminal and administrative penalties for similar acts in different tax years.
Source KPMG
See also
- Join the Linkedin Group on ECJ VAT Cases, click HERE
- VATupdate.com – Your FREE source of information on ECJ VAT Cases
