- CJEU ruled on the right to deduct VAT within a group of companies on December 12, 2024
- The case involved Romanian company Weatherford Atlas Gip SA, part of a group specializing in petroleum services
- Weatherford Atlas Gip SA was denied VAT deduction on administrative services by Romanian tax authorities
- Authorities claimed no demonstrated link between services and the company’s taxable activities and deemed the services unnecessary
- CJEU found this denial violated the VAT system’s principle of tax neutrality, which allows deduction of input VAT related to business activities
- The court stated it is not the role of tax authorities to judge the profitability or meaningfulness of such transactions
- The judgment emphasized that tax decisions should rely on objective documentation and actual service use, not subjective expense assessments
- The ruling highlights issues with tax authorities in other countries, like Poland, denying VAT deductions based on subjective business rationality
- The CJEU judgment maintains that deductions cannot be denied based on subjective views unless transactions are fraudulent or lack a clear business connection
- Taxpayers still must prove the connection between expenses and taxable activities to justify deductions
Source: mddp.pl
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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.
