Comments on ECJ C-527/23: Right to deduct VAT within a group of companies

CJEU Decision Overview: The Court of Justice of the European Union (CJEU) ruled that a taxpayer retains the right to deduct VAT on services provided by a group company, emphasizing tax neutrality and the connection to taxable activities.
Case Background: The ruling involved Weatherford Atlas Gip SA, which was denied VAT deductions by Romanian authorities due to claims that the services were not necessary for its activities. The CJEU found this refusal violated the fundamental VAT principle of neutrality.
Implications for Taxpayers: The judgment clarifies that tax authorities cannot deny VAT deductions based on subjective assessments of transaction rationality, reinforcing the need for taxpayers to document and demonstrate the connection between services purchased and their taxable activities.

Source MDDP