- The Court of Justice of the EU ruled on December 12, 2024, regarding VAT deductions for a Romanian company purchasing administrative services from other group companies abroad
- Romanian tax authorities initially denied VAT deduction, labeling the service costs as shareholder costs unrelated to the company’s taxed transactions
- The CJEU confirmed that VAT deduction eligibility depends on a direct link between the costs and the company’s taxed transactions or overall economic activities
- The decision emphasizes that VAT deductions should not be influenced by the economic profitability or perceived necessity of the services
- The ruling indicates that VAT should be considered independently of other tax systems, reinforcing the principle of VAT neutrality
- The judgement advises tax authorities not to base VAT deduction eligibility on subjective assessments of the appropriateness or necessity of purchases
- It also suggests that transfer pricing corrections should be viewed separately from VAT implications, maintaining a clear distinction in their effects on VAT treatment
- The case highlights ongoing challenges in VAT deduction practices, especially concerning transactions within corporate groups and emphasizes the need for compliance with legal VAT criteria
Source: tpa-group.hr
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.
