Comments on ECJ C-794/23 – VAT due only if issued to VAT-exempt taxpayer

Case Background: An Austrian company operating an indoor playground incorrectly applied a standard VAT rate of 20% on admission tickets, while the correct rate was 13%. After issuing numerous invoices, the tax office denied the company’s claim for overpayment, leading to an appeal that reached the Court of Justice of the EU.
Advocate General’s Opinion on VAT Liability: The opinion clarified that Article 203 of the VAT Directive, which addresses tax liability based on invoices, applies only when there is a risk of a purchaser deducting input tax. Invoices issued to consumers, who lack a deduction right, do not fall under this article, while those issued to businesses with a potential right to deduct do.
Procedural Considerations for Tax Authorities: The opinion emphasized that tax authorities must assess invoices individually, distinguishing between those issued to consumers and businesses. If a significant number of invoices are issued to consumers, tax authorities can estimate tax liability for the remaining invoices issued to businesses, provided their methods respect EU principles of equivalence, effectiveness, and proportionality.