- The High Court upheld a decision that a property owner was not liable for a VAT clawback due to a breach of EU law.
- The case focused on Irish VAT rules regarding waivers of exemption from VAT on property lettings.
- Waivers allowed landlords to charge VAT on lettings with terms under 10 years before 1 July 2008.
- Pre-existing waivers continued for properties acquired before 1 July 2008.
- Legislation allowed for a clawback of excess input VAT reclaimed over output VAT paid when a waiver was cancelled.
- Killarney Consortium purchased a property in 2004, exercised the waiver, and reclaimed VAT.
- Due to market downturn, the property remained vacant, and VAT charged on rents was less than VAT reclaimed.
- The property was sold in 2017 at a loss, with VAT reclaimed still exceeding VAT paid by about 590,000 euros.
- Revenue issued an assessment for the deficit amount due to waiver cancellation.
- The Consortium appealed, arguing EU VAT law does not allow clawback merely because input VAT exceeds output VAT.
- The TAC ruled in favor of the Consortium, reducing the assessment to zero.
- The High Court confirmed the right to deduct input VAT for taxable supplies, regardless of VAT charged on supplies.
- The waiver cancellation was deemed contrary to EU law and fiscal neutrality.
- The High Court supported the decision to disapply the relevant section and reduce the assessment.
Source: charteredaccountants.ie
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.
