- The Italian Supreme Court ruled that VAT deduction can be denied to the transferee if they knew or should have known that the VAT charged was not paid by the contractual counterpart.
- This applies even if there is no actual tax fraud, but indications of tax evasion.
- In the case discussed, the company that failed to pay VAT was linked to the transferee’s family.
- The company systematically omitted VAT payments, creating a tax gap that affects the principle of neutrality.
- Generally, the transferee is not responsible for the counterpart’s unpaid VAT, except in specific cases.
- If there are strong indications that the transferee was aware of the unpaid VAT, the deduction can be denied.
- The unpaid VAT can be seen as a form of financing at the expense of the Treasury, affecting neutrality.
- The principle is valid if the Treasury proves the transferee’s involvement in evasion.
- Presumptions must be rigorously examined by the court due to the issue’s sensitivity.
Source: eutekne.info
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.
