BFG decision – Entitlement to input tax deduction in the event of wrongly declared VAT in the context of a reverse charge transaction

ECJ Ruling on Direct Claims: The European Court of Justice (ECJ) determined that service recipients can assert a direct claim against tax authorities when they cannot enforce a civil law claim against the original service provider, particularly in cases of insolvency where VAT correction is no longer possible.
Illustrative Case: In the “Reemtsma” case, AB GmbH issued incorrect invoices totaling around 400,000 euros plus VAT. Following AB GmbH’s insolvency and deletion, customer B was unable to reclaim the unduly paid VAT, prompting the Federal Fiscal Court (BFG) to recognize a direct claim against the tax authorities.
Implications for Entrepreneurs: This ruling allows entrepreneurs in similar situations to pursue input VAT deductions even if the service provider is insolvent. The BFG has yet to conclusively clarify this issue within Austria, but the ECJ’s decision offers a strong foundation for future disputes related to erroneous invoicing and VAT claims.