ECJ 26/04/2017, C-564-15 - Tibor Farkas
Reverse charge in the case of immovable property
Reverse charge system — Article 199(1)(g) — Application only in the case of immovable property — Undue payment of the tax by the purchaser of property to the seller as a result of an incorrectly drawn up invoice — Tax authority’s decision holding that the property purchaser has an outstanding tax liability, refusing payment of the deduction sought by the purchaser, and imposing a penalty tax.
The VAT authorities may deny the right of deduction when VAT is not due, on the basis of an invoice including VAT where the said VAT is paid by the seller if the reverse charge mechanism is applicable.
However, to the extent that reimbursement of the unduly invoiced VAT by the seller to the purchaser proves to be impossible or excessively difficult, in particular in the case of the seller insolvency, the purchaser should be allowed to apply for reimbursement directly to the Tax Authorities.Additionally, the principle of proportionality precludes Tax Authorities from imposing on the purchaser having paid VAT (instead of applying reverse charge) a tax penalty of 50% of the amount of value added tax, where those Authorities suffered no loss of VAT revenue and there is no evidence of tax evasion.