The tax authorities may not refuse a taxpayer the right to deduct input VAT on the sole ground that the purchase invoices contain an error relating to the identification of the goods which are covered by the transactions. Penalizing the taxpayer's failure to comply with formal conditions by refusing the right of deduction goes beyond what is necessary to achieve the objective of ensuring the correct application of the VAT neutrality principle. The authorities must also take into account the additional information and documents provided by that taxable person in order to assess whether the substantive conditions for the VAT deduction are met.

Furthermore, it is not necessary for the taxable person to issue an amending document to correct the mistake, nor to request corrective invoices from his supplier as long as he provides the tax authorities with the explanations and documents necessary to determine the actual purpose of the transactions.

A potential buyer may not be refused the recovery of VAT relating to a payment on account in respect of goods where that payment has been made and received and where, at the time that payment was made, all the relevant information concerning the future supply was regarded as known to that buyer and the supply of those goods appeared to be certain. However, that buyer may be refused that right if it is established, having regard to objective elements, that, at the time the payment on account was made, he knew or should reasonably have known that that supply was uncertain.

Comments: The question arises as to which extent that ruling could be at variance with the below-noted ruling of 27/06/2018 in which the Court denies the recovery on the “mere” ground that the supply didn’t take place.

Where, following a tax adjustment, additional VAT was paid to the Treasury and was the subject of documents rectifying the initial invoices several years after the supply, Member States may not deny the right to deduct VAT on the ground that the regulatory period laid down for the exercise of that right has expired. (C-8/17). Member States may not disallow a taxable person to correct VAT returns, although such correction can be made by Tax Authorities, on the sole ground that the correction relates to a period that has already been be subjected to a tax inspection. (C-81/17)

Comments: These case-law are very significant and show that taxable persons can still recover input VAT after the statutory period of limitation if they were unable to do it within the ordinary deadline as a result of a tax assessment. Should you be placed in such a situation please feel free to contact us. We will evaluate your entitlement to obtain a VAT refund.Right to deduction in case of payment on account ( advanced payment). A potential buyer may not be refused the recovery of VAT relating to a payment on account in respect of goods where that payment has been made and received and where, at the time that payment was made, all the relevant information concerning the future supply was regarded as known to that buyer and the supply of those goods appeared to be certain. However, that buyer may be refused that right if it is established, having regard to objective elements, that, at the time the payment on account was made, he knew or should reasonably have known that that supply was uncertain (31/05/2018, C-660/16 and C-661/16). The question arises as to which extent that ruling could be at variance with the below-noted ruling of 27/06/2018 in which the Court denies the recovery on the “mere” ground that the supply didn’t take place.

Discount granted by a pharmaceutical company to a private health insurance company results in a reduction of the taxable amount in favour of that pharmaceutical company. The fact that the direct beneficiary of is not the private health insurance company which reimbursed the insured persons but the insured persons themselves is not to affect the consequence regarding the taxable amount.

Comments: Where VAT was initially calculated on the price that is subsequently decreased, vendor is entitled to recover the overpaid VAT amount. That decision of the Court stresses that the concept of "price effectively paid" must be ascertained for the supplier regardless the beneficiary of discount. Similar situations prove to exist in many economic sectors involving complex schemes of distribution (food, automotive, home furniture etc.).

The payment of default interest may not be refused by Tax Authorities where the duration of the tax investigation procedure is excessive and cannot be attributed entirely to businesses.

A company made a number of purchases of diesel fuel for its economic activity. The Polish VAT authorities refused VAT deduction on the ground that the invoices corresponding to those fuel purchases have been issued by fictitious trader. According to the E.C.J., VAT directive is opposed to Polish legislation that does not authorize the purchaser to deduct VAT paid in respect of goods that were supplied to it. If, however, the purchaser knew, or should have known, without being required to carry out checks which are not his responsibility that his purchase was connected with fraudulent practice, VAT recovery should be denied.

The identification for VAT purpose, and the obligation for the taxable person to state when his activity as a taxable person commences, changes or ceases are only formal requirements for the purposes of control, and cannot undermine, inter alia, the right to deduct VAT in the case where the substantive conditions which give rise to that right are satisfied. In particular, a taxable person for VAT purposes cannot be prevented from exercising his right of deduction on the ground that he was not identified as a taxable person for those purposes before using the goods purchased in the context of his taxed activity.