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Umsatzsteuer Newsletter 51/2022
ECJ: scope of necessary checks and attribution of knowledge of tax evasion in supply chains
Time and again, the tax authorities have denied input VAT deductions to taxable persons because they should have known, had they exercised due diligence, that they were participating in tax evasion with their supplies. In this context, the ECJ has now ruled that taxable persons are not required to carry out complex and comprehensive checks on their business partners, such as those that can normally only be performed by the tax administration (judgment of 01.12.2022 – C-512/21 – Aquila Part Prod Com). At the same time, however, the ECJ held that taxable persons must accept responsibility for the knowledge of an appointed third party of a tax evasion in the chain of transactions.
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Umsatzsteuer Newsletter 50/2022
Potential for structuring: VAT group also includes non-economic activities
The ECJ judgment of 1 December 2022 in the case of Finanzamt T allows public bodies and non-profit organisations a great deal of leeway. According to the ECJ, the VAT group also includes the non-economic (sovereign and “idealistic”) sector and there is no taxation in the form of a supply carried out free of charge. Even though the ECJ has not explicitly ruled on the non-taxable nature of internal transactions, there are numerous arguments in favour of their being non-taxable.
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Umsatzsteuer Newsletter 49/2022
ECJ: Refusal of the right of input VAT deduction not limited to tax loss
Taxable persons occasionally face accusations raised by their tax office that they ought to have known about fraud committed by another person from whom they have purchased goods or supplies of services. As a result, the tax office denies them the deduction of input VAT and/or the VAT exemption for intra-Community supplies. The ECJ has now ruled that the denial of corresponding tax advantages may also go beyond the actual tax loss that the tax authorities have suffered in the supply chain (judgment of 24 November 2022 – C-596/21 – Finanzamt M). Taxable persons should take precautions to avoid being exposed to the accusation that they “ought to have known” about the commission of a particular fraudulent act.
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