Court of Appeal of ‘s-Hertogenbosch has refused to allow the VAT deduction on the grounds that the identity of the issuer of the VAT invoice is not sufficiently clear.
VAT deduction
Just as in the case that has given rise to our article In its ruling earlier this week on the right to deduct VAT on shop receipts, the Court begins by noting that the burden of proof that the conditions for VAT deduction have been met rests entirely with the taxpayer.
VAT invoice
A VAT invoice must comply with a whole range of formal requirements. One of these is that the invoice must state the VAT registration number of the trader who is supplying the goods or services and issuing the invoice. This requirement was not met, as the invoice stated the VAT registration number of a sole trader who had gone into liquidation, whilst the services had been provided by a private limited company.
Material conditions
It is established case law of the European Court of Justice that formal defects in a VAT invoice must not prevent VAT deduction, provided that it is established that the substantive conditions for such deduction have been met.
But here too, the proceedings go awry. The Court concludes that the invoices, which according to the accounts were paid in cash, do not provide sufficient clarity as to the identity of the person who issued them. The person listed on the invoices as the service provider denies, in response to enquiries from the tax authorities, that he carried out the services. He also denies having issued the invoices.
The Court considers that it was plausible that the party concerned was aware of the bankruptcy. That knowledge should have led to greater caution when claiming the VAT deduction.