European Union: ECJ Case C-664/16 (Vadan) – The right to deduct input VAT where no invoice is available.

11 December 2018

The Court of Justice of the European Union handed down its judgment in case of Vadan. The facts of the case are as follows;

Mr Vadan a Romanian citizen and a property developer, built a residential complex containing 90 apartments. As Mr Vadan’s turnover exceeded the VAT registration threshold, the Romanian tax authorities registered him as taxable person in Romania.

An assessment was then raised against Mr Vadan on the basis that had performed economic activities after he was registered for VAT. The Romanian tax office also denied the deduction of input VAT incurred prior to his registration, as Mr Vadan did not have the original purchase invoices.

Mr Vadan argued that he should be able to deduct the input VAT, as at time of incurring the VAT, Mr Vadan did not exceed the VAT registration threshold and as such was not obliged to keep the original invoices. This matter was referred to the European Court of Justice (“ECJ”) to determine whether the right to deduct input VAT may be refused where the taxpayer fails to provide any invoices to proof their entitlement to deduct the input VAT.

The ECJ ruled that a taxable person who is unable to prove the amount of tax VAT that it has paid, by the production of invoices or any other document, cannot benefit from a right to deduct VAT on the sole basis of an estimate resulting from an expert report commissioned by a national court.

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