ECJ’s Resolution, of December 11th, 2014, Idexx. Right to deduct on Intra-EU acquisitions of goods. Formal requirements

It is asked to the Court whether Articles 18 and 22 of Directive 77/388/EEC, Sixth Directive, do refer to materials requirements or to formal requirements for tax deduction.

The present case concerns to the right to deduct VAT, which the Italian tax authorities denied to a company who performed intra-community acquisitions of goods from France and The Netherlands, by failing to comply with the requirements of self-billing and registration in the ledgers, as laid down in the national legislation in this regard. Therefore, having recognized the tax administration the existence of the intra-EU acquisitions of goods, on the basis of the evidence provided, it has settled the company with the corresponding VAT but without admitting the right to deduct.

Accordingly, it is asked to the Court whether the doctrine established in the judgment ECOTRADE would apply to this case, by referring the Articles 18 and 22 of the Sixth Directive to formal requirements and, therefore, the breach of these requirements cannot limit the right to exercise the deduction, or whether these articles de refer to material requirements, in which case the breach thereof preclude the taxable person’s right to deduct VAT.

The Court firstly begins by noting that the system of intra-Community acquisitions is set so that no payment of VAT between the provider and the recipient does arise, so any amount is owed to the tax authorities, and secondly, that the formalities prescribed by the national legislation cannot exceed what is strictly necessary. With this in mind, the judgment ECOTRADE states that the deduction is allowed when the material requirements are being fulfilled, even if certain formal requirements are not met.

Following this reasoning, the Court clearly concluded that the requirements of Articles 18 and 22 of the Sixth Directive refers to formal requirements whose failure does not cause the loss of deductibility.

A copy of the judgment Idexx, Case C-590/13 is attached.

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ECJ C 590_13. VAT. Right to deduct. Intra-Community Acquisitions. Formal requirements.htm