In the two recent cases of Barlis and Senatex the European Court (CJEU) defended the taxpayers' right to recover input VAT even where invoices were not complete.
There must be a valid VAT invoice in order to reclaim input VAT. The information which is required to be shown on a UK VAT invoice is set out in Regulation 14 of the Value Added Tax Regulations 1995 (SI 1995/2518). As with all VAT legislation, this is based on, and has to be applied in line with, the rules set out in the EU VAT Directive.
In both of these cases the CJEU found that restrictions on input VAT recovery under local law were not compatible with the VAT Directive.
In Barlis 06 (C-516/14):
- The taxpayer operates hotels with restaurants and is based in Lisbon.
- From 2008 to 2010 they received legal services which were invoiced using descriptions of ‘Fees for legal services rendered from [date] to [date]’ or ‘Fees for legal services rendered until the present date’.
- The Portuguese tax authorities refused a claim for input VAT on these invoices as the descriptions of the services were insufficient, even after the company provided annexes giving a more detailed description.
The CJEU found that the tax authorities had to look beyond the wording of the invoices to the other information made available to them when considering the claim:
- The wording on the invoices alone was not sufficient:
- Only referring to ‘legal services’ did not meet the requirements of the Directive to state the nature and extent of services.
- Referring to services rendered ‘up to the present date’ also did not meet the requirement to state the date in which services were provided.
- The tax authorities could not refuse the claim on these grounds alone though: all the information necessary was made available to them in the annexes.
In Senatex GmbH (C-518/14):
- The taxpayer company operated a wholesale textile business.
- In 2008 - 2011 it claimed input VAT on invoices which were, on a tax office check, found not to contain the VAT registration number.
- Under German law an invoice may be corrected if it does not contain all the information required for input VAT recovery.
- The correction is not retrospective: the input VAT can only be claimed in the period of correction and late payment interest can be charged.
- The taxpayer corrected the invoices in 2013, but the tax office issued amended VAT returns for 2008 – 2011 on the grounds the input VAT could only be recovered in 2013.
The CJEU found that:
- The tax authorities could not refuse to apply the correction of an invoice retrospectively.
- Instead, the right to recover VAT has to relate to the year in which the invoice was originally drawn up, and not when it was corrected.
Links
Our subscriber guide: What constitutes a valid VAT invoice?
Case references:
Barlis 06 – Investimentos Imobiliaris e Tursiticos SA (C-516/14)
