CJEU – Recent Developments in Value Added Tax 2014

S. 203Liability of Taxpayers Involved in VAT Fraud

Paolo Centore

I. S. 204Introduction

In order to better understand the latest evolution in the jurisprudence of the Court of Justice on the subject of VAT fraud, an initial remark must be made. Unlike other taxes, the avoidance of VAT cannot be entirely consigned to the sphere of a single taxpayer, and must involve, in principle, at least one other taxable entity, either prior or subsequent to the tax evader.

The involvement of another person is the result of the trilateral relationship that distinguishes this tax, in which the supplier charging the tax to the customer becomes liable to pay the same tax to the tax administration, from which the customer, if a taxable person, drives the right to obtain a tax credit.

The connection with another subject still has to be present, even if the latter is the end consumer: it is a matter of common knowledge that a taxpayer that does not wish to certify its business by means of an invoice or other document for tax purposes must obtain the consent of the customer, even on a “private” basis, sometimes offering a “discount”.

The rule of engagement is obvious in the case of “carousel” fraud, which is implemented t...