CJEU – Recent Developments in Value Added Tax 2016

S. 295Right to Deduct

Marie Lamensch

1. S. 296Introduction

The right to deduct lies at the core of the VAT system as “it is meant to relieve the operator entirely of the burden of the VAT paid or payable in the course of all his economic activities.” By so doing, it “ensures the neutrality of taxation of all economic activities, whatever their purpose or results, provided that they are themselves subject, in principle, to VAT.” As such, the right to deduct laid down in Arts. 167 and 168 of the VAT Directive thus forms an integral part of the VAT mechanism and in principle cannot be limited. Otherwise, this tax on consumption would in effect become a tax on production.

However, the implementation of the right to deduct is not so simple and litigation around this right represents almost one fifth of the cases decided by the CJEU. In the past year, a large number of decisions have again been taken that relate to the right to deduct. This contribution will focus on three cases that relate to the principle of “substance over form” in the context of the right to deduct:

• S. 297Case C‑516/14, Barlis concerns the case of an incomplete invoice subsequently complemented by an annex. It includes an interesting discu...