ECJ - Recent Developments in Value Added Tax

S. 340I. Introduction

The right to deduct input VAT is one of the core features of modern value added taxes. It is the fact that businesses can deduct input VAT which gives a multi-stage VAT its character as a consumption tax. Generally, the tax burden should not rest on the business but is shifted to the final consumer. The relief of business from the VAT burden is also one of the main pillars of neutrality. This is recognized by the CJEU but also generally accepted on an international level.

The deduction system is meant to relieve the taxable person of the burden of the VAT paid or payable in the course of all his economic activities. Thus, the common system of VAT seeks to ensure neutrality of taxation of all economic activities, whatever their purpose or results, provided that they are themselves subject, in principle, to VAT.

This contribution summarizes the CJEU case law on deductions between January 2012 and September 2013 based on selected cases. It does not cover CJEU decisions related to fraud or abuse though. These are covered by Eleonor Kristoffersson’s contribution in this book. Neither are the recent cases on cross-border VAT recovery (e.g. the Pastor Vastgoed case, the Elsac...