Can the Tax Office deny the entitlement to deduct VAT revenue when the taxable person has failed to comply with certain non-substantial registration obligations?
In a sentence issued on 11 December 2014, the Court of Justice (Eighth Chamber) clarified that there is a margin of tolerance regarding certain formal obligations.
The sentence analysed the case of an Italian company which had bought merchandise from a Dutch company and while processing the reverse charge found that the invoices issued by the Dutch firm had not been entered in the issued invoices register but rather solely in its purchases register under the heading “VAT excluded”.
The Court found that legal formalities cannot exceed what is strictly necessary to check whether the reverse charge procedure had been correctly applied. In the case concerned, the Italian Tax Office was perfectly able to detect that there had been an intra-Community operation which was at least registered under purchases.
The situation might be different if the effect of the non-compliance of these formal requirements was to impede the detection of transactions.