ECJ ruling on input VAT deduction for intra-Community acquisitions

Facts

The applicant, Aptiv Services Hungary Kft. (hereinafter: Aptiv), had carried out intra-Community acquisitions between 2016 and 2018 but did not receive the invoices for them until 2021. Consequently, Aptiv claimed the input VAT on the intra-Community acquisitions only for 2021. The Hungarian tax authority refused the input VAT deduction on the grounds that, under Hungarian law, Aptiv should only have claimed the input VAT by amending the VAT returns for 2016 to 2018 – which, however, was no longer fully possible due to the partial expiry of the limitation periods for those periods.

ECJ ruling

The ECJ first noted that, although the right to deduct input VAT under Article 167 of the VAT Directive arises at the time the deductible tax becomes chargeable. In the case of intra-Community acquisitions, this is upon issue of the invoice, or at the latest on the 15th day of the month following the month of the acquisition, Article 69 in conjunction with Article 222 (1) of the VAT Directive. However, pursuant to Article 178 (c) of the VAT Directive, the prerequisite for exercising this right is possession of the invoice. Consequently, the input VAT deduction for intra-Community acquisitions must, in principle, be exercised for the tax return period in which both prerequisites for the input tax deduction are cumulatively met, namely the arising of the right to input tax and the receipt of the invoice.

Accordingly, Aptiv had done everything correctly. On the premise that Aptiv had acted in good faith and not abusively, it would be contrary to the principles of neutrality, proportionality and effectiveness to deny Aptiv the right to claim the input VAT deduction. Although it is, in principle, permissible for Member States to provide for a limitation period for claiming input VAT deduction for reasons of legal certainty, the national limitation period had not yet expired for 2021.

Analysis

Germany has made use of the option under Article 181 of the VAT Directive and does not require an invoice for the input VAT deduction on intra-Community acquisitions. Therefore, had the case occurred in Germany, the outcome would have been different: The taxpayer would have had to claim the input VAT deduction no later than for the tax return period in which the month following the intra-Community acquisition ends, if the invoice had not been received before, § 13 (1) (6) in conjunction with § 15 (1) (3) of the German VAT Act (UStG). A correction would therefore have had to be made for the years 2016 to 2018 if the input VAT deduction had not been claimed in the respective VAT returns. The fact that the possibility of correction is subject to a limitation period is not in itself contrary to EU law, meaning that the taxpayer in Germany would have lost his right to input VAT deduction after the expiry of the limitation period.

Author: Nadia Schulte