Belgium adopts ECJ’s position on incomplete invoices
Belgium has adopted the recent ECJ jurisprudence regarding the right to deduct VAT on incomplete invoices with missing details.
1 December, 2017
ECJ's criteria adopted by Belgium
Last 12 October 2017 the authorities published a Circular letter: 2017/c/64 summarizing their interpretation of recent ECJ decisions concerning the conditions under which a taxable person may exercise his right to deduct VAT in cases of irregular invoices.
Based on this circular, Belgian Tax Authorities have relaxed their position on invoice requirements by stating that, in cases of non-compliant invoices, the tax administration must perform a case-by-case analysis taking into account the following aspects:
- If the substantive requirements that give the right to deduct have been met.
- If credit notes have been issued to correct the irregular invoices.
- The analysis of additional documents related to the invoice, such as contracts, order forms, emails, etc.
During the audit, all additional information required must be submitted by complying with the format and periods established by the authorities. Likewise, the right to deduct VAT can be denied if the authorities consider that the taxpayer knew or should have known that a transaction was subject to fraud.
ECJ jurisprudence on incomplete invoices
The recent ECJ position about this topic states that the right of deduction must be allowed when VAT is paid in the course of economic activities as long as the substantive requirements have been met. Hence taxpayers may exercise their right to deduct VAT even the invoices do not meet certain formal requirements. See ECJ cases listed below:
- Senatex GmbH Case C-518/14.
- Barlis Case C-516/14.
- Pannon Case C-368/09.
- Petroma Transports Case C-271/12.
In particular, these judgements state that Tax Authorities cannot refuse the right to deduct only because some of the invoice requirements are not met when these authorities have sufficient information to ascertain that the substantive conditions to exercise the right to deduct were satisfied. Therefore, the authorities cannot limit themselves to examining the invoice itself, but must also analyse the additional information provided by the taxpayer.
Furthermore, these judgements also emphasized the value of the credit notes by recognizing its retroactive effect when they are used to correct invoices with missing details.