ECJ case on statute of limitations for deduction of input VAT

In case Biosafe v Flexipiso, the ECJ  clarified that it is possible to deduct VAT in certain circumstances even when the statute of limitations has expired. 


In the case at hand, the supplier (Biosafe) charged a reduced VAT rate to its client (Flexipiso) between 2008 and 2011. As a result of a tax audit asessing these years, Biosafe was obliged to pay additional VAT to the tax authorities corresponding to the standard VAT rate that should have been charged on these sales. Once paid to the authorities, Biosafe requested the client to pay these additional VAT amounts. However, Flexipiso refused to pay these amounts on the grounds that they would not be deductible because the statute of limitations had expired.

In principle, the taxpayer can only deduct input VAT within a given period, the so-called statute of limitations for deduction of input VAT establishes how far can a company go back to deduct such VAT. Following the national legislation for the statute of limitations, the right to deduct had expired four years after the right of deduction has arisen. The tax adjustment was reflected in documentation rectifying the original invoice. The ECJ decision now pointed out a general requirement for the right to deduct VAT by noting that the deduction can only be made when the taxable person has received a valid invoice.

Following this interpretation, the taxpayer Flexipisio was given the right to deduct the input VAT after having received the rectifying documents from the supplier Biosafe. This right could not be denied by referring to the statute of limitations, which had expired for the original invoice.

The judgement is important for taxpayers as it gives them the possibility to challenge the date of expiration specified in the national legislation of the statute of limitations under similar circumstances.

For more specific information about the statute of limitations for deduction of input VAT, you may consult our country manuals. You can find the information under the “VAT basics”.

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