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ECJ view on invoice address and right to deduct

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ECJ view on invoice address and right to deduct

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VAT deduction and fexible interpretation of the invoice requirements

This month the Advocate General gave a flexible interpretation on the requirement of having the client’s address stated on the invoice when looking at VAT deduction rights.

Two recent ECJ cases originating in Germany were brought forward to the ECJ, both asking if it is correct to disallow VAT deduction on invoices not including the correct or complete address of the customer. These cases were C-374/16 and C375/16.

Correct address as invoice requirement

The first remark made by the AG focuses on the definition of address and whether information such as PO Box , virtual address or the physical location of the company handling your accounting is accepted in light of the VAT Directive. This is, should the address be the place where the customer carries out its economic activity or is it enough with a location where the customer can be contacted? The response of the AG was clear. It is not a requirement to have an economic activity in the address stated on the invoice.

This opinion is in line with recent ECJ decisions focusing on substantive requirements rather than administrative formalities. Moreover, the AG added that recent economic developments like e-commerce and virtual services make it increasingly harder to match the invoice address with the place of economic activity.

Deduction of input VAT can be denied where the taxpayer knew or should have known that a transaction was subject to fraud. The test on this fraud requirement focuses on reasonable checks carried out by the taxpayer to ensure that he is free of VAT fraud. The AG clarified that checking if the address stated on each invoice corresponds to the place of economic activity is not reasonable or practical for the taxpayer.

Invoices are your passport to deduct VAT. Multinational businesses dealing with multiple legislations and invoice requirements must carry a periodic check on all invoices issued to make sure that all formalities are met. Please send us an email if you want to receive an overview of invoice requirements in Europe. We may also create a ´master invoice´ that you can use in all European countries.