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home / ECJ decision about penalties on reverse charged VAT
Following the opinion of the advocate general published last November, the ECJ gave its decision in Farkas case (C-564/15). This judgement has reduced the powers of Member States to impose penalties on reverse charged VAT on transactions that are incorrectly reported. This case is important for non-established companies registered for VAT in other EU countries, as these businesses are often involved in reverse charge transactions.
In summary, the ECJ position is as follows:
This ECJ decision gives an opportunity for businesses who receive penalties on reverse charged VAT for not reporting reverse charged purchases in due time in the VAT return.