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EU VAT deductions ruling from ECJ – Bulgaria

  • Dec 12, 2012 | Richard Asquith

EU VAT deductions ruling from ECJ – Bulgaria

The European Court of Justice has recently ruled on a Bulgarian VAT question regarding the deductibility of VAT for supplies.

The case concerned the input VAT claimed by a Bulgarian company for supplies of wheat it received.  The Bulgarian tax authorities believed there were irregularities on the supplies, and that the company was attempting to over claim for purchase VAT, and so reduce its VAT abilities.  Whilst the company was able to demonstrate proper payment against a purchase invoice, it was unable to produce proof of receipt of the goods.  The Bulgarian tax authorities therefore believed that the company could not make the VAT deduction.

The ECJ has now ruled that the payment is VAT deductible as long as the company did not know (or take reasonable steps to find out) that there was a VAT fraud being carried out.

This therefore helps reduce the risks of cash flow losses for chain supply frauds for company which are victims.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.