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On The Way To A Fairer VAT System

The European court of justice (ECJ) has declared in a recent case that with checking VAT transactions, the tax authority cannot ignore examining the full budgetary impact. Thus it is not acceptable for the authorities to deny the right of VAT deduction to a taxpayer without allowing the other taxpayer to accordingly reclaim the VAT that is paid. Furthermore, the court has also found it unacceptable for the tax authority to base a fine only on the amount of the VAT deducted unlawfully without examining the text shortfall actually caused. The ruling can be considered as another important step towards the creation of a fair VAT system.

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