VAT recovery: the economic link

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As is often the case with buses, a second important case on input tax recovery has come along shortly after another.

The Court of Justice of the European Union (CJEU) has ruled in AES-3C Maritza East 1 EOOD (C-124/12) (AES) that the company has the right to deduct VAT incurred on various goods and services provided for workers who were not its employees.

The link between input and output activities, which must exist in order to be able to deduct VAT, need only be ‘purely economic’. This is a far broader test than previously applied…

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