VAT penalties for failure to report cancellation of an invoice

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On 20 June 2013, the Court of Justice of the European Union (CJEU) rendered a judgment in the case C-259/12 on the appropriateness of the collection of a value-added tax (VAT) fine due in the case of a failure by a taxable person to timely record in its accounts and in its periodic VAT return matters affecting the calculation of VAT.

A Bulgarian company liable to VAT registered a purchase invoice in its accounts and made the corresponding VAT deduction in its periodic VAT return. The invoice was later cancelled and the cancellation was registered only after the legal deadline in the company’s accounts and periodic VAT return. The company then rectified the deduction previously made in respect of that invoice by payment in full of both the amount of VAT initially deducted and of the interest thereon.

The company was charged with a penalty equivalent to the amount of VAT due on the invoice for missing the deadline and therefore contended that the fine was contrary to EU law and more especially to the principles of fiscal neutrality and proportionality…

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