Incorrect invoices and tax liability

The fact that the tax due under Article 203 of the VAT Directive also refers to the VAT that is shown separately unduly (at too high a level) in low-value invoices is aligned with EU case law regarding the purpose of Article 203 of the VAT Directive, which is to eliminate the risk of loss of tax revenue that may result from an unjustified deduction by the recipient of the invoice on the basis of the same invoice (EN.SA, C-712/17; LVK, C-643/11; Rusedespred, C-138/12; ). The right to deduct is certainly limited to the taxes corresponding to a transaction subject to VAT (Genius, C-342/87); however, the risk of loss of tax revenue persists as long as the recipient of an invoice that unduly exposes VAT can use it to exercise that right under Article 168. Indeed, it cannot be ruled out that the tax administration will not be able to ascertain in a timely manner whether considerations of substantive law preclude the exercise of the formally granted right to deduct.

Article 203 of the VAT Directive therefore aims, in the case of an undue (excessive) indication of VAT, to create a synchronism between the deduction made by the recipient of the invoice and the tax due by the issuer of the invoice, similar to that which would normally occur for the supplier and the recipient of the service in the case of a correct invoice (Finanzamt Österreich, C‑378/21). According to the wo...