Sales Tax State Activity Update - November 2007
Austria Takes Iron Fist Approach to VAT Fraud
Under a proposed amendment to the Austrian VAT Act a taxpayer will not be entitled to VAT deduction if he knew, or should have known, that his supplier, customer or any other taxable person in a supply chain of goods, is involved in VAT fraud. The loss of VAT deduction would occur even if the taxpayer is not involved in any fraudulent activities themselves.
Although the wording is similar to the judgment of the European Court of Justice joint cases Alex Kittel, Recolta Recycling SPRL, it could be argued that those judgments intended to limit the right to deduct VAT to persons aiding in the fraudulent activities.
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