”Ethvert andet dokument”: Skønsmæssig ansættelse af momstilsvar i lyset af C-664/16 VÅDAN

Abstract

The scope of the thesis is the direct effect of the rules governing exercise of the right of deduction within national Danish law, in accordance with the VAT Directive (Directive 2006/112). In the case of Vădan (C-664/16) the Court ruled on the burden of proof regarding the right of deduction in the absence of invoices. Time had rendered Vădan’s documentation illegible, and thus he was not able to present an invoice. The Court pointed out, that a court- commissioned expert report could not remedy the lack of documentation by assessing input VAT based on the amount of work necessary to construct the buildings, that Vădan had sold. To exercise his right of deduction, Vădan would have to provide objective evidence, in the form of invoices or “any other document”, that goods and services were inputs by actual taxable persons for the purposes of his own transactions subject to VAT, in respect of which he has actually paid VAT. Yet, a longstanding practice of assessing VAT deductions in the absence of invoices did in fact exist in Danish case-law. Under article 288 of TFEU, EU’s directives are “binding, as to the result to be achieved, upon each
Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods.” Under § 5, subsection 2 of the Tax Collection Act, the tax authorities are allowed to perform an assessment, of a taxable person’s VAT response, that is the net difference between outgoing and input
VAT, in case the bookkeeping provided the taxable person is deemed dissatisfactory. This thesis contains an analysis of the Danish provision, to establish whether the provision in fact contain legal basis for purely discretionary VAT deductions, without the existence of invoices. The finding was that no such legal basis exists, and that the provision did not provide the tax
authorities with the ability to assess VAT deductions in the absence of objective evidence, that the substantive and a minimum of formal requirements were met.
Nevertheless, Danish case-law sourced from the provision did suggest, that the objectives of the VAT directive were not properly enforced. This was likely a case of VAT being addressed under the influence of principles only applicable to direct taxes, namely the “net-income-principle”, governed by the Act on Taxation of Income and Property §§ 4-6. The tax a ppeals a gency, in c ase S KM2021.456.LSR, t ook i t u pon i tself to c orrect t he w rongdoings, however not without pushback from the tax authorities. “The assessment replaces the evidence”, they argued. The conclusion of the thesis is that even though the provision does not allow VAT deduction purely based on assessment, it had resulted in case-law doing just so. The tax appeals agency did manage to
turn the ship around, and certain safeguards have been put in place by the authorities to correct the misguided policy. However, much is still to be desired in terms of clarity, when it comes to the rules governing the right of deduction of VAT.