VAT Newsletter 3/2013

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The European Court of Justice („ECJ”) has ruled on the case C-527/11 (Ablessio SIA)

The dispute in this case refers to the refusal of the Latvian tax authorities to register for VAT purposes Ablessio SIA, on the grounds that the company did not have the material, technical and financial resources to carry out the declared economic activity, namely the provision of construction services.

ECJ concludes that based on the provisions of Directive 2006/112, the tax authority of a Member State may not refuse to assign a value added tax identification number to a company solely on the ground that, in the opinion of that authority, the company does not have at its disposal the material, technical and financial resources to carry out the economic activity declared, and that the owner of the shares in that company has already obtained, on various occasions, such an identification number for companies which never carried out any real economic activity, and the shares of which were transferred immediately after obtaining the VAT number, where the tax authority concerned has not established, on the basis of objective factors, that there is sound evidence leading to the suspicion that the VAT identification number assigned will be used fraudulently.

It is for the referring court to assess whether that tax authority provided serious evidence of the existence of a tax evasion risk.

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