Insights
VAT
Input Tax Deduction on Invoices Without VAT Indication
If a foreign entrepreneur fails to register for VAT in Austria and does not show VAT on its invoices, it still owes VAT in Austria.
The recipient of the services or of these invoices is however not entitled to deduct input tax, even if the foreign company subsequently declares the VAT to the tax authority via a protocol drawn up during a tax audit, which cannot be compared with an invoice. Furthermore, according to the Court of Justice of the European Union (EuGH), the correction of such an erroneous invoice may be refused by the authority.
Requirement: VAT owed and paid
Only recently the EuGH referred to its consistent case law, according to which input tax deduction is an integral part of the VAT system and may not be restricted in principle. The requirement for input tax deduction is that the VAT whose deduction is claimed has been owed and paid. Input tax deduction can in principle also be claimed where the formal requirements are not met, provided that the substantive conditions for input tax deduction are satisfied.
In one case the protocol submitted by a company to the authority did not meet the requirements, among other things because the company was named in the protocol both as supplier and as recipient of the supplies, so that it could not be equated with an invoice. The EuGH therefore concluded that the authority may refuse input tax deduction where a entrepreneur breaches the registration obligation, the invoice does not show VAT and only during an audit a protocol with VAT shown is produced.
On the question of correcting invoices the EuGH confirms that a rule excluding the correction of invoices is justified in order to ensure proper collection or to prevent tax evasion, provided that there is no risk to tax revenue.
Tip
If, during a tax‑authority audit in Austria, it is found that input tax deduction was made on the basis of a formally incorrect or deficient invoice, the defect may be remedied within a reasonable period set by the examiner. If the invoice is corrected within this period, the originally made input tax deduction may be retained. Where the VAT indication was incorrectly (initially too low) stated, this retroactive approach is not permissible, but a correction of the invoice is possible for the current input tax assessment period.
Requirement: VAT owed and paid
Only recently the EuGH referred to its consistent case law, according to which input tax deduction is an integral part of the VAT system and may not be restricted in principle. The requirement for input tax deduction is that the VAT whose deduction is claimed has been owed and paid. Input tax deduction can in principle also be claimed where the formal requirements are not met, provided that the substantive conditions for input tax deduction are satisfied.
In one case the protocol submitted by a company to the authority did not meet the requirements, among other things because the company was named in the protocol both as supplier and as recipient of the supplies, so that it could not be equated with an invoice. The EuGH therefore concluded that the authority may refuse input tax deduction where a entrepreneur breaches the registration obligation, the invoice does not show VAT and only during an audit a protocol with VAT shown is produced.
On the question of correcting invoices the EuGH confirms that a rule excluding the correction of invoices is justified in order to ensure proper collection or to prevent tax evasion, provided that there is no risk to tax revenue.
Tip
If, during a tax‑authority audit in Austria, it is found that input tax deduction was made on the basis of a formally incorrect or deficient invoice, the defect may be remedied within a reasonable period set by the examiner. If the invoice is corrected within this period, the originally made input tax deduction may be retained. Where the VAT indication was incorrectly (initially too low) stated, this retroactive approach is not permissible, but a correction of the invoice is possible for the current input tax assessment period.