Input VAT deduction
The right to deduct input tax, i.e. the right to reduce the amount of tax due by the amount of input tax, is the basic and fundamental right of the taxpayer arising from the very structure of the value added tax as a value added tax. According to the basic principle expressed in Article 167 of Directive 2006/112 / EC, the right to deduct arises when the tax to be deducted becomes chargeable.
According to the provisions of art. 168 lit. a) Directive 2006/112 / EC, if the goods and services are used for the purposes of taxable transactions of the taxpayer, the taxpayer is entitled, in the Member State in which he carries out these transactions, to deduct the following amounts from the amount of VAT he is required to pay: VAT due or paid in that Member State on goods and services supplied to him or to be provided to him by another taxable person.
At the same time, pursuant to Article 178 lit. a) Directive 2006/112 / EC, in order to exercise the right of deduction, the taxpayer must meet the following conditions: in order to make the deduction referred to in art. 168 lit. (a) in respect of the supply of goods or services, must have an invoice drawn up in accordance with Title XI Chapter 3 Sections 3-6. The invoice issued in accordance with the VAT Directive should explicitly mention in particular the VAT identification number under which the taxpayer delivered the goods, the full name and address of the taxpayer and the quantity and type of goods supplied.
These EU rules create two basic material conditions and a formal condition, after which each VAT taxpayer can deduct input tax in each taxed transaction. The right to deduct VAT arises – under the VAT Directive – when the tax obligation arises in relation to the deductible tax, which means that the taxpayer-buyer can deduct the input tax as soon as the taxpayer-supplier incurs a tax obligation (tax due ). On the other hand, the requirement to have an invoice documenting the purchase of goods and services is intended to provide control over the input tax deduction process