Vesselina Petkova[1]

 

The commentary discusses the Bulgarian domestic provisions concerning the right to VAT deduction for supplies received prior to the VAT registration of a taxable person and their compliance with the basic principles of the VAT system and the Court of Justice case-law.

 

The analysis reviews the domestic statutory requirements for the arising and exercise of the right to VAT deduction and poses the following main questions relevant to the VAT deduction right:

 

(i)             Is it admissible to restrict the right to VAT deduction for supplies acquired prior to the VAT registration only to goods which are treated as assets as per the accounting legislation and standards and which are available at the date of the VAT registration?

(ii)            Do the Court of Justice case-law and the VAT principles preclude national legislation, which subjects the arising of the right to VAT deduction, to the VAT registration and the preparation of an inventory of goods?

(iii)           Should the 7-day deadline for filing the inventory and the 3-month term for enjoying the right to VAT deduction be treated as too short in the light of the Court of Justice case-law?

(iv)          Should the preclusion of the right to VAT deduction in case of non-filing of the inventory within the 7-day deadline be considered as disproportional sanction violating the neutrality and effectiveness principles?

 

In the course of the commentary two recent cornerstone decisions on preliminary ruling requests delivered by the Supreme Administrative Court are reviewed and the conclusions of the court in each of them are analyzed and compared. Special attention is given to the arguments for refuting the request for preliminary ruling referral in the first case and to the questions which the Supreme Administrative Court referred for preliminary ruling to the Court of Justice in the second case.

 

Further to the review of the domestic case-law, some of the emblematic Court of Justice judgments are invoked and the major principles of neutrality, proportionality, effectiveness and equivalence of the VAT system are discussed. A separate section is dedicated to Court of Justice judgment in case C-385/09 Nidera which specifically deals the issue of VAT deduction enjoyed for goods acquired prior to the VAT registration.

 

The discussion continues with a separate analysis on each of the questions posed in the opening of the article. The summary of the arguments reveals the conclusion that the Bulgarian domestic provisions on the right of deduction for supplies acquired prior to the VAT registration are incompliant with EU law and violate the basic principles of the VAT system in terms of the restrictions posed to the supplies eligible to VAT deduction (only assets which are available at the time of the VAT registration), the capacity of the person (only VAT registered persons), the filing of specific documents (an inventory of assets) and the tight deadlines (7-day term for filing the inventory of the assets and 3-month period for exercising the right to VAT deduction).

 

The commentary comes to the conclusion that making the Bulgarian courts and administrative bodies familiar with the basic VAT principles and with the rulings of the Court is a step forward towards a better understanding of the ground rules of the VAT system which must prevail over the formal and sometimes overly complicated technicalities that may prevent the taxable persons from enjoying the rights, essential for the common system of VAT.

 

 

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Линк към цялта статия на български език: ДАНЪЧНИЯТ КРЕДИТ ЗА СТОКИ И УСЛУГИ, ЗАКУПЕНИ ПРЕДИ ДДС РЕГИСТРАЦИЯТА – МИСИЯТА (НЕ)ВЪЗМОЖНА?

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[1] Associate lawyer at Delchev and Partners LLP.