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Recognition of an agreement as an invoice – Current ECJ requirements

The ECJ has expressed its view on the question of whether or not an agreement may be regarded as an invoice and the criteria that would have to be fulfilled for this. In the underlying case, the Supreme Court of the Republic of Slovenia had referred a question to the ECJ concerning the information that would necessarily have to be included in a contractual sale-and-lease back agreement, the conclusion of which was not followed by the issue of an invoice, for such an agreement to be considered an invoice.

Contractual sale-and-lease back agreement with the content of an invoice 

In the case for which the ECJ published its judgement on 29.9.2022 (case: C-235/21), the legal action had been brought by a company P that was the owner of a plot of land and a residential building in Slovenia. The company wanted to erect new buildings at this location and, to that end, concluded a contractual sale-and-lease back agreement with Raiffeisen Leasing (RL). According to this agreement, RL was required to buy the plot of land at a pre-determined price. The P company was required to pay the monthly lease instalments until the value of the land and the buildings to be constructed were repaid in full. The VAT amount was stated in this agreement. RL, as the lessor, did not subsequently issue an invoice and nor did it pay any VAT. However, the P company claimed input tax deduction on the basis of the contractual sale-and-lease back agreement because it believed that the agreement constituted an invoice.

Input tax deduction refused

The Slovenian tax authority refused the application for input tax deduction on the grounds that the transaction covered by the contract for sale was exempt from VAT. At the same time, the tax authority established that RL, as the lessor, had thus far not yet paid any VAT and now ordered RL to pay interest on the tax debt.

ECJ criteria for recognition as an invoice 

In the view of the ECJ, as set out in detail in its judgement of 29.9.2022, a contractual sale-and-lease back agreement, the conclusion of which was not followed by the issue of an invoice, may be regarded as an invoice within the meaning of the Directive on the VAT System. The prerequisite for this is that, besides the VAT being stated, the agreement must contain all the information necessary for the tax authorities to be able to establish whether or not, in a specific case, the substantive conditions for the input tax deduction have been satisfied. 

Please note: The ECJ’s judgement will also have to be consulted in the context of German contracts. Up to now, it has already been the case that in the event of the non-fulfilment of the obligation to provide all mandatory information within the meaning of the German VAT Act, the necessary information from a reference, in the agreement, to other documents has to be made accessible.

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