On 08/05/2019, the ECJ ruled on VT reference C-712/17*.

The Court stated that:

  • in a situation, in which fictitious circular sales of electricity made between the same traders and for the same amounts did not cause tax losses, the principles of neutrality and proportionality, must be interpreted as not precluding national legislation which excludes the right to VAT relating to fictitious transactions while requiring the persons who enter VAT on an invoice to pay that tax, including for a fictitious transaction, provided that national law allows the tax liability arising from that obligation to be adjusted when the issuer of that invoice, who was not acting in good faith, has, in sufficient time, wholly eliminated the risk of any loss of tax revenue;
  • the principles of proportionality and neutrality of VAT must be interpreted as precluding, in a situation such as that at issue in the main proceedings, a rule of national law under which the unlawful deduction of VAT is penalised by a fine equal to the amount of the deduction made.


*All ECJ rulings should be read in the concrete context.