In the analysed dispute, the tax authority did not allow the taxable person to deduct input VAT for the reason that the buyer’s VAT registration number and address were missing from the invoice submitted for inspection. This means that the invoice did not comply with the requirements set out in § 37 of the Value Added Tax Act. The taxable person resubmitted the invoices in the course of the inspection after the necessary data had been written overleaf, but the tax authority did not accept them anymore. The tax authority explained that as input VAT can only be declared on the basis of an invoice, it is of no importance from the viewpoint of taxation whether the details missing from the invoice had been given in another document. The tax authority emphasised that the fact whether or not the service noted on the invoice was received is not the object of the dispute. The details on the invoice are the only issue. Or the lack thereof, to be more precise.
The Administrative Chamber of the Supreme Court disagreed with the tax authority’s position that the data set out in subsection 37 (7) of the Value Added Tax Act are equally important in all cases and the absence of any data whatsoever from an invoice excludes the calculation of input VAT on the basis of such an invoice. The Chamber has repeatedly emphasised in its earlier rulings that important and unimportant formal mistakes in tax accounting have to be distinguished1. As a rule, the absence of the seller’s VAT registration number and address is regarded as an unimportant formal mistake by the Chamber. This conclusion arises from the fact that Estonia has a single, not a regional, register of VAT payers2. The name and registration code of the company are generally enough to reliably identify the seller and verify whether they are a registered VAT payer. The data of the seller’s identity and the goods or services, however, must be considered important and their absence means that input VAT cannot be calculated on the basis of such an invoice that does not meet requirements3.
The European Court of Justice has already found that the principle of neutrality of VAT requires that the right to deduct input VAT be given when the substantive requirements are met, even if the taxable person has failed to fulfil some formal requirements4. Consequently, if the tax authority has the data required to ascertain that the substantive requirements have been met, it cannot establish any restrictions on the VAT payer’s right to deduct input VAT, which may make this right non-existent5.
The Administrative Chamber of the Supreme Court is of the opinion that the settled case law of the European Court of Justice clearly indicates that noting the issuer’s address and VAT number on the invoice is a formal requirement ignoring which is not a sufficient basis for prohibiting immediate deduction of input VAT. This means that the relevant provisions of the Value Added Tax Act must be interpreted in such a manner that an invoice with formal omissions can be the basis for deducting input VAT. As a rule, the absence of the seller’s VAT registration number and address is regarded as an unimportant formal mistake. The data of the seller’s identity and the goods or services, however, are important and their absence means that input VAT cannot be calculated on the basis of such an invoice that does not meet the requirements.
1 See point 9 of the judgment made in case 3-3-1-59-15 and the settled case law referred to therein.
2 See 3-3-1-59-15, point 11.
3 See, e.g. 3-3-1-81-12, point 11, and 3-3-1-57-13, points 11–13.
4 See judgments Ecotrade, C 95/07 and C 96/07, point 63; Uszodaépítő, C 392/09 point, 39; Nidera Handelscompagnie, C 385/09, points 42 and 43, and Idexx Laboratories Italia, C 590/13, point 38.
5 See judgment Idexx LaboratoriesItalia, C 590/13, point 40.
