The consequences to contract with non-compliant suppliers: the right to deduct expenses and input vat. Analysis of the ecj rulings

Abstract

In this paper we analyse one of the most important problems that derive from some measures adopted in Spain to fight tax fraud. The entrepreneurs who contract with non-compliant suppliers can suffer unexpected consequences from such measures. In particular, they can be deprived from the right to deduct tax credits that result from operations with non compliant suppliers. As consecuence, this would force entrepreneurs to maintain a high level of vigilance over their suppliers.

The impact of these measures on the formal and material aspects of the fiscal deductions is studied from a domestic as well as EU law perspective considering the ECJ rulings on schemes of VAT fraud and avoidance.