The European Court of Justice ruled in Case T-363/25 that VAT deductions cannot be claimed on re-invoiced supplies when the underlying transaction structure is deemed fictitious. A Hungarian automotive parts trader was denied input VAT deduction on purchases from German suppliers re-invoiced through a domestic intermediary.
The ECJ ruled that VAT deductions cannot be claimed on re-invoiced supplies when the underlying transaction structure is deemed fictitious, even if invoices appear valid.
The ECJ ruled that VAT Directive 2006/112/EC must be interpreted as precluding input VAT deduction when supplies are re-invoiced through intermediaries without legitimate commercial substance.
Hungarian tax authorities deemed the invoice fictitious because goods were purchased from German suppliers but re-invoiced through a domestic intermediary solely under a cooperation agreement.
Organisations using intermediaries must ensure legitimate commercial substance exists in the transaction structure, not merely VAT claim structuring, to support input VAT deduction claims.
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