Austria MOF Clarifies Input VAT Deductions on Subcontractor Services Supported by Fraudulent Cover Invoices

The Austrian Federal Ministry of Finance April 22 posted online Federal Finance Court Decision No. RV/7104879/2020, clarifying input VAT deductions on subcontractor services supported by fraudulent cover invoices. The taxpayer, a construction company, claimed input VAT deductions and deductible operating expenses on its services. Following a tax audit, the Tax Office denied the deductions. On appeal, the Federal Finance Court found that: 1) the subcontractors weren’t the actual service providers, as supported by missing documentation, inconsistent invoices, and lack of personnel and infrastructure; 2) the taxpayer didn’t exercise the due diligence of a prudent businessperson and, therefore, knew or should ...