European Court of Justice Issues Preliminary Ruling on Italian Input VAT Deduction Rules

The European Court of Justice (ECJ) March 7 issued a preliminary ruling for Case No. C- 341/22, on Italian input VAT deduction rules. The taxpayer, an Italian company, engaged in the production and marketing of wine and sought to deduct input VAT. The Italian Tax Authority refused the VAT deduction on the basis that the taxpayer was a non-operating company, because the taxpayer’s VAT transactions fell below the threshold under which companies are presumed to be non-operational. The ECJ held that, under the common VAT system and the principles of VAT neutrality and proportionality: 1) the taxpayer can’t be denied ...