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New conditions for the adjustment of an invoice where the VAT is incorrectly stated

The ECJ has stated its position on a request from Austria for a preliminary ruling. This ruling is also applicable to German VAT law and will also affect the adjustment of invoices by German companies.

In the relevant year of 2019, the Austrian claimant operated an indoor playground whereby it provided its services exclusively to private end users. The billing was via invoices for small amounts with the VAT stated separately and calculated on the basis of the standard rate. Having realised that the reduced VAT rate would have been applicable, the claimant adjusted its VAT return and asked the tax authorities to refund the difference. However, the latter assumed that the total amount that was stated was owed and rejected the request. Firstly, the claimant had not adjusted its invoices and, secondly, the adjustment that was sought would have resulted in the claimant being unjustly enriched since its customers would have had to bear the costs of the higher rate of VAT. 

Up to now, in such cases, the German fiscal administration required an effective invoice adjustment in order to recover the VAT - irrespective of whether or not the invoice recipient was a business. The ECJ, in its ruling of 8.12.2022 (case: C-378/21), concluded that a company that has supplied a service and that had stated on the invoice an amount of VAT calculated on the basis of an incorrect rate is not liable for the part of the VAT invoiced incorrectly if there is no risk of loss of tax revenue. 

Result: This requirement was fulfilled here since the relevant service was provided exclusively to end users who were not authorised to make input tax deductions. Therefore, there was no need for an adjustment to the invoice.

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