Deduction of VAT

Case no. 115/2018 and case no. 116/2018
Judgment delivered on 26 March 2019

The Danish Ministry of Taxation
vs.
Sparbank A/S
and
The Danish Ministry of Taxation
vs.
Fortis Lease Danmark A/S

No entitlement to deduct VAT on machines that had never existed

The main issue in the case was whether the Danish Ministry of Taxation was right to refuse to let Sparbank and Fortis Lease Danmark deduct the VAT paid on the purchase of construction machinery on the grounds that the machines had never actually existed.

The Supreme Court stated that it is a condition for deducting VAT on goods sold to the company that the goods were in fact delivered. As it had to be considered that the machines for which Sparbank and Fortis Lease Danmark wished to deduct VAT had never existed, delivery had not been made, and they could not be allowed to deduct the VAT paid.

The High Court had reached a different conclusion.