VAT Obligations of Entities Under Liquidation : Reflections From the European Court of Justice

The European Court of Justice (‘ECJ’) recently examined the statutory provisions in the context of European Value Added Tax (‘VAT’) regulations to opine upon the extent of restrictions that can be imposed upon entities which are under liquidation. This decision addresses a situation wherein the entity under liquidation nonetheless continues to carry out taxable supplies. In particular the right of deduction of input tax and the likely restrictions which can be imposed on such entities is considered. The ECJ interpreted the provision in a manner which, while safeguarding the interests of revenue, ensure that unnecessary restrictions are not placed on business which continue their activities notwithstanding the liquidation proceedings