Invoice raised beforehand
Those who are in business are under a statutory obligation to raise invoices for the products they supply and/or the services they render. It is these invoices which entitle the recipient businesses to docking the value-added tax component (as input tax credit). Invoices are required to fulfil certain legal requirements. However, as the law does not dictate when exactly an invoice must be raised, it follows that this can be done in anticipation of the agreed consideration. Any document that satisfies (most of) the requirements governing invoices will qualify as an invoice.
Invoice, yes or no?
The Bois-le-Duc Court of Appeal was asked to pass judgment on whether a particular supplier-prepared document qualified as an invoice. Its decision in the matter would have a major impact on the (financial) year during which input tax credit entitlement had accrued to the client in question. The document in question pertained to a commercial property construction of which was yet to commence, and included an invoice number as well as mentioning the aggregate price and the value-added tax component thereof. Having previously ruled that the document failed to qualify as an invoice, the Tax and Customs Administration had imposed an additional tax assessment on the client, in compensation of the latter’s earlier input tax credit. The Court of Appeal decided that the document had indeed satisfied virtually all conditions to be imposed on an invoice. The client in question had sought input tax credit in 2008 even though he had not paid the actual invoice that year, whereas the supplier rather than settling up the value-added tax charge with the Tax and Customs Administration in 2008 had raised constituent invoices as the build progressed and the client had – rightly – refrained from seeking input tax relief for the value-added tax charges as per the constituent invoices.
Having established that the original document had qualified as an invoice, the Bois-le-Duc Court of Appeal went on to quash the additional tax assessment, referring in its judgment to the European Court of Justice’s 2016 ruling to the effect that it was not acceptable for the Tax and Customs Administration to disallow input tax credit because of the invoice’s alleged failure to comply with all of the formal conditions where it was aware that the de facto conditions upon which the input tax credit entitlement was contingent had been fulfilled: the Tax and Customs Administration in this particular case should also have taken the information as per the building contract into consideration.
Dutch version: Factuur uitgereikt voor aanvang prestatie