Optigen/Bond House v HMRC [2006] EUECJ C-354/03

Preliminary ruling of the European Court of Justice confirming that innocent traders that happen to be a link in a carousel MTIC fraud are entitled to a refund of their input VAT. There were three joined cases (Optigen, Fulcrum and Bond House).

The Court rejected HMRC's argument that these transactions did not constitute economic activity (and therefore were outside the scope of VAT) because the only purpose of the carousel, taken as a whole, was criminal rather than a legitimate business. Instead it held that the qualification of a transaction as economic activity under the Sixth VAT directive was to be assessed on the basis of the facts relating directly to this transaction, disregarding the existence of a carousel of which the trader claiming input VAT had no knowledge and no means of knowledge.

For further information or advice please contact Franck Latrémolière.

Filed under ECJ/CFI, Economic activity, Tax fraud, VAT.

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