In the determination of the taxable amount of a transaction concealed by taxable persons for VAT purposes, the amounts paid and received as reconstituted by the tax authority must be regarded as already including that tax

(Source: Court of Justice of the EU)

Any other interpretation would be contrary to the principle of VAT neutrality

The Lito group is a group of companies responsible for the management of infrastructure and
orchestras for patron saint feast days and village festivals in Galicia (Spain). In the context of an
activity subject to value added tax (VAT), an agent for performing artists would negotiate
performances by orchestras on behalf of the Lito group with the municipal festival committees. The
festival committees paid in cash and there were no invoices. These payments were not declared to
the tax authority for the purposes of either corporate tax or VAT. The agent would receive 10% of
the Lito group’s income. Payments to him were also made in cash, with no invoices, and were not
declared, either. Since the agent did not issue invoices, he did not complete VAT returns.

Full Press Release – 117/2021 : 1 July 2021 – Judgment of the Court of Justice in Case C-521/19

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