In RGEX GmbHc v Finanzamt Neuss (Case C‑374/16) and Finanzamt Bergisch Gladbach v I Butin (Case C‑375/16), the German tax authorities sought to deny input VAT because the suppliers’ invoice addresses were not where they carried on their business.


RGEX GmbHc (RGEX) sold cars out of Germany. It had purchased cars from EXTEL GmbH (EXTEL) and the input tax deductions claimed on the basis of invoices issued by EXTEL had been refused, because EXTEL was considered a “ghost company” which did not have any establishment at the address shown on the invoice.

Similarly, Mr Butin ran a car dealership in Germany and relied on invoices to deduct input VAT for a number of vehicles acquired from a third party for resale. The German tax authorities refused claims for deduction of input tax on the ground that the address stipulated on the invoices issued by the third party was incorrect. The address served as a letterbox address from which the third party collected its post.

The taxpayers lodged their respective appeals. The national court, having doubts as to the correct interpretation of Article 226(5) of the VAT Directive, decided to refer questions to the CJEU for a preliminary ruling.

Advocate General’s opinion

Advocate General Wahl (AG) delivered his opinion on 5 July 2017 and confirmed that the fact that the address indicated on an invoice was a mere letterbox address did not justify the denial of the right to deduct input tax.

In reaching his decision, the AG observed that the right to deduction was a key element of the VAT system and, as such, should not in principle be limited. He confirmed that member states may not make the exercise of the right to deduct VAT dependent on compliance with conditions relating to the content of invoices, which are not expressly laid down in the VAT Directive.

In his view, the Court had consistently adopted a ‘realistic and pragmatic’ approach to the interpretation of the VAT rules, rather than a formalistic one. In the view of the AG the strict approach adopted by the German tax authorities was not justified on a literal interpretation of Article 226(5), which referred to any type of address, including a letterbox address, provided that the trader could be contacted at that address. The approach of the German authorities could not be justified by a purposive interpretation of the VAT system. The purpose of the requirement for an address was simply to identify the trader. A tangible presence of the trader’s business at that address was therefore not strictly necessary.


Questions concerning the formalities of VAT invoices and the denial of deduction of input tax are a common theme in recent case law. The AG has confirmed that the fact an address referred to on an invoice is a mere letterbox address does not justify the denial of a right to deduct input tax.

Tax authorities of member states cannot adopt an unrealistic or non-purposive approach to statutory construction in an attempt to deny taxpayers the right to deduct input tax.

A copy of the AG’s opinion is available to view here.