Court of Justice (Third Chamber) 6 December 2012, C‑285/11 (Bonik EOOD v Direktor na Direktsia ‘Obzhalvane i upravlenie na izpalnenieto’ — Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite.)

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The Court ruled that under Articles 2, 9, 14, 62, 63, 167, 168, and 178 of Directive 2006/112/EC, a taxable person cannot be denied the right to deduct VAT based on alleged fraud in the supply chain unless it is proven that they knew or should have known about the fraud. The decision emphasizes that the burden of proof lies with the tax authorities to establish objective evidence of the taxable person's knowledge of the fraudulent activity. This interpretation reinforces the principle that the right to deduct VAT is fundamental and exceptions must be strictly justified.AI