In implementation of the provisions of the Law No. 92/2014, dated July 24, 2014 “For the value-added tax in the Republic of Albania,” as amended, regardless of whether the taxable person is subject to the provisions of Articles 69 and 70 of the Law, the deduction of VAT shall not be allowed in cases where the taxpayer holds an invoice issued by third parties in non-compliance with, or in violation of, the provisions of the Law.

Cases of violations

• The taxable purchaser receives an invoice showing VAT issued by the seller, who is not entitled to calculate VAT under this Law. In this case, the buyer, despite having paid the invoice, must not deduct the VAT shown on the invoice, while the seller who has wrongly calculated it must pay the VAT to the Tax Administration.
• The taxable purchaser has received an invoice in which the price paid does not correspond to the supply of goods or services. In this case, the purchaser is not entitled to deduct the VAT shown on the invoice.
• The taxable purchaser receives an invoice showing a VAT amount that exceeds the amount of VAT that should have been charged under this Law. In this case, the purchaser, regardless of whether they have paid it, must not deduct the excess VAT amount.
• The taxable person to whom a supply of goods or services has been made under circumstances where the VAT charged has not been paid as a result of fraud is not entitled to deduct the VAT shown on the invoice.

Warning!
In cases where the taxable person, for whom a supply of goods or services has been made and who is aware that VAT is payable on that supply or on previous supplies, has not been paid due to fraud, then the taxable purchaser is jointly and severally liable with the supplier for the payment of VAT.

Doubt about the right of descent

Questioning the right to deduct depends on proving that an initial fraud was committed by the direct supplier, as well as on the buyer's awareness—or inability to ignore—that by making the purchase, he was participating in a fraud.

To ensure that a fraud has been committed by the direct supplier, a series of verifications are carried out:

• First, it must be determined that the supplier of a good has not irregularly settled the VAT due on the supply of the good to his customer. For the supplier, the fraud consists of failing to remit to the tax authority the VAT invoiced to his customer, while that customer has deducted it as part of a fraudulent scheme.
• On the other hand, it is neither necessary nor important to prove whether the buyer made a profit from the fraud. The buyer “was aware, or could not have ignored,” the fact that participating in a fraud involves failing to remit VAT.

Evaluation of elements related to fraud

• For the buyer to be “aware,” there must be objective, indisputable elements showing that the buyer knew of the fraud committed by his supplier.
• That the buyer “could not have ignored” must be shown objectively and irrefutably that the buyer should have been aware of the fraud, meaning that the facts are such that the buyer cannot claim not to have known of the fraud's existence.

Source: General Directorate of Taxes.