VAT deduction and simulated transactions: Cassation 16580/2025

In judgment No. 16580 of 20 June 2025, the Tax Section of the Court of Cassation addressed VAT deduction in a case involving simulated purchases and sham interposition. The official headnote is Rv. 675105-01.

The transaction must actually occur

The Court states that the right to deduct VAT requires proof that the taxable supply of goods or services actually took place. A simulated purchase does not justify deduction because the connection with downstream taxed transactions is absent.

The electricity import case

The case described in the headnote concerns a company that circumvented statutory limits on imports of electricity from non-renewable sources through a third company. That entity genuinely existed and was not merely a shell company, but was fictitiously interposed to carry out the fraudulent arrangement. The Court of Cassation set aside the decision allowing deduction and remanded the case.

The scope of the principle

In the case examined, the intermediary company's actual existence did not make VAT on the simulated purchases deductible. The decisive issue was whether the transaction actually occurred, not merely whether the entities or documents formally existed.

This principle concerns the circumstances examined and is not a complete list of VAT deduction requirements for every type of transaction. Applying it to another case requires examining the transactions and the available evidence.

Official sources: Corte di cassazione, Rassegna del Massimario.