Global Ink Trade: guidelines bind the administration — and the primacy of EU law binds the courts

CJEU, judgment of 11 January 2024 — C-537/22, Global Ink Trade, ECLI:EU:C:2024:6 · Full text (PDF)

The case

The Hungarian wholesaler Global Ink Trade purchased office supplies in 2012/2013 which, according to the invoices, were delivered by Office Builder Kft. (para 7). Audits led the administration to find that Office Builder had carried on no genuine economic activity; its imprisoned managing director denied ever issuing invoices, and the e-mail address used did not match the company’s official one (para 8). Witnesses confirmed that the goods had been delivered; the managing director of Global Ink Trade had checked the company’s entry in the commercial register and met a representative in person, with all further contact by e-mail (para 9). The administration deemed the invoices not credible, accused the business of insufficient diligence and of “passive tax evasion”, and refused the deduction (para 10). The referring court considered itself bound by case-law of the Kúria which declined to follow the CJEU’s orders in Vikingo Fővállalkozó and Crewprint on the ground that they contained no new elements of interpretation (paras 12–14).

The court’s reasoning

On the primacy of EU law the Court is unambiguous: the referring court is bound by the Court’s interpretation and must disregard the assessments of a higher national court where they are incompatible with it — even settled national case-law must, where necessary, be revised (paras 24 et seq., 28, 30). It is irrelevant whether the CJEU ruled by judgment or by reasoned order under Article 99 of the Rules of Procedure: the two do not differ in their scope or their effects (para 27). A mere duty to give reasons when departing from national precedent remains permissible (paras 29 et seq.).

On substance, the Court confirms the evidential architecture of the Aquila line: refusal is the exception, and the authority must establish to the requisite legal standard the objective factors of the fraud and of the trader’s knowledge or constructive knowledge (paras 35–37). In the Court’s words — rendered here from the German text of the judgment: “That evidential requirement prohibits, whatever the type of fraud or the acts examined, recourse to suppositions or presumptions which would have the effect, by reversing the burden of proof, of undermining the fundamental principle of the common system of VAT constituted by the right to deduct and, therefore, the effectiveness of EU law” (para 55). The trader’s diligence remains graduated: increased care where there are indications, but no complex and far-reaching checks of the administrative kind (para 39); in particular, a trader may not be required as a general matter to verify that the invoice issuer has met his VAT declaration and payment obligations (para 50). Newly accentuated is the review of guidelines: Member States may use guidelines to specify the level of diligence required (para 41); but guidelines may neither hollow out the authority’s duty of proof nor shift official control functions onto the taxable person (paras 42–44) — and the administration must be held to its own clearly drafted and foreseeable guidelines, with the court examining whether the requirements actually applied contradicted the published guidance (paras 45 et seq., 51 et seq.). As for carousel allegations: mere membership of an invoicing chain is not enough; the authority must identify the constituent elements of the evasion precisely and prove the trader’s involvement (paras 56 et seq.).

Where the judgment sits in the case-law

Global Ink Trade carries the evidential propositions of CJEU, judgment of 1 December 2022 — C-512/21, Aquila Part Prod Com (there paras 34–36), into a setting in which national precedent and administrative practice threatened to override EU requirements — and reinforces them with two procedural safeguards: the duty of lower courts to disapply supreme-court assessments incompatible with EU law (para 30), and the administration’s legal-certainty-based self-binding to its published guidelines (paras 45 et seq., 51 et seq.). The judgment thus connects with the procedural protection line of CJEU, judgment of 16 October 2019 — C-189/18, Glencore Agriculture Hungary, and, together with CJEU, judgment of 21 June 2012 — Joined Cases C-80/11 and C-142/11, Mahagében and Dávid, frames the EU-law standard against which German audit and appeal practice under Section 25f of the VAT Act must be measured.

Academic commentary

Wäger discusses the decision in his survey of the recent refusal case-law (Wäger, UR 2025, 81 (109 et seq.)). Heidner incorporates the burden-of-proof and diligence line into the commentary on Section 25f (Heidner, in: Bunjes, UStG, 24th ed. 2025, § 25f Rn. 9); Spilker regards German refusal practice as further constrained by the strict EU evidential requirements (Spilker, UR 2023, 589 (590)). Vobbe/Pötters supply the doctrinal counterweight to excessive recourse against honest traders (Vobbe/Pötters, UR 2023, 777 (781)).

Three levels — kept strictly apart

Operative holding: The tax administration may in principle base its diligence assessment on published guidelines and refuse the deduction where invoices are “not credible” owing to a lack of care attributable to the taxable person — but only provided it proves, to the requisite legal standard, the objective factors of the fraud and of the trader’s knowledge or constructive knowledge; the practice and guidelines do not burden the trader with complex and far-reaching checks; the requirements applied correspond to the guidelines; and the published guidelines were clearly drafted and foreseeable in their application (para 52). A national court must depart from assessments of a higher court that are incompatible with the CJEU’s interpretation — including interpretation given by reasoned order (para 30). Administrative practice: There is no express German administrative rule on guideline self-binding in refusal cases; in general terms, sec. 25f.1 of the VAT Application Decree (UStAE, Federal Ministry of Finance circular of 15 June 2022 — III C 5 - S 7429-b/21/10003 :001, Federal Tax Gazette I 2022, 1001) acknowledges the administration’s burden of establishing the facts. Our conclusion for the defence: In our assessment the judgment supplies a twofold audit programme: the assessment notice is to be measured, first, against the Aquila evidential propositions and, secondly, against the administration’s own pronouncements — a business that archives the authority’s guidelines, leaflets and risk notices can challenge departures from them as a breach of legal certainty.

Levers for the defence

• Run the guideline comparison: the demands made in the audit are to be set against the published administrative guidelines; contradictions fall to be examined by the court under paras 51 et seq. — self-binding becomes a matter of evidence.
• Enforce the ban on presumptions: recourse to suppositions and presumptions is prohibited whatever the type of fraud (para 55); sweeping “credibility” reasoning about invoices is no substitute for proof.
• Fend off blanket duties: verification of the supplier’s declaration and payment record may not be demanded as a general matter (para 50); indirect impositions via the assessment of evidence are equally impermissible (para 44).
• Isolate the carousel building block: mere involvement in an invoicing chain does not carry a refusal; the authority must identify the evasion concretely and prove participation (paras 56 et seq.).
• Use the precedent objection: where the other side relies on national supreme-court case-law departing from the CJEU line, its inapplicability should be pleaded — the Court’s orders rank equally with judgments (paras 27, 30); as our own assessment: the same logic applies in engaging national case-law on Section 25f.

Defence assessment: POSITIVE · Keywords: burden of proof, ban on presumptions, guideline self-binding, primacy of EU law, diligence standard, invoice credibility

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