In the German case of Finanzamt Köln-Nord v W Becker (CJEU Case C-104/12) a sole trader (B) who was also the managing director of a limited company was charged with bribery. He claimed a deduction for input tax on the fees charged by the lawyers who defended him. The tax authority rejected the claim and he appealed. The case was referred to the CJEU which rejected B’s contentions holding that ‘the supplies of lawyers’ services whose purpose is to avoid criminal penalties’ did not give rise to a right to deduct input tax.
Why it matters: The CJEU held that the costs of defending a criminal charge did not give rise to a right to deduct the relevant input tax. The decision here is in line...
