The European Court of Justice determined that, unless the buyer is aware, or should have been aware that a VAT fraud was being committed by means of the supply at stake, the right to deduct the respective input VAT shall not be rejected.
The European Court of Justice has held that where the purchaser of immovable property unduly paid VAT to the seller, which then remitted it to the tax authority because the reverse charge regime should have applied, the purchaser should still be able to recover the undue VAT paid directly from the seller. In case this procedure becomes impossible or excessively difficult, (e.g., by reason of the insolvency of the seller) the purchaser ought to be entitled to address his claim for the undue VAT directly to the tax authority.
Furthermore, the ECJ considered excessively burdensome and contrary to the principle of proportionality to allow national tax authorities to impose on the purchaser of immovable property
8 found in the situation described a tax penalty of 50% of the VAT due to the authority where the authorities suffered no loss of revenue and no evidence of tax evasion arises.