Abstract
This article focuses on the issue of the definition of the tax administrator's competence to refuse the right to deduct the input value added tax or the status of the exempted transaction from value added tax with the right to deduct input tax. Its aim is to analyse relevant case law of the Court of Justice of the European Union and the Supreme administrative court of the Czech Republic and to provide the opinion of the author, how this doctrine shall be applied in the European Union conformally way.
The particular court decisions are examined by the descriptive and analytic method and discovered conclusions are generalized with respect to the possible pitfalls of the Czech court praxis. The result of this article consists in the complete insight to the doctrine of the refusal of the status of the exempted transaction or the right to deduct of input value added tax, which is based on the analysis of the objective circumstances of every case and knowledge test of the taxable person about its participation or possible participation in the business chain affected by the fraud if this person has not undertook every precaution which could reasonably be required of it to ensure that its transactions are not connected with fraud.
Based on the acquired conclusions, the tendency of the Court of Justice of the European Union to established the universal construction of the fight against the most common B2B tax frauds could be deduced if the tax administrator bears the burden of proof successfully. However, the relevant rules of the application of such instrument are not met by the national organs of the public power in the Czech Republic in every case.