Here are the facts. Someone liable for VAT had been suspected by the administration of having purchased goods at a food wholesaler, without paying the VAT. The wholesaler had admitted having set up a double purchaser card system, in which some cards mentioned the names of real purchasers and the others the names of fictitious purchasers.

The administration issued a constraint order requiring the payment of 34.000 € as VAT, in addition to a 68.000 € fine. The constraint was overturned by the Court of first Instance of Brussels. The administration however lodged an appeal and the case was submitted to the Court of Appeal of Brussels.

In order to demonstrate that the appellee was indeed liable for such an amount of VAT, the administration based its argumentation on an official report which mentioned correlations between the real and the fictitious purchasers that appeared in a listing. The listing, that had allegedly been drawn up by the wholesaler, established a link between the taxpayer and the fictitious purchaser, hereby named X, for the ease of understanding.

The Court reminded the parties that in this matter, official reports that mention an article on which the administration bases its case only prove the article's existence and does not reinforce the presumption grounded on this article.

The drafting of an official report does not add any probative force to the original article (In this case, the document in which the correlations appeared). Moreover the Court considered that the use of the fake card and the fact that it was used by a single taxpayer were pure suppositions, the more so as they were corroborated by no substantial data.

The administration also based its case on a second official report mentioning cross checkings between the correlation listing and other listings. The Court ruled that nevertheless it was necessary that the facts on which the administration based its case be effectively known and unchallenged, and also that the listing annexed to the official report had no probationary value because it consisted of data coming from other listings. Thus the administration had relied on a cascade of presumptions without any probative force.

Moreover and especially, the administration had noticed that 25 of the 184 invoices in the name of the taxpayer had been issued immediately before or after invoices in issued in the name of X, and had concluded from this observation that the taxpayer and the X were indeed the same person.

After having pointed out that evidence by presumption requires that the reasoning leading to conclusive evidence be obviously logical and do not suffer any dispute, the Court stated that the observations on the 25 of the 184 invoices did not constitute a sufficient presumption. The Court also estimated that the administration's reasoning was debatable since the administration had not checked whether or not X (642 invoices) could have purchased its goods at the same time as other purchasers, since the fake VAT card could have been used by several persons.

Lastly, the administration considered that the fact that many (68%) of the wholesaler's customers had accepted a transaction with him was an additional proof that the appellee had purchased goods with the card in the name of X. While specifying that these assertions could not be checked, the Court ruled that, even if this percentage had been real, it did not prove that the taxpayer had carried out purchases in the name of X.

Thus, the Court of Appeal of Brussels dismissed the appeal of the administration, confirming thereby the first instance judgement.

Of course this decision has to be approved.

The probative force of the VAT administration's official reports only applies to the observations made directly by the agents of the administration. Moreover, a presumption can be based only on established facts and shall be a logical and unquestionable consequence of this fact. The administration often seems to forget it.