On May 2, 2019, the ECJ released the decision in the case C-133/18 (Sea Chefs Cruise Services).
Context: Reference for a preliminary ruling — Value added tax (VAT) — Refund of VAT — Directive 2008/9/EC — Article 20 — Request for additional information made by the Member State of refund — Information to be provided within 1 month of the date on which the request reaches the person to whom it is addressed — Legal nature of that time limit and consequences of the failure to comply with it
Summary
- Case Background: The case involved Sea Chefs Cruise Services GmbH, a German company that applied for a VAT refund from France for the year 2014. The French tax authority rejected the application due to the company’s failure to provide additional information within a specified one-month period after a request was made.
- Legal Issue: The primary question for the Court was whether the one-month time limit for providing additional information requested by the Member State of refund constitutes a limitation period, which would result in the forfeiture of the right to regularize the refund application if not complied with.
- Court’s Interpretation: The Court ruled that the one-month period outlined in Article 20(2) of Directive 2008/9 is not a limitation period. Therefore, even if the taxable person fails to respond within that timeframe, they still retain the right to regularize their refund application by presenting the necessary information to a national court.
- Implications for VAT Refunds: The judgment emphasizes that the right to a VAT refund is a fundamental principle in the EU’s VAT system, aimed at ensuring neutrality in taxation. Thus, a failure to meet the one-month deadline should not penalize the applicant by extinguishing their right to a refund.
- Legal Protections: The decision highlights the importance of the principles of neutrality and proportionality in VAT law, ensuring that taxpayers are not unduly disadvantaged by procedural requirements that are not explicitly designated as limitations. This allows taxpayers to appeal and provide necessary documentation even after the specified period has lapsed.
Articles in the EU VAT Directive 2006/112/EC
- Article 167: This article states that a right of deduction arises at the time the deductible tax becomes chargeable.
- Article 169: It specifies the conditions under which taxable persons are entitled to deduct VAT, particularly relating to transactions outside the Member State in which the tax is due or paid.
- Article 170: This article outlines the entitlement to VAT refunds for taxable persons not established in the Member State where they purchase goods and services or import goods subject to VAT.
- Article 171(1): This article relates to the refund of VAT to taxable persons established in another Member State, in accordance with the detailed rules laid down in Directive 2008/9/EC.
Facts
- Parties Involved: The case was brought before the tribunal administratif de Montreuil (Administrative Court, Montreuil, France) by Sea Chefs Cruise Services GmbH, a company established in Germany, against the French Minister for the Public Sector and Public Accounts.
- VAT Refund Application: On September 17, 2015, Sea Chefs submitted a request for a refund of VAT that it had paid for the period from January 1 to December 31, 2014. This request was made through the electronic portal available to businesses in its Member State of establishment (Germany).
- Request for Additional Information: On December 14, 2015, the French tax authority sent an email to Sea Chefs requesting additional information necessary to process the VAT refund application. The company was required to respond to this request within one month.
- Failure to Comply: Sea Chefs failed to provide the requested information within the stipulated one-month period. Consequently, on January 29, 2016, the French tax authority rejected the company’s refund application, citing the lack of response to the request for additional information.
- Legal Action: In response to the rejection of its VAT refund application, Sea Chefs filed an action against the French tax authority’s decision before the tribunal administratif de Montreuil. The company argued that the inability to regularize its situation by providing the requested information was contrary to the principles of VAT neutrality and proportionality.
- Referral to the Court of Justice: The tribunal administratif de Montreuil, uncertain about the implications of the failure to comply with the one-month deadline for providing additional information, referred a question to the Court of Justice of the European Union (CJEU) for a preliminary ruling. The question pertained to whether the one-month period was a limitation period affecting the right to refund applications.
Questions
Must Article 20(2) of [Directive 2008/9] be interpreted as meaning that it creates a limitation rule which has the effect that a taxable person of a Member State which applies for a refund of [VAT] from a Member State in which it is not established is not able to regularise its refund application before a tax court if it has not complied with the time limit for replying to a request for information made by the administration in accordance with the provisions of [Article 20(1) of that directive] or, on the contrary, as meaning that that taxable person may, in the context of the right of appeal laid down in Article 23 of that directive, and having regard to the principles of neutrality and proportionality of VAT, regularise its application before the tax court?
AG Opinion
Article 20(2) of Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State must be interpreted as meaning that it does not create a mandatory time limit, non-compliance with which results in the automatic forfeiture of the right to a refund of value added tax (VAT) from a Member State. A taxable person may thus regularise its VAT refund application by adducing evidence in the context of an appeal pursuant to Article 23 of that directive.
Decision
Article 20(2) of Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State must be interpreted as meaning that the period of 1 month laid down in that provision for providing the Member State of refund with the additional information requested by that Member State is not a limitation period whereby, if that period is exceeded or in the event of a failure to reply, the taxable person loses the possibility of regularising his refund application by producing, directly before the national court, additional information capable of establishing the existence of his right to the refund of value added tax.
Source
Reference to other ECJ Cases
- Volkswagen (C-533/16): This case was cited to underscore the fundamental principle of the right to deduct VAT and the right to a refund as integral components of the VAT system established by EU legislation. The judgment emphasized that these rights are designed to relieve the operator of the burden of VAT due or paid in the course of their economic activities.
- Elsacom (C-294/11): The Court referenced this case to clarify that the deadline for submitting a VAT refund application is a limitation period. The phrase “au plus tard” (at the latest) was discussed, indicating that failure to comply with this deadline results in forfeiture of the right to a VAT refund.
- Other Case Law: The judgment also mentioned general principles established in case law regarding the compatibility of limitation periods with the VAT Directive, emphasizing the need for compliance with the principles of equivalence and effectiveness when it comes to VAT deduction and refund rights.
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