ECJ C-844/19 (TechnoRent) – Decision – Interest for late VAT refunds despite lack of national provision

On May 12, 2021, the ECJ issued the AG Opinion in the case C-844/19 (TechnoRent)which relates to Interest for late VAT refunds despite lack of national provision.

Article in the EU VAT Directive

Articele 90(1): Taxable amount (Misc. provisions)

Article 90
1. In the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly under conditions which shall be determined by the Member States.

27(2) of Council Directive 2008/9/EC of 12 February 2008

Facts

An Austrian referral asking whether EU law permits a taxpayer to claim interest where the tax authorities fail to process a VAT refund in good time, even though national law does not provide for such an interest payment? When does the interest begin to accrue?

Question

1. Is there a rule with direct effect under EU law that grants a taxpayer to whom the tax office, in circumstances such as those in the main proceedings, has not refunded a turnover tax credit in good time entitlement to interest for late payment, with the result that he can claim that entitlement before the tax office or before the administrative courts, even though national law does not provide for such a rule on interest?

If Question 1 is answered in the affirmative:

2. Is it permissible also in the case of a turnover tax claim made by the taxable person as a result of a subsequent reduction of consideration under Article 90(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax that interest begins to accrue only after expiry of a reasonable period for the tax office to assess the lawfulness of the entitlement claimed by the taxable person?

3. Does the fact that the national law of a Member State does not provide for any rule on interest in respect of the late crediting of turnover tax credits mean that the national courts must, when calculating interest, apply the legal consequence laid down by the second subparagraph of Article 27(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, even though the main proceedings do not fall within the scope of that directive?

AG Opinion

Under EU law – in this instance Article 183 and Article 90 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (‘the VAT Directive’) in conjunction with the principle of neutrality – interest is to be paid, in principle, on excess VAT under Article 183, just as on an entitlement to a refund resulting from the adjustment of the taxable amount under Article 90 of the VAT Directive, when the refund is not made within a reasonable period. However, there is no rule of the directive with direct effect concerning the specific application of interest to such entitlements. The referring court is therefore obliged to do everything within its power to produce a result in conformity with EU law, for example by means of an application by analogy or a broad interpretation of national law in conformity with EU law.

Decision

Art. 90 para. 1 and Art. 183 of Council Directive 2006/112 / EC of November 28, 2006 on the common VAT system are to be interpreted in conjunction with the principle of fiscal neutrality as meaning that a reimbursement resulting from a correction of Tax base according to Art. 90 (1) of this directive, as well as a reimbursement of an input tax surplus according to Art. 183 of this directive is subject to interest if it is not made within a reasonable period of time. It is incumbent on the referring court to do everything within its jurisdiction to ensure the full effectiveness of these provisions through an interpretation of national law in conformity with Union law.

Summary

The Court of Justice of the EU has ruled that interest must be paid when a VAT refund is not made within a reasonable period of time. This applies when a VAT refund within the meaning of art. 90 paragraph 1 EC Directive 2006/112. It also applies when there is a refund of a VAT surplus within the meaning of art. 183 EC Directive 2006/112. However, it is for the referring court to do everything within its competence to ensure the full effect of these provisions by interpreting national law in accordance with EU law.

A taxpayer is entitled to interest on the delayed VAT refund, even if national legislation does not provide for such interest

Two Austrian taxpayers received VAT refunds after lengthy proceedings.
The first case involved an excess of input VAT, which was eventually granted (although previously contested by the tax authorities). In the second case, it was a refund of output VAT resulting from “in minus” correction.
However, Austrian legislation did not provide for the right to interest in such cases. The question therefore arose as to whether there is a right to such interest derived directly from EU law.
The Court noted that:
- The right to deduct is an integral part of the VAT scheme and in principle may not be limited. The system of deduction is intended to relieve the entrepreneur of the burden of VAT, which ensures the neutrality of VAT.
- The tax refund must be made within a reasonable time.
- Lack of interest for a late refund payment violates the principle of VAT neutrality.
- This is true in connection with the refund of VAT following from an input VAT deduction, as well as a reduction in the taxable amount (on the sales side).
- However, the EU VAT legislation does not specify how this interest should be calculated.
- National authorities and courts are required to ensure that EU law is fully effective.
- It is for the national court to assess whether EU law can be given full effect by taking into account the domestic law and applying it by analogy.