On February 2, 2023, the ECJ issued the AG Opinion in the case C-615/21 (Napfeny Toll).
Context: Reference for a preliminary ruling – National taxation procedure – Value added tax – National regulation providing for the possibility of suspending the limitation period for tax law in the context of judicial review indefinitely, regardless of the number of repeated tax procedures – Principles of legal certainty and the effectiveness of Union law
Article in the EU VAT Directive
N/A
Facts
During the period in question, namely in June 2010 and between November 2010 and September 2011 (period concerned), the applicant deducted the VAT on the goods it had acquired from the tax payable by it. The South Budapest tax authorities carried out an audit of the period concerned by authorization dated 09-12-2011. It was found that some of the goods acquired by the applicant did not in fact come from the undertakings which issued the invoices to it. By decision of 08.10.2015, the South Budapest Tax Office established a tax difference of HUF 144,785,000 borne by the applicant, which had been classified in its entirety as a tax debt, and imposed a tax penalty on the applicant, plus default interest. According to the statement of reasons for the decision, some of the invoices in question were not based on actual economic transactions; for another part economic transactions had taken place but tax fraud had been committed with the applicant’s knowledge. Defendant’s predecessor (objection division of the national tax) According to the statement of reasons for the decision, some of the invoices in question were not based on actual economic transactions; for another part economic transactions had taken place but tax fraud had been committed with the applicant’s knowledge. Defendant’s predecessor (objection division of the national tax) According to the statement of reasons for the decision, some of the invoices in question were not based on actual economic transactions; for another part economic transactions had taken place but tax fraud had been committed with the applicant’s knowledge. Defendant’s predecessor (objection division of the national tax) ‐ and customs office of Hungary) amended this decision by decision of 11-12-2015 with regard to the default interest and confirmed it for the rest. Deciding on the action brought by the applicant, the Board of Directors ‐ and the labor court annulled the decision on the objection by decision of 02-03-2018, which became irrevocable on the same day, and referred the case back for a new procedure. By its decision of 06/04/2020, which is being contested in the context of the present proceedings, the defendant amended the primary decision as regards the default interest and confirmed the remainder. In its application, the applicant seeks annulment of the contested decision, including the primary decision. In that regard, it submits, inter alia, that the right of the tax authorities to determine the tax under Paragraph 164(1) and (5)
Consideration:
§164(5) of the old Code of Tax Procedural Law and § 203(3) of the new Code of Tax Procedural Law regulate in essentially the same way the suspension of the limitation period during the judicial review of an administrative decision. None of these provisions provides for any limitation with regard to the duration of the suspension or makes an exception for decisions of the tax authorities that, in the opinion of the court, do not qualify for substantive review. Therefore, according to Hungarian law and the relevant case-law of the Kúria, the suspension of the limitation period in the event of judicial review is not limited in time and judicial proceedings initiated in respect of annulled decisions of the tax authorities are no exception to this rule. The principle of effectiveness, which has also been regularly examined by the Court in VAT-related cases, requires that national procedural rules do not make it impossible in practice or excessively difficult to assert claims based on EU law. The referring court considers that the unreasonably long duration of the tax procedure for assessing the substantive conditions of the right to tax deduction makes the exercise of the right to deduct tax extremely difficult. On the basis of all of the foregoing, the referring court has doubts as to whether the above scheme and the legal practice based on it are compatible with the EU law principles of legal certainty and effectiveness.
Questions
Should the principles of legal certainty and effectiveness, which are part of European Union law, be interpreted as not precluding national legislation, such as Paragraph 164(5) of az adózás rendjéről szóló 2003. évi XCII. törvény (Law No. XCII of 2003 establishing the Fiscal Procedure Code; hereinafter ‘Old Code’), which does not allow the court to exercise any discretion, and the practice based on that law according to which the prescription of actions is not subject to any limitation period? XCII of 2003 enacting the Tax Procedure Code; hereinafter: “Old Tax Procedure Code”), which leaves no discretion to the court, and the practice based on it according to which the limitation of the tax authorities’ right to determine value added tax (hereinafter: “VAT)” is suspended during the entire duration of the administrative appeal procedures, regardless of the number of new procedures after referral back by the judge, and the duration of the periods of suspension during the administrative appeal procedures are added together without time limitation, even if the judge found, with respect to the decision of the tax authority made in a new procedure after referral back, that the tax authority had not complied with the directions given by the judge in an earlier procedure, i.e. that the tax authority is to blame for the fact that an administrative appeal procedure was again instituted?
AG Opinion
The principles of legal certainty and the effectiveness of European Union law must be interpreted in such a way that they do not preclude the legislation of a Member State under which, in the field of VAT, the limitation period for the tax authority’s power to assess taxes is suspended throughout the period of the judicial review in question, even if it changes review against successive decisions by a tax authority relating to the same tax.
However, it is for the competent national court to assess, taking into account all the circumstances of the case, such as the complexity of the case, whether the repetition of the tax procedure and the judicial reviews concerned were mainly due to negligence on the part of the tax administration or whether that delay was attributable to the national courts can be attributed and to draw the necessary conclusions therefrom, including the existence of any right to compensation in favor of the taxpayer concerned
Decision
Summary
Source
Similar ECJ cases
Cited (recent) case law: (C-14/83), (C-106/89), (C-334/92), (C-91/92), (C-397/01 to C-403 /01), Plantanol Gmbh (C-201/08), Belgocodex (C-381/97), Goed Wonen (C-376/02), Netto Supermarket (C-271/06), technoRent International ea (C-844 /19), Volkswagen (C-533/16), LVK (C-643/11), Ecotrade SpA (C-95/07 and C-96/07)
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