On October 5, 2023, the ECJ issued its decision in the case C-151/23 (ZSE Elektrárne Case).
Context: Reference for a preliminary ruling – Article 99 of the Rules of Procedure of the Court – Common system of value added tax (VAT) – Directive 2006/112/EC – Article 183 – Excess VAT – Late reimbursement – Right of the taxable person to late payment interest – Modalities of application – Procedural autonomy of the Member States – Principles of effectiveness and fiscal neutrality – National regulations situating the starting point for the calculation of late payment interest at a date subsequent to that on which such reimbursement should have been carried out in the absence of a tax audit
Article in EU VAT Directive
Article 183 of the EU VAT Directive 2006/112/EC.
Article 183
Where, for a given tax period, the amount of deductions exceeds the amount of VAT due, the Member States may, in accordance with conditions which they shall determine, either make a refund or carry the excess forward to the following period.
However, Member States may refuse to refund or carry forward if the amount of the excess is insignificant.
Facts
- On December 27, 2011, ZSE requested from the tax administration the payment of a sum of 139,953.47 euros corresponding to late payment interest on the reimbursement of excess VAT that it had paid to it under the first quarter of the year 2008, maintaining that this reimbursement had taken place beyond the deadline set by the law relating to VAT. This request was the subject of a refusal decision by the tax administration, confirmed on appeal by the finance department. Both decisions were overturned following an administrative appeal by ZSE and the matter was referred to the tax authorities.
- In the context of the second administrative procedure, the tax administration again rejected the request for payment of interest submitted by ZSE. This new decision of refusal was, once again, confirmed on appeal by the finance department, on the grounds that the excess VAT in question was indeed reimbursed to ZSE within the legal deadline, since ZSE had made the subject to a tax audit and that this reimbursement had taken place within ten days following the closure of the audit. Consequently, ZSE would not be entitled to payment of late payment interest.
- The administrative appeal lodged by ZSE before the Krajský súd Trnava (Regional Court of Trnava, Slovakia) against this latter decision having been rejected, ZSE lodged an appeal in cassation against this judgment before the Najvyšší správny súd Slovenskej republiky (Supreme Administrative Court of the Slovak Republic), which is the referring court.
- Before the latter, ZSE argues that it is clear from the Court’s case-law that the right to late payment interest arises from the moment the excess VAT is not reimbursed when it should normally have been, so that a national provision under which the time when the right to interest arises may be fixed at a date later than that on which this reimbursement should have been made is not in compliance with Article 183 of the VAT Directive in the absence of tax audit.
- In this regard, the referring court has doubts as to the exact scope of the relevant case-law of the Court which it has identified, namely, in this case, the judgments of 12 May 2011, Enel Maritsa Iztok 3 (C‑107/10, EU:C:2011:298) and of 24 October 2013, Rafinăria Steaua Română (C‑431/12, EU:C:2013:686) as well as the order of 21 October 2015, Kovozber (C‑120/15, EU:C:2015:730).
- Indeed, according to the referring court, these decisions of the Court must be understood as meaning that the deadline for reimbursement of excess VAT may be extended for the purposes of a tax audit without it being necessary to immediately consider this deadline to be unreasonable. In the event of a tax audit, late payment interest would only be due to the taxable person if the excess VAT is reimbursed after the expiration of a reasonable period. It would then be necessary to determine whether the time limit provided for by the VAT law is reasonable or not, which it would be for the referring court to do.
- Thus, it could be inferred from the Court’s case-law that national legislation which provides that the right to late payment interest arises, in the event of a tax audit, from from a date subsequent to that on which, in the absence of this control, the excess VAT would have been reimbursed.
- However, it also appears from that case-law that a calculation of the interest due by the tax administration which does not take as its starting point the day on which the excess VAT should normally have been returned in accordance with the VAT Directive is, in principle, contrary to the requirements of Article 183 of this directive.
Questions
Must the first paragraph of Article 183 of the [VAT Directive] be interpreted as meaning that it precludes national legislation which, following a tax audit, fixes the moment when the entitled to interest to be reimbursed on the excess VAT on a date later than that on which this reimbursement should have been made in the absence of a tax audit in the present case?
AG Opinion
None
Decision
Article 183, first paragraph, of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax,
must be interpreted in the sense that:
the taxable person is entitled to obtain from the national tax administration that it pays him late payment interest on an excess of value added tax when this administration has not reimbursed this excess within a period reasonable. The terms of application of these interests fall within the procedural autonomy of the Member States, framed by the principles of equivalence and effectiveness, it being understood that the national rules relating in particular to the starting point for the calculation of any interest due do not must not result in depriving the taxable person of adequate compensation for the loss caused by the late reimbursement of said excess.
Summary
- The case involves ZSE Elektrárne sro and the Financial Directorate of the Slovak Republic regarding a request for payment of late payment interest relating to the reimbursement of excess VAT.
- The question raised to the Court is whether national legislation that fixes the moment when late payment interest on excess VAT is due at a date later than the date on which reimbursement should have taken place, in the absence of a tax audit, is compatible with Article 183 of the VAT Directive.
- The Court clarifies that the taxable person is entitled to late payment interest if the tax administration has not reimbursed the excess VAT within a reasonable time.
- The determination of the starting point for the calculation of interest falls within the procedural autonomy of Member States, guided by the principles of equivalence and effectiveness.
- The national rules should not deprive the taxable person of adequate compensation for the loss caused by the late reimbursement of the excess VAT.
Source
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Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
