- National legislation is compatible with Directive 2006/112/EC if it states that a taxpayer who has ceased economic activities cannot carry forward VAT credit but must request a refund within 12 months from the cessation date provided equivalence and effectiveness principles are respected
- The Court of Justice of the EU ruled on this in a case involving Modexel Consultores e Servicos SA where the company ceased operations in February 2015, accrued VAT credit, and resumed in May 2016 using the credit against due tax
- Portuguese financial authorities challenged the use of the credit arguing it should have been claimed within twelve months of activity cessation and was therefore lost
- Articles 179 and 183 section 1 of Directive 2006/112/EC allow for the deduction of VAT credit from the tax due for the same period and state that excess deductions can be carried forward to the next period or refunded as decided by member states
- The Court of Justice of the EU noted that the term next period refers to the period immediately following the one in which the VAT credit exceeded the tax due and that carrying the credit over multiple periods is not supported by EU jurisprudence
Source: eutekne.info
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.
