Comments on ECJ C-680/23: EU Court Endorses Portuguese VAT Surplus Regulation with 12-Month Recovery Limit

• The European Court of Justice supports Portuguese legislation limiting VAT surplus recovery to 12 months after economic activity cessation
• Case background involves Modexel Consultores e Serviços SA and the Madeira Regional Tax Authority
• Modexel ceased operations in 2015 with a VAT surplus of 12,456.20 euros and attempted to transfer this surplus upon resuming in 2016
• The Tax Authority rejected the transfer, citing the need for a refund request within 12 months of activity cessation
• The Administrative and Tax Court of Funchal raised questions to the ECJ regarding the interpretation of the subsequent tax period and the validity of national rules limiting VAT surplus transfer
• ECJ ruling confirms that national legislation can prevent VAT surplus transfer to a later tax period post-activity cessation
• VAT surplus can only be recovered through a refund request within a reasonable period, respecting the principles of equivalence and effectiveness
• The term subsequent tax period refers to the period immediately following the one in which the surplus was generated
• When economic activity ceases, there is no subsequent tax period as the taxpayer status is lost
• National regulations on VAT surplus refund must respect equivalence and effectiveness principles
• Fiscal neutrality is not compromised if the surplus is refundable within a reasonable period like 12 months
• Allowing transfers after resuming activities could encourage abusive practices or artificial structures to bypass deadlines
• Legal articles applied include Article 183, first paragraph, and Article 179, first paragraph, of Directive 2006/112/EC
• Principles of equivalence and effectiveness are derived from ECJ jurisprudence

Source: audiconsultores-etlglobal.com

See also

• ECJ VAT C-680/23 (Modexel) – Judgment – VAT Carry-Forward Prohibited After Activity Cessation

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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.