Comments on ECJ C-453/22: Correcting liability of supplies – repayment from suppliers time barred – direct claim to tax authorities

A timber merchant purchased timber from suppliers at a standard VAT rate of 19% and sold the wood at a reduced rate of 7%.
The tax authorities challenged the reduced rate, but the domestic courts supported the merchant’s application.
However, the court also ruled that the earlier upstream supplies of the unchanged goods were also subject to the reduced rate, resulting in the merchant only being entitled to recover input VAT of 7% instead of 19%.
The tax authorities assessed the merchant for overclaimed input tax plus interest, but the suppliers did not correct their invoices or repay the overcharged VAT due to a defence of limitation.
The merchant appealed to the tax authority for discharge on grounds of equity, which was rejected.
The Court ruled that the taxpayer had a right to a direct claim to the tax authority for the improperly invoiced VAT and interest due to the principles of VAT neutrality and effectiveness.

Source KPMG