ECJ VAT Cases: Landmark Judgment and Two AG Opinions Set to Shape Future Tax Landscape

"VAT Refund Cases Under Scrutiny: Irish Courts Investigate Legal Remedies and Procedural Restrictions"

December 14, 2023

A Slovenian Referral: Examining Legal Remedies and Procedural Restrictions in VAT Refund Cases

In a recent development, the European Court of Justice (ECJ) has been presented with a referral from Slovenia regarding legal remedies and procedural restrictions in Value Added Tax (VAT) refund cases. This referral seeks clarification on the rights and obligations of taxpayers when it comes to claiming VAT refunds and the limitations imposed by national legislation.

The Slovenian case revolves around a taxpayer who has encountered difficulties in obtaining a VAT refund from the national tax authority. The taxpayer argues that the national legislation in question imposes procedural restrictions that hinder their ability to exercise their rights under EU law. They contend that these restrictions violate the principles of effectiveness and proportionality.

The referral seeks guidance from the ECJ on several key issues. Firstly, it questions whether the taxpayer should have access to an effective remedy when their VAT refund claim is rejected or unduly delayed. Secondly, it asks whether national legislation can impose time limits for lodging VAT refund claims and, if so, whether these time limits are in line with EU law. Finally, it seeks clarification on the conditions under which a taxpayer can be required to provide additional guarantees or evidence to support their VAT refund claim.

This case is of significant importance as it touches upon fundamental principles of EU law, including the right to an effective remedy and the principle of proportionality. It also highlights the need for harmonization and consistency across EU member states when it comes to VAT refund procedures. A ruling from the ECJ in this case will provide much-needed clarity and guidance to both taxpayers and national tax authorities.

December 21, 2023

A Hungarian Referral: Tax Guarantee Imposed on a Company with Outstanding Tax Debt

Another referral has been submitted to the ECJ, this time from Hungary. The case at hand concerns the imposition of a tax guarantee on a company, where one of its executive officers is also a member or executive of another legal person with an outstanding tax debt.

The Hungarian tax authority argues that it is entitled to impose a tax guarantee on the company in question due to the involvement of its executive officer in another entity with unpaid taxes. They argue that this measure is necessary to ensure the collection of taxes and prevent tax evasion.

However, the company contests this decision, claiming that it violates their rights under EU law. They argue that the imposition of a tax guarantee on their business is disproportionate and goes beyond what is necessary to achieve the legitimate aim of tax collection.

The referral seeks clarification from the ECJ on whether the imposition of a tax guarantee in such circumstances is in line with EU law. It also questions whether the involvement of an executive officer in another legal person with an outstanding tax debt can be used as a basis for imposing a tax guarantee on a separate entity.

This case raises important questions regarding the rights and obligations of taxpayers and the powers of national tax authorities. It also highlights the need for a balance between the legitimate aim of tax collection and the protection of taxpayers’ rights under EU law. A ruling from the ECJ will provide valuable guidance on these issues and contribute to the development of a consistent approach across EU member states.

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For an overview of ECJ cases per article of the EU VAT Directive, click HERE

Barry Caldwell

Barry Caldwell

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