EUROPEAN UNION – REFUND OF VAT – LAW REPORT

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Value added tax – Refund of tax – Latvian tax authority declining to refund

Mednis SIA v Valsts ienemumu dienests: Court of Justice of the European Union (Third Chamber) (Judges Lenaerts (Rapporteur acting as President)): 18 October 2012

The applicant company applied to the tax authority for a refund of VAT amounting in total to LVL 2081.79, corresponding to excess VAT paid for November 2007. Of that total amount, the tax authority refused to refund LVL 1455.82. It stated as the grounds for that refusal the fact that during the period to which the excess VAT related, part of the excess tax had been over 18% of the total value of the taxable transactions carried out in the months at issue.

Under Latvian law, the tax authority could decline to refund that part of the excess VAT, which would be refunded on the basis of the annual tax return. In the course of proceedings brought by the applicant against that decision the Latvian referring court made a reference to the Court of Justice of the European Union.

By its question the referring court asked, in essence, whether article 183 of Council Directive (EC) 2006/112 (on the common system of value added tax) (the directive) had to be interpreted as authorising the tax authority of a member state to defer, without undertaking a specific analysis and solely on the basis of an arithmetical calculation, the refund of the excess VAT which had arisen during a tax period, pending the examination by that authority of the taxable person’s annual tax return.

The Court ruled: article 183 of the directive had to be interpreted as not authorising the tax authority of a member state to defer, without undertaking a specific analysis and solely on the basis of an arithmetical calculation, the refund of part of the excess VAT which had arisen during a one-month tax period, pending the examination by that authority of the taxable person’s annual tax return (see [38] of the judgment).

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