This judgment relates to the proceedings between Volkswagen AG and the Finance Directorate of the Slovak Republic. The dispute arose after a partial refusal by the Finance Directorate of the Slovak Republic of an application for a refundof value added tax (‘VAT’), charged several years after the initial delivery of the supplied goods to Volkswagen AG.
The Slovak government argued that the 5 year limitation period (Law No 511/1992 on Tax Administration, ‘The Tax Code’), starting from the date of delivery of the goods, had already expired when the application for deduction was made on 1 July 2011.
The legal context asks whether the fixing of the starting date of the five year limitation period is compatible with EU law on the common system of value added tax. While current EU law on the common system of value added tax holds that the ‘right to deduct’ (Article 167 of Directive 2006/112) is an integral part of the VAT scheme, the ‘right to deduct’ is also subject to substantive requirements or conditions (judgment of 19 October 2017, Paper Consult, C-101/16, paragraph 38).
The CJEU found that EU law must be interpreted to preclude national legislation of a Member State in circumstances, such as the main proceedings, when the exercise of the right to claim a refund expired before the VAT tax was charged and an application for a refund was submitted.
This article appears in the JHA March 2018 Tax Newsletter, which also features:
