Principles of equivalence and effectiveness EU VAT case law

6 cases of the Court of Justice and the General Court of the European Union on this point of VAT law, from 2015 to 2022.

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Provisions these cases interpret most

Article 183 of Directive 2006/112/EC Rules governing exercise of the right of deduction · 2 of these cases
Article 273 of Directive 2006/112/EC Obligations of taxable persons and certain non-taxable persons · 2 of these cases
Article 179 of Directive 2006/112/EC Rules governing exercise of the right of deduction · 1 of these cases
Article 1 of Thirteenth Directive 86/560/EEC 1 of these cases
Article 2 of Thirteenth Directive 86/560/EEC 1 of these cases
Article 3 of Thirteenth Directive 86/560/EEC 1 of these cases
Article 170 of Directive 2006/112/EC Origin and scope of right of deduction · 1 of these cases
Article 171 of Directive 2006/112/EC Origin and scope of right of deduction · 1 of these cases

The 6 cases, most recent first

Under each case, what the Court decided, from its summary. The summaries are AI-generated and are not official documents: open the case for the Court’s own text.

C-487/20 Philips Orăştie

Judgment · 10 February 2022 · Romania

Bank guarantees and the refund of disputed VAT, the principle of equivalence

Articles 179 and 183, together with the principle of equivalence, preclude national procedural rules governing VAT refund claims based on breach of the common VAT system that are less favourable than those applicable to comparable claims founded on domestic law concerning other taxes and duties. The Court left it to the referring court to identify genuinely comparable domestic actions and to verify that the VAT rules are in fact less favourable, and likewise to assess whether the financial burden lasts an unreasonable period. Effectiveness was not in issue. Confirms that Member States' procedural autonomy over excess VAT refunds is bounded by equivalence. Relevant to businesses in Romania and elsewhere disputing VAT assessments while running repayment positions, and to advisers structuring guarantees pending appeal.

C-13/18 Sole-Mizo and Dalmandi Mezőgazdasági

Judgment · 23 April 2020 · Hungary

Interest on excess deductible VAT withheld in breach of EU law

The base rate approach fails effectiveness and fiscal neutrality where that rate is below what a taxable person other than a credit institution would pay to borrow the same amount, and where interest stops at the end of the reporting period with nothing to compensate for monetary erosion until actual payment. However, a five-year limitation period running from entry into force of the corrective legislation is compatible, as is requiring a specific request for default interest, which then runs only from expiry of the 30 or 45 day processing deadline. Businesses holding historic interest claims against Member States for VAT withheld contrary EU law now have a benchmark. Relevant to Hungarian claims and to comparable interest disputes elsewhere.

C-562/17 Nestrade

Judgment · 14 February 2019 · Spain

Time limit for correcting invoices in a Thirteenth Directive refund claim

The Thirteenth Directive, which is lex specialis to Articles 170 and 171, leaves the arrangements and time limits for refund claims to national law. It therefore does not preclude a time limit on rectifying incorrect invoices, provided the principles of equivalence and effectiveness are observed, which the national court must verify. Where the authority already holds all the information needed to establish entitlement, it may not impose further conditions. Here it appears it did not. Relevant to non-EU businesses claiming refunds of EU input VAT and to their advisers.

C-574/15 Scialdone

Judgment · 2 May 2018 · Italy

Criminal thresholds for late payment of declared VAT

The Grand Chamber held EU law does not preclude the higher VAT threshold. Failure to pay correctly declared VAT is not fraud under Article 325(1) TFEU or the PFI Convention, so the EUR 50 000 figure is irrelevant. It is an "illegal activity" requiring only effective and dissuasive penalties, which the 30% fine plus interest supplies. Non-remittance of withholding tax is not an infringement of similar nature and importance, as its constituent elements differ and certification makes it harder to detect, so equivalence permits different thresholds. Confirms that late or non-payment of declared VAT sits in a different category from VAT fraud. Relevant to advisers handling Italian and other national criminal tax exposure for directors, and to arguments that penalties on the company alone are inadequate.

C-564/15 Farkas

Judgment · 26 April 2017 · Hungary

Reverse charge applied to the wrong transaction, deduction and penalty

Article 199(1)(g) applies only to immovable property sold by a judgment debtor in a compulsory sale. Deduction of VAT that was not due may be refused even though the seller paid it to the Treasury. The purchaser must seek reimbursement from the seller. But where that is impossible or excessively difficult, notably on the seller's insolvency, he must be able to claim directly from the tax authority. A 50% penalty for a purely administrative error causing no revenue loss appears disproportionate, subject to the national court's assessment. Confirms that domestic reverse charges cannot be extended beyond the categories listed in Article 199 without an Article 395 derogation, which is where national insolvency and auction regimes are exposed.

C-662/13 Surgicare

Judgment · 12 February 2015 · Portugal

Mandatory national anti-abuse procedure and VAT

Directive 2006/112 does not preclude the mandatory preliminary application of such a national administrative procedure where the authorities suspect an abusive practice. The Directive says nothing about how anti-abuse measures are to be implemented, so procedural autonomy applies, subject to equivalence and effectiveness. A procedure offering a three-year limitation period, a prior hearing, the right to submit evidence, senior authorisation and reasoned decisions is favourable to the taxpayer. Compatibility with those principles is for the national court. Confirms that domestic procedural safeguards surrounding abuse-of-rights findings apply to VAT as much as to direct taxes, and that taxpayers can invoke them against assessments.