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ECJ C-397/21 (HUMDA) – Judgment – Refund of wrongly charged VAT by the tax authorities if supplier has gone into liquidation

On October 13, 2022, the ECJ issued its decision in the case C-397/21 (HUMDA Magyar Autó-Motorsport Fejlesztési Ügynökség Zrt.). The referring court is: Fővárosi Törvényszék (Hungary)

Context: Reference for a preliminary ruling — Harmonization of tax legislation — Common system of value added tax (VAT) — Directive 2006/112/EC — Sales not subject to VAT — VAT unduly invoiced and paid — Liquidation of the supplier — Refusal of reimbursement by the authority to the recipient of unduly paid VAT – Principles of effectiveness, fiscal neutrality and non-discrimination


Article in the EU VAT Directive

Articles 167, 168(a) and 183 of the EU VAT Directive 2006/112/EC.

Article 167

“The right to deduct arises when the deductible tax becomes payable. »

Article 168(a)

“To the extent that the goods and services are used for the purposes of his taxed transactions, the taxable person is entitled, in the Member State in which he carries out these transactions, to deduct from the amount of tax for which he is liable the following amounts:

(a) the VAT due or paid in that Member State for the goods which are or will be supplied to him and for the services which are or will be supplied to him by another taxable person”.

Article 183

“When the amount of the deductions exceeds that of the VAT due for a taxable period, the Member States may either have the excess carried over to the following period, or proceed with the reimbursement according to the methods which they lay down.

However, Member States may refuse carry-over or reimbursement where the excess is insignificant. »


Facts

  •  The company that Humda succeeded in law had called on “BHA” Bíró Hűtéstechnikai és Acélszerkezetgyártó Ipari Kft. (hereinafter “BHA”) for the latter to provide it with services within the framework of the project for the construction of the Hungarian pavilion of the Universal Exhibition held in 2015 in Milan (Italy) ( hereinafter the “provision of services in question”). In connection with these services, BHA had issued nine invoices including VAT, for a total amount of 486,620,000 HUF (approximately 1,230,500 euros). These invoices were paid by the successor company Humda and BHA paid the invoiced VAT to the Hungarian tax authorities. During an inspection, the latter noted that, under Hungarian law, the VAT in question was not due in Hungary, given that the supply of services in question related to goods located in Italy. Therefore, the VAT in question had been invoiced in error.
  • Humda, with a view to recovering the sum corresponding to the unduly paid VAT, seized the Nemzeti Adó- és Vámhivatal Észak-budapesti Adó- és Vámigazgatóság (regional tax and customs directorate of Budapest-North, part of the national tax administration and Customs, Hungary) of a request for reimbursement of the sum of HUF 126,248,760 (approximately 320,000 euros), corresponding to the amount of this VAT, as well as the payment of interest relating thereto. According to Humda, even if it is up to it to request reimbursement of this sum from the issuer of the invoice in the context of civil proceedings, which should then regularize its situation with the competent tax authority, in occurrence, it is confronted with the fact that BHA has been the subject of judicial liquidation proceedings and that,
  • That request and the subsequent action before the Appeals Department having been dismissed, Humda brought an action before the referring court, the Fővárosi Törvényszék (Court of Budapest-Capital, Hungary), requesting, in essence, the reversal or annulment of the decision adopted by the appeals department. That request is, according to the information contained in the request for a preliminary ruling, essentially based on the judgments of the Court of 26 April 2017, Farkas (C‑564/15, EU:C:2017:302), and of 11 April 2019, PORR Építési Kft. (C‑691/17, EU:C:2019:327).
  • The Appeals Department maintains that these judgments are not relevant, since, in this case, the supply of services in question was not carried out on Hungarian territory and did not give rise to a right of deduction in the head of Humda. Moreover, the latter would not have wished to exercise its right to deduct. However, in the judgments invoked by this company, the Court ruled on the undue payment of VAT by the recipient of services to the service providers in respect of an invoice wrongly drawn up on the basis of the rules of ordinary taxation, whereas the transaction to which this invoice related fell under the reverse charge regime. The Appeals Directorate argues that, insofar as the supply of services in question does not fall within the scope of Hungarian VAT legislation,
  • The referring court wonders, having regard to those judgments, whether the applicable national provisions as well as the national administrative practice are compatible with the VAT Directive and, more particularly, with the principles of effectiveness, neutrality of VAT and prohibition of discrimination. In that regard, it states that, in the present case, the recovery of unduly paid VAT is impossible or excessively difficult in the context of civil law proceedings, since, firstly, BHA has, in the meantime, subject to liquidation proceedings, secondly, the latter’s liquidator allegedly declared that it was not possible for him to modify the invoice drawn up at the time by BHA, thirdly, the latter did not request reimbursement of the tax unduly paid, fourthly,
  • The national court also asks whether, assuming that Humda is authorized to lodge a claim for reimbursement directly with the Hungarian tax authorities, the latter is obliged to pay default interest on the sum which is the subject of that reimbursement and, if so, what are the deadlines to be taken into consideration for this purpose.

Questions

1. Must the provisions of the VAT Directive, in the light of the general principles thereof, in particular the principles of  effectiveness and fiscal neutrality, be interpreted as precluding national legislation, and national practice based thereon, pursuant to which, where a taxable person liable for VAT erroneously issues an invoice including VAT in respect of an exempt supply and pays that tax to the Treasury in a provable manner, and the addressee of the invoice pays that VAT to the issuer of the invoice who charged the VAT, the national tax authority does not refund that VAT to either the issuer or the addressee of the invoice?

2. If the Court of Justice of the European Union answers the first question in the affirmative, must the provisions of the VAT Directive, in the light of the general principles thereof, in particular the principles of effectiveness, fiscal neutrality and non-discrimination, be interpreted as precluding national legislation pursuant to which, in the situation described in the previous question, the addressee of the invoice is absolutely prohibited from contacting the national tax authority directly in order to request a refund of the VAT or is permitted to do so only if it is impossible or excessively difficult to claim the amount of VAT in question by using another procedure under civil law, particularly where the issuer of the invoice has gone into liquidation in the meantime?

3. If the above question is answered in the affirmative, is the national tax authority under an obligation in those circumstances to pay interest on the VAT to be refunded? If that obligation does exist, what period of time does it cover? Is that obligation subject to the general rules on refunds of VAT?


AG Opinion

None


Decision

1)       Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in the light of the principles of effectiveness and neutrality of value added tax (VAT) ,

should be interpreted as:

it opposes rules of a Member State pursuant to which a taxable person to whom another taxable person has supplied a service cannot claim, directly from the tax authorities, reimbursement of the amount corresponding to the VAT been unduly invoiced by this supplier and which the latter has paid to the Public Treasury, whereas the recovery of this amount from the said supplier is impossible or excessively difficult due to the fact that the latter has been subject to liquidation proceedings and even though no fraud or abuse can be attributed to these two taxable persons, so that there is no risk of loss of tax revenue for this Member State.

2)       Article 183 of Directive 2006/112, read in the light of the principle of neutrality of value added tax (VAT),

should be interpreted as:

in the event that a taxable person to whom another taxable person has provided a service can claim directly from the tax authorities the reimbursement of the amount corresponding to the VAT which has been unduly invoiced to him by this supplier and which the latter has paid to the Public Treasury, this administration has the obligation to pay interest on this amount if it has not made this reimbursement within a reasonable time after having been invited to do so. The procedures for applying interest on this amount fall within the procedural autonomy of the Member States, framed by the principles of equivalence and effectiveness, it being understood that the national rules relating in particular to the calculation of any interest due must not result in depriving the taxable person of adequate compensation for the loss caused by the late reimbursement of the same amount. It is for the referring court to do everything within its jurisdiction to ensure the full effect of Article 183 by interpreting national law in accordance with EU law.


Source


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