Comments on ECJ C-640/23: VAT Refund from the Tax Office when it cannot be Recovered from the Supplier

CJEU Case Overview: The CJEU addressed the case of Greentech, a Romanian company that faced issues with VAT deductions after the tax authority reversed its earlier decision, classifying a transaction as non-VAT taxable after the statute of limitations had expired. This situation raised questions about the principles of VAT neutrality, legal certainty, and protection of legitimate expectations.
Judgment and Principles Established: The CJEU ruled that while taxpayers should have mechanisms to correct unjustifiably reported taxes, the right to deduct VAT only applies to transactions that are subject to VAT. If a transaction is deemed non-VAT taxable, the taxpayer cannot claim a deduction, even if they have been burdened with the economic impact of the VAT due to the tax authority’s previous confirmation of its taxability.
Implications for Tax Authorities: The ruling emphasizes the obligation of Member States to ensure taxpayers can recover overpaid VAT when direct recovery from the supplier is impossible or excessively difficult. This highlights a need for procedural mechanisms to allow taxpayers to seek refunds directly from tax authorities, which remains a complex issue in the Polish tax landscape where such provisions have yet to be fully implemented.