- Reemtsma Principle Overview: The Reemtsma principle allows businesses to recover VAT directly from tax authorities when suppliers are unable or unwilling to correct an overcharge, providing a vital alternative to traditional recovery methods in cases of supplier insolvency or other complications.
- Recent CJEU Rulings: Recent rulings have clarified the principle’s application in various scenarios, including cross-border land transactions and situations where deadlines for supplier corrections have passed, reinforcing that businesses can seek VAT refunds directly from tax authorities under specific conditions without risking tax revenue.
- Limitations and Strategic Considerations: While the Reemtsma principle offers a valuable recovery avenue, it has limitations, such as when suppliers have already received refunds from tax authorities. Businesses should ensure they meet criteria like supplier insolvency and absence of fraud to effectively utilize this principle, and may benefit from partnering with VAT reclaim specialists to navigate complex claims successfully.
Source: vatit.com
See also
- C-35/05 (Reemtsma Cigarettenfabriken) – No refund of VAT via 8th VAT Directive if not legally due, but ….
- C-397/21 – HUMDA Magyar Auto-Motorsport, which addressed VAT incorrectly charged on services related to cross-border land transactions and the implications of supplier insolvency on VAT recovery.
- C-453/22 – Michael Schütte v Finanzamt Brilon, which dealt with missed deadlines for VAT correction and affirmed the right to reclaim VAT even after supplier correction windows have closed.
- C-640/23 – Greentech case, which reinforced the principles established in the previous case regarding VAT recovery despite deadlines for corrections being passed.
- C-83/23 – H GmbH v Finanzamt M, which clarified the limitations of the Reemtsma principle when the tax authority had already refunded the VAT to the supplier.
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