On October 24, 2013, the Court of Justice of the European Union (hereinafter referred to as the “CJEU”) held a judgment regarding case C-431/12 for a preliminary ruling, requested by Înalta Curte de Casaţie şi Justiţie (Romania) in proceedings between Agenţia Naţională de Administrare Fiscală (hereinafter referred to as the “Agency”) on one side and SC Rafinăria Steaua Română SA (hereinafter referred to as “Steaua”) on the other.
The facts in the case are as follows:
Steaua’s VAT returns for the months of December 2007 and January 2008 showed a negative balance of RON 3 697 738, refund of which was approved by the Agency following an inspection.
Following the same inspection the Agency drew up to Steaua a notice of assessment by which it imposed two supplementary tax charges on Steaua in the amount of RON 19 002 767 in respect of VAT and RON 5 374 404 as default interest. Based on the notice of assessment, the Agency issued two notices by which it refunded the excess VAT by setting it off against those two tax liabilities, thereby settling them.
Steaua filed firstly administrative complaints and afterwards brought legal proceedings against the notice of assessment, and in fineÎnalta Curte de Casaţie şi Justiţie (Romania) abrogated the notice of assessment and ordered the Agency to refund to Steaua the amount of RON 3 697 738, claimed as principal.
On the ground of the unlawfulness of the notices and the late refund of the unlawfully compensated VAT, Steaua claims that the Agency pay interest on the aforementioned amount, starting on the day of expiry of the statutory period of 45 days for reaching a determination on VAT returns until the date of the actual refund of that amount. It quantifies the amount of interest at RON 1 793 972.
Since that claim was rejected by decision of the Agency of September 30, 2010, the Curtea de Apel Bucureşti, by judgment of February 14, 2011, annulled that decision and ordered the Agency to pay to Steaua the amount of RON 1 793 972, by way of statutory interest up to July 27, 2009.
The Agency brought an appeal against that judgment before the Înalta Curte de Casaţie şi Justiţie (Romania), where as the former considers that the default interest is not due for the period during which the set-off notices were in force.
Steaua on the other hand relies on the judgment of May 12, 2011, in case Enel Maritsa Iztok 3 (C-107/10), whereas it underlines that in said judgment the CJEU expressly ruled on the interpretation and application of the principle of VAT neutrality in the light of respect for the right of persons to obtain interest on the delayed refund of excess VAT.
In those circumstances and in order to clarify the application of the European Union Law, Înalta Curte de Casaţie şi Justiţie (Romania) decided to stay the proceedings and to refer the following question to the CJEU for a preliminary ruling:
Is it possible for a taxable person, having made a claim for refund of excess input VAT over the VAT which it is liable to pay, to obtain from the tax authorities of a Member State default interest on the refund, made late by those authorities for a period during which administrative measures precluding the refund, which were subsequently annulled by a court ruling, were in force?
In order to answer to the question, the CJEU deems firstly necessary to remind some of its case law (the aforementioned judgment in case Enel Maritsa Iztok 3) regarding the principles of the common European Union system of VAT. The CJEU states that even though the right to a refund of excess VAT falls, as a general rule, under the procedural autonomy of the Member States, the said autonomy is circumscribed by the principles of equivalence and effectiveness. The CJEU also states that the right of taxable persons to deduct the VAT they have already paid on goods purchased and services received as inputs from the VAT which they are liable to pay is a fundamental principle of the common system of VAT and as a general rule it may not be limited. It is precisely in that context that the CJEU considers that the conditions for the refund of excess VAT cannot undermine the principle of fiscal neutrality of the VAT system and the refund is to be made within a reasonable period of time.
Taking into consideration all of the above-said, the CJEU considers that the VAT Directive must be interpreted as precluding a situation in which a taxable person, having made a claim for a refund of excess input VAT, cannot obtain from the tax authorities of a Member State default interest on a refund made late by those authorities in respect of a period during which administrative measures precluding the refund, which were subsequently annulled by a court ruling, were in force. Pursuant to the above-said, this judgment is a logical continuation of the judgment in case Enel Maritsa Iztok 3.
The CJEU states that from the taxable person’s perspective whether the refund is delayed because the claim was dealt with administratively after the expiry of the time-limits or because there were unlawful and subsequently annulled administrative measures is irrelevant.
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