Advocate-General Opinion

The Advocate General was asked in CS, C-844/19 whether EU law permits a taxpayer to claim interest where the tax authorities fail to process a VAT refund in good time, even though national law does not provide for such an interest payment. The Advocate-General opined that interest is to be paid, in principle, on excess VAT under Article 183, just as on an entitlement to a refund resulting from the adjustment of the taxable amount under Article 90 of the VAT Directive, when the refund is not made within a reasonable period. However, there is no rule of the directive with direct effect concerning the specific application of interest to such entitlements. The referring court is therefore obliged to do everything within its power to produce a result in conformity with EU law, for example by means of an application by analogy or a broad interpretation of national law is in conformity with EU law.

DLA Piper comment: It will be of high interest whether the CJEU´s will follow the Advocate-General´s opinion as there is a significant amount of similar cases and situations in practice. Some countries (e.g., Germany) do already have general provisions on the interest on tax debts. In case the CJEU derives such provision from EU law, the EU law should prevail. Then the relevant criteria would be the start of the interest run and the applicable interest rate (e.g., in Germany currently 6% p.a. pursuant to sec. 233a of the German Tax Act, however, subject to current discussions due to the current low interest-rate situation).