The Court of Justice of the European Union has held that the EU law must be interpreted as not requiring a State to pay interest on VAT refunded to a taxable person if it is refunded as a result of calculation errors imputable to that person.
The State shall not be liable to pay interest if the refund of VAT results i) in part, from the finding that that taxable person, due to errors in its accounts, did not fully exercise its right to deduct input VAT and ii) in part, from an amendment, with retroactive effect, of the detailed rules for calculating the deductible VAT, where those rules are established under the sole responsibility of that taxable person.
The interpretation of the EU law: CJEU analyses how the EU law regulates the payment of interest by the State to a taxable person in case of a VAT refund, in particular when there are errors in the accounting or a retroactive change in the way the deductible VAT is calculated. The Court has ruled that interest is not payable in such cases.
Although it is acknowledged that persons affected by improper collection of VAT are entitled to a refund of overpaid amounts, including interest for the period during which the amounts were unlawfully withheld, the Court has identified cases where this does not apply.
The Court has examined the criteria and methods used to determine deductible VAT, particularly in relation to a taxable person’s general costs, stressing its responsibility for determining and correctly applying those methods. If an erroneous calculation is imputable to the taxable person, he will no longer be able to claim interest, his right being limited to the recovery of VAT.
