Judgment;Summary — ECLI:EU:C:2024:147
Date: 2024-02-22
Language of the case: Dutch
Court formation: Fourth Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Netherlands

Summary  C-674/22 – 1 
Case C-674/22 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged:  
31 October 2022 
Referring court:  
Rechtbank Gelderland (Netherlands) 
Date of the decision to refer:  
26 October 2022 
Applicant:  
Gemeente Dinkelland 
Defendant:  
Ontvanger van de Belastingdienst/Grote ondernemingen, kantoor 
Zwolle 
  
Subject matter of the main proceedings 
At issue in the main proceedings is whether the applicant has a right to the 
reimbursement of recovery interest on turnover tax refunds because of the 
possibility that tax was levied in breach of EU law.  
Subject matter and legal basis of the request for a preliminary ruling 
The request for a preliminary ruling pursuant to Article 267 TFEU concerns the 
question of whether default interest must be paid in respect of a refund of tax 
levied in breach of EU law if that refund results from administrative errors on the 
part of the taxable person or from recalculations arising from a change in the law.  
Questions referred for a preliminary ruling 
1. Must the legal rule that default interest must be reimbursed because there is 
a right to a refund of taxes levied in breach of EU law be interpreted as 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-674/22 
 
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meaning that, where a taxable person has been granted a refund of turnover 
tax, default interest must be reimbursed to that taxable person in a situation 
where: 
a. the refund is the result of administrative errors on the part of the 
taxable person, as described in this ruling, and for which the inspector 
cannot be blamed in any way; 
b. the refund is the result of a recalculation of the allocation key for the 
deduction of turnover tax on general costs, under the circumstances 
described in this ruling?  
2. If question 1 is answered in the affirmative, from what day is there a right to 
the reimbursement of default interest? 
Provisions of EU law relied on 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax. 
Provisions of national law relied on 
Invorderingswet 1990 (Law on Tax Collection of 1990), Article 28c. 
Wet op de omzetbelasting 1968 (Law on Turnover Tax of 1968). 
Wet op het btw-compensatiefonds (Law on the VAT Compensation Fund). 
Succinct presentation of the facts and procedure in the main proceedings 
1 The applicant is a Netherlands municipality. As such, in addition to activities in its 
capacity as a public authority, it also carries out economic activities. The latter 
activities are subject to the ordinary tax regulations under Directive 2006/112 
(‘the VAT Directive’) and the Law on Turnover Tax of 1968 in relation to the 
payment of turnover tax and the deduction of input tax (the VAT paid on the 
purchase of goods and services relating to economic activities). On activities other 
than economic activities, the municipality levies turnover tax or is charged such 
tax by companies in exactly the same way. In the latter case, however, the 
municipality can recover this tax under the Law on the VAT Compensation Fund 
(‘the BCF’) subject to certain exceptions.  
2 The applicant’s turnover tax returns for the years 2012 to 2016 apparently 
required retrospective adjustment. This resulted in a tax refund which the 
inspector approved and which was subsequently paid to the applicant. The dispute 
concerns whether default interest must also be paid on this amount.  
GEMEENTE DINKELLAND 
 
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3 Of relevance here is the cause of the adjustments to the turnover tax returns. In the 
first instance, these were the result of changes in the calculation of the 
contributions that the applicant received from the BCF in the event that the 
turnover tax did not relate to economic activities. Since it is not always easy to 
determine whether the activities concerned are economic or non-economic, the 
applicant applies an apportionment key indicating the portion of the input tax paid 
that is deductible and the part that entitles it to a contribution from the BCF. Due 
to certain legislative changes, the applicant’s administrative procedures had to be 
adjusted with effect from 2016. This also changed the method of calculating the 
apportionment key and, consequently, the calculation of the tax deduction. Only in 
2020 did the tax authorities approve the new calculation method and the resulting 
deduction.  
4 In the course of this adjustment of the municipal administrative procedures, the 
applicant also discovered several administrative errors that also affected the 
turnover tax refund. These errors are not in themselves in dispute. The tax 
inspector approved the corrected returns. However, the existence of administrative 
errors on the part of the applicant is relevant to the question of whether payment 
of default interest can be claimed.  
5 When claiming payment of default interest, the Netherlands distinction between 
tax interest and recovery interest must be taken into account. Tax interest is 
charged by the tax authorities if, at the end of a tax period, too little tax has been 
paid. There is a right to its reimbursement if the processing of a refund request has 
taken more than eight weeks or if, broadly speaking, the refund is the result of the 
inspector’s actions. In principle, this tax interest is calculated for the period 
starting three months after the start of the year following the year in which the tax 
was paid.  
6 The same rules apply to a contribution from the BCF. As a result, a municipality 
that has wrongly deducted input tax but is entitled to a higher contribution from 
the BCF must in principle pay tax interest, but will not be reimbursed the tax 
interest on the corresponding additional amount of BCF contribution. Conversely, 
tax interest must be paid on a repayment of funds received from the BCF, but a 
corresponding turnover tax refund is paid without tax interest.  
7 Recovery interest is charged if an assessment is paid late. Conversely, this interest 
is reimbursed if a refund is not paid out to the taxable person quickly enough and, 
exceptionally, in the case of refunds following the revision of an assessment.  
8 According to the Court of Justice of the European Union (‘the Court’), where tax 
has been levied in breach of EU law, interest must be paid, as is apparent from the 
judgment of 18 April 2013, Irimie, C-565/11, ECLI:EU:C:2013:250, 
paragraphs 20 to 23. Following this judgment, the Netherlands legislature 
stipulated in Article 28c of the Law on Tax Collection (‘the IW’) that recovery 
interest would be reimbursed if tax was levied in breach of EU law. It is the 
Ontvanger van de belastingdienst (the Receiver of the Customs and Tax 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-674/22 
 
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Administration), the defendant in this case, who is responsible for doing so and 
not the tax inspector, who determines the assessments.  
9 Such recovery interest is paid from the day on which the tax was remitted. Thus, it 
is only the reimbursement of recovery interest resulting from tax levied in breach 
of EU law that offers the applicant in the present case the possibility of receiving a 
full reimbursement of interest. Tax interest comes into play only in so far as it is 
attributable to the inspector’s actions and even then for a more limited period.  
10 In the present case, on 31 July 2020, the applicant requested the reimbursement of 
recovery interest under Section 28c IW on the turnover tax refunds granted. After 
the defendant rejected that request, the applicant filed a notice of objection, which 
the defendant also rejected. The applicant then lodged an appeal with the referring 
court.  
The essential arguments of the parties in the main proceedings 
11 According to the applicant, recovery interest must be paid because the condition 
laid down in Article 28c IW that the ‘tax has been levied in breach of Union law’ 
has been fulfilled. It points, inter alia, to the Court’s judgment of 19 July 2012, 
Littlewoods Retail, C-591/10, ECLI:EU:C:2012:478, where it was held that 
interest was payable because an incorrect taxable amount had been applied when 
calculating VAT.  
12 First, the defendant is of the view that there is no question of a refund of tax 
previously levied, as required by section 28c IW. The refunds relate solely to 
input tax to be repaid to the applicant. The applicant had wrongly not deducted 
that input tax. The case does not concern the refund of turnover tax due. Second, 
in so far as it does concern a refund of previously levied tax, the defendant is of 
the view that there is no question of tax having been levied in breach of EU law.  
Succinct presentation of the reasoning in the request for a preliminary ruling 
13 According to the referring court, it is immaterial that the refunds granted relate 
primarily to input tax that was wrongfully not initially deducted. Indeed, it makes 
no difference to the final amount of tax to be paid whether less turnover tax has to 
be paid or indeed, whether more input tax may be deducted. Both situations result 
in a lower tax return and only that is relevant to the question of whether tax has 
been levied.  
14 According to the referring court, in determining whether that tax was levied in 
breach of EU law, a distinction must be drawn between the corrections resulting 
from administrative errors and those resulting from the recalculation of the 
apportionment key.  
GEMEENTE DINKELLAND 
 
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15 It is not disputed that the inspector cannot be blamed for the applicant’s 
administrative errors. The question is whether interest should nevertheless be paid 
as the applicant believes it should, relying on the Littlewoods Retail judgment. 
According to the referring court, however, it is not clear from that judgment 
whether the error at issue there was to be attributed solely to the applicant in that 
case or also to the UK tax authorities.  
16 The cases leading to the Court’s judgment of 28 April 2022, Gräfendorfer 
Geflügel und Tiefkühlfeinkost, C-415/20, C-419/20 and C-427/20, 
EU:C:2022:306, concerned the question of whether, for the purposes of the 
payment of interest, the nature of the infringement of EU law is relevant. 
According to the referring court, the Court found, inter alia, that the right to 
payment of interest is the expression of a general principle the application of 
which is not limited to certain breaches of EU law. However, it cannot be 
ascertained from the Court’s case-law whether, when determining whether default 
interest should be reimbursed, it is relevant whether the person concerned can be 
blamed for initially paying too much tax. It does not seem unreasonable to the 
referring court in the present case to adopt an exception to the general rule 
requiring the reimbursement of interest on the ground that the tax authority played 
no role whatsoever in determining the amount of turnover tax due. After all, the 
turnover tax payable is calculated in the first instance by the taxable person him- 
or herself.  
17 By contrast, the corrections that resulted solely from the recalculation of the 
apportionment key were not only the result of mistakes made by the applicant. 
Those corrections were necessary in the first instance following a legislative 
change that came into force in 2016. Due to lengthy deliberations within the tax 
administration, the inspector only approved the new calculation method in 2020, 
also agreeing to apply this new method for the years from 2012 onwards.  
18 Having regard to that, there are reasonable doubts as to how the term ‘tax levied in 
breach of EU law’ must be interpreted when reimbursing default interest. The 
referring court therefore refers questions on that term for a preliminary ruling. It 
also wishes to ascertain the period for which default interest must be paid.