Enel Maritsa Iztok 3 AD v Direktor «Obzhalvane i upravlenie na izpalnenieto» NAP.
Date: 2011-05-12
27. It is true, as pointed out by the Bulgarian Government, that, according to its wording, that provision does not lay down any obligation to pay interest on a refund of excess VAT or the date from which such interest is payable.
28. However, it cannot be concluded from that fact alone that that provision must be interpreted as meaning that no control may be exercised under European Union law over the procedures established by Member States for the refund of excess VAT (see, to that effect, Case C‑472/08 Alstom Power Hydro ECR I‑0000, paragraph 15).
29. First, while the implementation of the right to a refund of excess VAT provided for in Article 183 of the VAT Directive falls, as a general rule, under the procedural autonomy of the Member States, the fact remains that that autonomy is circumscribed by the principles of equivalence and effectiveness (see, to that effect, Alstom Power Hydro , paragraph 17). Moreover, the Court has consistently held that the principle of the protection of legitimate expectations must be observed by the Member States when they exercise the powers conferred on them by European Union directives (see Case C‑62/00 Marks & Spencer  [2002] ECR I‑6325, paragraph 44 and the case-law cited).
30. Second, it is necessary to examine to what extent Article 183 of the VAT Directive, interpreted in the light of the general context and principles governing VAT, contains specific rules to be complied with by the Member States in implementing the right to reimbursement of excess VAT (see, by analogy, Case C‑314/09 Strabag and Others [2010] ECR I‑0000).
31. In that connection, it has been consistently held 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 established by the relevant European Union legislation (see, inter alia, Joined Case C‑286/94, C‑340/95, C‑401/95 and C‑47/96 Molenheide and Others  [1997] ECR I‑7281, paragraph 47; Case C‑78/00 Commission  v Italy  [2001] ECR I‑8195, paragraph 28; and Case C‑25/07 Sosnowska  [2008] ECR I‑5129, paragraph 14).
32. As the Court has consistently held, it is clear that the right to deduct is an integral part of the VAT scheme and as a general rule may not be limited. In particular, that right is exercisable immediately in respect of all the taxes charged on transactions relating to inputs (see, notably, Case C‑62/93 BP Supergas  [1995] ECR I‑1883, paragraph 18; Case C‑386/06 Cedilac  [2007] ECR I‑12327, paragraph 31; and Sosnowska , paragraph 15).
33. As regards the possibility, under Article 183 of the VAT Directive, of providing that excess VAT is to be carried forward to the following tax period or refunded, the Court has made it clear that, while the Member States have a certain freedom in determining the conditions for the refund of excess VAT, those conditions cannot undermine the principle of fiscal neutrality by making the taxable person bear the burden of the VAT in whole or in part. In particular, such conditions must enable the taxable person, in appropriate circumstances, to recover the entirety of the credit arising from that excess VAT. This implies that the refund is made within a reasonable period of time by a payment in liquid funds or equivalent means, and that, in any event, the method of refund adopted must not entail any financial risk for the taxable person (see Commission  v Italy , paragraphs 32 to 34, and Sosnowska , paragraph 17).
38. On that point, while it is for the referring court alone to determine whether, under national legislation such as that in force until 18 December 2007, default interest was payable in the main proceedings as from 27 November 2007, it is for the Court to answer the question referred on the basis of the referring court’s interpretation of the national legislation and to provide that court with all the criteria for the interpretation of European Union law which may enable it to determine whether that legislation is compatible with Article 183 of the VAT Directive and the principle of the protection of legitimate expectations (see, to that effect, Case C‑293/06 Deutsche Shell  [2008] ECR I‑1129, paragraphs 25 and 26, and Case C‑201/08 Plantanol  [2009] ECR I‑8343, paragraph 45).
39. In that regard, it should be noted that, according to the Court’s settled case-law, it is perfectly permissible and, as a general rule, consistent with the principle of the protection of legitimate expectations for new rules to apply to the future consequences of situations which arose under the earlier rules (Case C‑60/98 Butterfly Music [1999] ECR I‑3939, paragraph 25 and the case-law cited). However, a legislative amendment retroactively depriving a taxable person of a right he has derived from earlier legislation is incompatible with the principle of the protection of legitimate expectations (see, to that effect, Marks & Spencer , paragraph 45).
40. It follows that, in a situation such as that in the main proceedings, the principle of the protection of legitimate expectations precludes a national legislative amendment which retroactively deprives a taxable person of a right enjoyed prior to that amendment to obtain default interest on a refund of excess VAT (see, to that effect, Marks & Spencer , paragraph 46).
49. However, it cannot be inferred from the wording of that provision that the carrying forward mechanism as provided for by the national legislation at issue in the main proceedings is irreconcilable with that provision. Account must be taken of the fact, referred to by the Bulgarian Government, that that legislation set the tax period, which may vary between one month and a year, in accordance with Article 252(2) and (3) of the VAT Directive, at one month. Accordingly, the fact that the excess is carried forward to the three tax periods following that in which the excess in question arose does not, in itself, affect the principles referred to at paragraphs 29 to 33 above. Such a carrying forward mechanism, under which the tax is reimbursed within a period of three months, is consistent with the freedom enjoyed by Member States in determining the conditions for refunding excess VAT.
51. Regarding such legislation under which the requirement on the part of the tax authorities to pay interest is contingent upon the completion of a tax investigation, it has been consistently held by the Court that calculation of the interest payable by the Treasury which does not take as its starting point the date on which the excess VAT would have had to be repaid in the normal course of events in accordance with the VAT Directive would be contrary, in principle, to the requirements of Article 183 of that directive (see, to that effect, Molenheide and Others, paragraphs 63 and 64).
52. In that regard, it should be noted that the normal functioning of the common system of VAT requires that the tax be collected accurately. Every Member State is under an obligation to take all legislative and administrative measures appropriate for ensuring collection of all the VAT due on its territory. In that regard, Member States are required to check taxable persons’ returns, accounts and other relevant documents, and to calculate and collect the tax due (Case C‑188/09 Profaktor Kulesza, Frankowski, Jóźwiak, Orłowski (formerly Profaktor Kulesza, Frankowski, Trzaska)  [2010] ECR I‑0000, paragraph 21).
53. It follows that the period for refunding excess VAT may, as a general rule, be extended in order to carry out a tax investigation without there being any need for such an extended period to be regarded as unreasonable provided that the extension does not go beyond what is necessary for the successful completion of the investigation (see, by analogy, Sosnowska , paragraph 27). However, in so far as the taxable person is deprived on a temporary basis of funds corresponding to the excess VAT, he is at an economic disadvantage which can be compensated for by payment of interest, thus ensuring compliance with the principle of fiscal neutrality.
55. In that regard, it should be noted, first, that the effect of the application of the legislation at issue in the main proceedings is not only to deprive the taxable person for a considerable period, namely approximately eight months, of funds corresponding to the excess VAT but also to deprive that person of the right to receive interest that is normally payable under that legislation.
57. Therefore, the taxable person may not only suffer financial disadvantages but is also unable to predict the date from which funds corresponding to the excess VAT will be made available to him, thus entailing an additional burden for that person.
58. In those circumstances, the conditions laid down by the national legislation at issue in the main proceedings do not, contrary to the principles referred to at paragraph 33 above, enable the taxable person, in appropriate circumstances, to recover the entirety of the credit arising from the excess VAT without being exposed to any financial risk.
64. In accordance with the case-law cited at paragraph 33 above, Member States have a certain freedom as regards the conditions for the refund of excess VAT, provided that the refund is made within a reasonable period of time by a payment in liquid funds or equivalent means and the taxable person is not exposed to any financial risk.