European Commission v Republic of Hungary.
Date: 2011-07-28
39. It follows from the wording itself of that article and, in particular, from the terms ‘in accordance with conditions which they shall determine’ that the Member States have a certain freedom in determining the conditions for the refund of excess VAT (Case C‑78/00 Commission  v Italy [2001] ECR I‑8195, paragraph 32; Case C‑25/07 Sosnowska [2008] ECR I‑5129, paragraph 17; and Case C‑107/10 Enel Maritsa Iztok 3 [2011] ECR I‑0000, paragraphs 33 and 64).
40. 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 [2010] ECR I‑0000, paragraph 15, and Enel Maritsa Iztok 3 , paragraph 28).
41. It is necessary to examine to what extent Article 183 of Directive 2006/112, 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 Enel Maritsa Iztok 3 , paragraph 30).
42. In that connection, first, it has been consistently held that the right of taxable persons to deduct the VAT due or 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, Commission  v Italy , paragraph 28; Sosnowska , paragraph 14; and Enel Maritsa Iztok 3 , paragraph 31).
43. As the Court has consistently held, that 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, inter alia, Case C‑62/93 BP Supergas [1995] ECR I‑1883, paragraph 18; Case C‑392/09 Uszodaépítő [2010] ECR I‑0000, paragraph 34, and Enel Maritsa Iztok 3 , paragraph 32).
44. Second, it must be observed that the existence of the right to deduct is covered by Articles 167 to 172 of Directive 2006/112 in the Chapter headed ‘Origin and scope of right of deduction’, whereas Articles 178 to 183 of the directive relate only to the conditions for the exercise of that right (see, to that effect, Case C‑338/98 Commission  v Netherlands  [2001] ECR I‑8265, paragraph 71, and Case C‑152/02 Terra Baubedarf-Handel [2004] ECR I‑5583, paragraph 30).
45. 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, the conditions for the refund of excess VAT 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 33 and 34; Sosnowska  , paragraph 17, and Enel Maritsa Iztok 3 , paragraphs 33 and 64).
47. Similarly, Article 167 of Directive 2006/112 provides that a right of deduction is to arise at the time the deductible tax becomes chargeable, which is the case, under Article 63, once the transaction has been carried out, regardless whether payment of the consideration due for that transaction has been made. Furthermore, it is expressly stated in Article 168(a) of that directive that the right to deduct input tax which the taxable person enjoys relates not only to the VAT paid but also to the VAT due. It is also apparent from the wording of Article 179 of that directive that the right to deduct is to be exercised, as a rule, by subtracting from the amount of VAT due for a given tax period the amount of VAT in respect of which, during the same period, the right of deduction has arisen (see, to that effect, Joined Cases C‑95/07 and C‑96/07 Ecotrade [2008] ECR I‑3457, paragraph 41).
55. Moreover, it must be observed that that exclusion of the refund of the deductible VAT excess leads to a situation where certain taxable persons whose tax declarations regularly record such an excess may be required more than once to carry forward the excess to the following tax period. In that regard, it must be borne in mind that the carrying forward of a VAT excess over several tax periods following that in which the excess in question arose is not necessarily irreconcilable with the first paragraph of Article 183 of Directive 2006/112 (see, to that effect Enel Maritsa Iztok 3 , paragraph 49). However, given that the national legislation at issue provides for tax periods from one month to a year in length, it may create a situation in which certain taxable persons, do not, because of the repeated carry-over of an excess, obtain a refund of that excess within a reasonable period.