Compass Contract Services Limited v Commissioners for Her Majesty's Revenue & Customs.
Date: 2017-06-14
21


In the first place, it should be recalled that, according to settled case-law, the principle of fiscal neutrality precludes in particular treating similar goods or supplies of services, which are thus in competition with each other, differently for VAT purposes (judgments of 3 May 2001, Commission v France, C‑481/98, EU:C:2001:237, paragraph 22, and of 10 November 2011, The Rank Group, C‑259/10 and C‑260/10, EU:C:2011:719, paragraph 32).
24


In the second place, regarding the principle of equal treatment, the Court has held that, although infringement of the principle of fiscal neutrality — which is the reflection, in matters relating to VAT, of the principle of equal treatment — may be envisaged only as between competing traders, infringement of the general principle of equal treatment may be established, in matters relating to tax, by other kinds of discrimination which affect traders who are not necessarily in competition with each other but who are nevertheless in a similar situation in other respects (see, to that effect, judgment of 10 April 2008, Marks & Spencer, C‑309/06, EU:C:2008:211, paragraph 49).
25


According to settled case-law, a breach of the principle of equal treatment as a result of different treatment presupposes that the situations concerned are comparable, having regard to all the elements which characterise them (judgment of 16 December 2008, Arcelor Atlantique et Lorraine and Others, C‑127/07, EU:C:2008:728, paragraph 25). The elements which characterise various situations, and hence their comparability, must in particular be determined and assessed in the light of the subject matter of the provisions in question and of the aim they pursue, whilst account must be taken for that purpose of the principles and objectives of the field to which the measure at issue relates (see, to that effect, judgment of 16 December 2008, Arcelor Atlantique et Lorraine and Others, C‑127/07, EU:C:2008:728, paragraph 26, and the judgment of 7 March 2017, RPO, C‑390/15, EU:C:2017:174, paragraph 42).
28


In order to determine whether those situations are comparable, it is necessary, first, to establish the elements which characterise a claim for repayment of overpaid VAT, such as that of Compass. In that regard, it should be recalled that the Sixth Directive does not contain any provisions relating to the adjustment, by the issuer of the invoice, of VAT which has been wrongly invoiced. In those circumstances, it is in principle for the Member States to lay down the conditions under which wrongly invoiced VAT may be adjusted (see, to that effect, judgment of 19 September 2000, Schmeink & Cofreth and Strobel, C‑454/98, EU:C:2000:469, paragraphs 48 and 49, and judgment of 11 April 2013, Rusedespred, C‑138/12, EU:C:2013:233, paragraph 25).
29


It is settled case-law of the Court that the right to a refund of charges levied in a Member State in breach of rules of EU law is the consequence and complement of the rights conferred on individuals by provisions of EU law as interpreted by the Court (see, inter alia, judgments of 9 November 1983, San Giorgio, 199/82, EU:C:1983:318, paragraph 12; of 8 March 2001, Metallgesellschaft and Others, C‑397/98 and C‑410/98, EU:C:2001:134, paragraph 84, and of 19 July 2012, Littlewoods Retail and Others, C‑591/10, EU:C:2012:478, paragraph 24). The Member State is therefore required, in principle, to repay charges levied in breach of EU law (see, inter alia, judgments of 14 January 1997, Comateb and Others, C‑192/95 to C‑218/95, EU:C:1997:12, paragraph 20, and of 19 July 2012, Littlewoods Retail and Others, C‑591/10, EU:C:2012:478, paragraph 24).
30


The claim for repayment of overpaid VAT concerns the right to recovery of sums paid but not due which, according to settled case-law, helps to offset the consequences of the tax’s incompatibility with EU law by neutralising the economic burden which that tax has wrongly imposed on the trader who, in fact, has ultimately borne it (see, to that effect, judgment of 20 October 2011, Danfoss and Sauer-Danfoss, C‑94/10, EU:C:2011:674, paragraph 23).
33


The Court has already held that the right of taxable persons to deduct VAT due or 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 EU law. The right to deduct VAT is, therefore, an integral part of the VAT scheme and in principle may not be limited (see, inter alia, judgments of 6 December 2012, Bonik, C‑285/11, EU:C:2012:774, paragraphs 25 and 26, and the judgment of 22 June 2016, Gemeente Woerden, C‑267/15, EU:C:2016:466, paragraphs 30 and 31).
34


The deduction rules thus established are intended to free the taxable person completely of the burden of the VAT accruing or paid in all its economic activities. The common system of VAT therefore ensures that all economic activities, whatever their purpose or results, provided that they are, in principle, themselves subject to VAT, are taxed in a neutral way (judgments of 14 February 1985, Rompelman, 268/83, EU:C:1985:74, paragraph 19; of 6 July 2006, Kittel and Recolta Recycling, C‑439/04 and C‑440/04, EU:C:2006:446, paragraph 48; and of 26 April 2017, Farkas, C‑564/15, EU:C:2017:302, paragraph 43).
35


Thus, the Court has already held that the right to deduct can be exercised only in respect of taxes actually due and cannot be extended to VAT invoiced though not due and paid to the tax authorities (see, to that effect, judgment of 15 March 2007, Reemtsma Cigarettenfabriken, C‑35/05, EU:C:2007:167, paragraphs 23 and 27, and of 26 April 2017, Farkas, C‑564/15, EU:C:2017:302, paragraph 47).
36


Therefore, unlike the element characterising the right to repayment of overpaid VAT, the right to deduct VAT, which is a right inherent in the VAT scheme established by the common system of VAT, is based on the existence of a tax that is due.
42


Thirdly, as regards consideration of the first question in the light of the principle of effectiveness, it should be recalled that the Court has stated that it is compatible with EU law to lay down reasonable time limits for bringing proceedings in the interests of legal certainty which protects both the taxpayer and the authorities concerned. Such periods are not by their nature liable to make it virtually impossible or excessively difficult to exercise the rights conferred by EU law, even if the expiry of those periods necessarily entails the dismissal, in whole or in part, of the action brought (see, to that effect, judgments of 17 July 1997, Haahr Petroleum, C‑90/94, EU:C:1997:368, paragraph 48, and of 8 September 2011, Q-Beef and Bosschaert, C‑89/10 and C‑96/10, EU:C:2011:555, paragraph 36). In that context, a national limitation period of three years appears to be reasonable (see, to that effect, judgments of 11 July 2002, Marks & Spencer, C‑62/00, EU:C:2002:435, paragraph 35, and of 15 April 2010, Barth, C‑542/08, EU:C:2010:193, paragraph 28.)