Alicja Sosnowska v Dyrektor Izby Skarbowej we Wrocławiu Ośrodek Zamiejscowy w Wałbrzychu.
Date: 2008-07-10
14. It must be recalled at the outset that, in accordance with settled case‑law, the right, guaranteed by Article 17 of the Sixth VAT Directive, 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 Community legislation (see, in particular, to that effect, Joined Cases C‑286/94, C‑340/95, C‑401/95 and C‑47/96 Molenheide and Others  [1997] ECR I‑7281, paragraph 47, and Case C‑78/00 Commission  v Italy  [2001] ECR I‑8195, paragraph 28).
15. 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; Joined Cases C‑110/98 to C‑147/98 Gabalfrisa and Others  [2000] ECR I‑1577, paragraph 43; and Case C‑368/06 Cedilac  [2007] ECR I‑000, paragraph 31).
17. As regards the former possibility, which is at issue in the main proceedings, the Court has made it clear that, while the Member States have a certain freedom to manoeuvre in determining the conditions for the refund of excess VAT, those conditions cannot undermine the principle of neutrality of the VAT tax system 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).
20. It is therefore clear that new taxable persons are subject to conditions for the refund of excess VAT which are more onerous than those to which other taxable persons are subject. Accordingly they have to bear, at least to the extent of the amount of excess VAT to be repaid, the financial burden of VAT for a particularly long period.
22. As the Court has already had occasion to make clear, the Member States have a legitimate interest in taking appropriate steps to protect their financial interests and the prevention of possible tax evasion, avoidance and abuse is an objective recognised and encouraged by the Sixth Directive (see, to that effect, Molenheide and Others , paragraph 47; Case C‑255/02 Halifax and Others  [2006] ECR I‑1609, paragraph 71; and Joined Cases C‑439/04 and C‑440/04 Kittel and Recolta Recycling  [2006] ECR I‑6161, paragraph 54).
23. None the less, as the Advocate General observes in point 20 of his Opinion, Member States must, in accordance with the principle of proportionality, employ means which, whilst enabling them effectively to attain such an objective, are the least detrimental to the objectives and principles laid down by the relevant Community legislation, which include the fundamental principle of the right to deduct VAT (see Molenheide and Others , paragraphs 46 and 47; Case C‑409/04 Teleos and Others  [2007] ECR I‑7797, paragraphs 52 and 53; and Case C‑271/06 Netto Supermarkt  [2008] ECR I‑000, paragraphs 19 and 20).
24. It is clear from the case‑law that national legislation determining conditions for repayment of excess VAT which are more onerous for one category of taxable persons because of a presumed risk of evasion, without making any provision for the taxable person to demonstrate the absence of tax evasion or avoidance in order to take advantage of less restrictive conditions, is not a means proportionate to the objective of combating tax evasion and avoidance and has a disproportionate effect on the objectives and principles of the Sixth VAT Directive (see, by analogy, in relation to exclusions from the right to deduct, Joined Cases C‑177/99 and C‑181/99 Ampafrance and Sanofi  [2000] ECR I‑7013, paragraph 62, and, in relation to preventive attachment, Molenheide and Others , paragraph 51).
25. That is exactly the case, as determined in paragraph 20 of this judgment, of the national legislation in the main proceedings.
26. It is clear from the order for reference that Article 97(5) and (7) of the Law on VAT apply generally and preventively to new taxable persons, without making any provision for such persons to demonstrate the absence of a risk of tax evasion or avoidance.
27. Similarly, the national provisions at issue do not appear to be in conformity with the condition laid down in the case‑law, as stated in paragraph 17 of this judgment, that repayment of the excess VAT must be made within a reasonable time. As was stated in the order for reference, the period for repayment of 180 days laid down for new taxable persons is, on the one hand, six times longer than the one month applicable accounting period for VAT and, on the other hand, three times longer than the period applied to other taxable persons, while the Polish authorities have offered no argument capable of explaining why it is necessary, in order to prevent tax evasion and avoidance, to establish a difference in treatment of such a scale.
28. Moreover, such a long period appears even less necessary when, in any event, the tax office has the power, under Article 87(2) of the Law on VAT, if it is useful to make wider inquiry into the lawfulness of repayment and to obtain the necessary clarification, to extend the period of 60 days within which repayment must be made.