ECJ says companies can reclaim VAT paid in error

ECJ says companies can reclaim VAT paid in error

Advocate general rules that tax authorities must repay tax paid following German case

European Union (EU) member states must ensure foreign EU companies that
wrongly pay VAT are able to reclaim the money if mistakes are discovered, a
European Court of Justice advocate general has said.

Eleanor Sharpston has concluded that under EU VAT legislation, a local
company wrongly invoicing for VAT (and then handing it over to their local
government), should try to recover the money under national tax rules. Its
foreign business partner should then sue for the wrongly paid VAT.

But, importantly, if this solution was blocked for legal reasons not linked
to the merits of the foreign company’s case, Sharpston said EU member states
should establish ‘a means whereby the customer who has borne the burden of the
amount invoiced in error may recover that amount from the tax authorities’.

The ECJ usually adopts its advocate generals’ advice. The case involves
German tobacco company Reemtsma Cigarettenfabriken wrongly paying VAT to an
Italian advertising agency.

Related Articles

Watch out when winding up

Corporate Tax Watch out when winding up

3m Emma Rawson, ATT Technical Officer
How might Brexit affect UK tax policy?

Brexit & Economy How might Brexit affect UK tax policy?

3m Santhie Goundar
Corporation tax losses – your newly flexible friends

Corporate Tax Corporation tax losses – your newly flexible friends

5m Emma Rawson, ATT Technical Officer
HMRC large business tax enquiry duration rises to 3 years

Corporate Tax HMRC large business tax enquiry duration rises to 3 years

6m Emma Smith, Managing Editor
SMEs paying higher rate of corporation tax than big businesses

Corporate Tax SMEs paying higher rate of corporation tax than big businesses

6m Alia Shoaib, Reporter
Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

9m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

9m Emma Rawson, ATT Technical Officer
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

10m Alia Shoaib, Reporter