Recent changes to CJEU rulings in relation to VAT refunds

The CJEU rules that taxable persons not established in the territory of the country cannot obtain a VAT refund if the request is not justified in the administrative phase

On September 9, 2021 (C-294-20) the Court of Justice of the European Union (CJEU) ruled that the Tax Authorities may reject the VAT refund of a taxable person not established in the territory of the country if the taxable person does not submit the documents justifying the request during the administrative proceeding, even if they are subsequently provided during the economic-administrative claim or court appeal proceedings.

The case concerns a German entity, AUTO SERVICE LEASING GMBH, who filed requests in Spain for the refund of input VAT paid as a taxable person not established in Spain. The Spanish Tax Authorities rejected the request based on grounds that they had issued two formal information requests to the company asking them to provide evidence concerning the right to obtain the refund. These requests were not answered by the taxpayer.

The company appealed this rejection to the Central Economic-Administrative Court and the National Court, providing all the information requested by the Spanish Tax Authorities. However, both the Administrative Court and the National Court dismissed the case, stating that the relevant evidence had to be submitted to the competent administrative body. This statement suggests that the administrative claim procedure is not appropriate to review such evidence.

The case was appealed to the Supreme Court who upheld the case and ordered the National Court to issue a resolution on the basis of the evidence provided in the economic-administrative claim.

The National Court decided to raise a question to the CJEU to interpret the Eighth Council Directive 79/1072/EEC of 6 December 1979 regarding the refund procedure for taxable persons established in another EU Member State and on the determination of whether a court must examine documents submitted after the stipulated deadlines granted by the Tax Authorities in the administrative procedure by a non-established person in order to substantiate their right to a VAT refund.

The ruling of the CJEU states it is not contrary to the VAT directive and principles of EU law to reject a request of a VAT refund of a taxable person who is not established in the territory of the country if all the documents and information required to evidence the person’s entitlement to the VAT refund have not been submitted to the Tax Authorities in due term. This stands even if the taxable person submits such documents and information during the course of the economic-administrative claim or judicial appeal proceedings.

However, the European Court also states that it does not constitute an "abuse" of law for a taxable person who applies for a VAT refund to not provide the documents requested by the Tax Authorities during the administrative procedure, but to provide those during the appeal phase.

This is a significant judgement for Spanish case law which has traditionally accepted to analyze evidence not provided in the administrative procedure. As such , this ruling will have a considerable impact  on  the ongoing litigations on this topic.