European Court of Justice, Case C-426/22, “SOLE-MiZo Zrt. v. Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága”: Interest on Monetary Depreciation as a Compensation Measure for the Economic Burden Caused by the Unavailability of Tax Unduly Withheld

The European Court of Justice (ECJ) has given some indications about the situation of taxpayers having obtained the refund of VAT credits withheld in infringement of European Union (EU) law by a member state. The court has found that on top of the late payment interests foreseen by the law of the member state in question, the taxpayers were entitled to additional late payment interests from this member state as a compensation for monetary depreciation because of the time between the delivery of the judgment in which the Court of Justice has found that there has been an infringement of union law and the actual payment of interest on the excess VAT due by this member state, in so far as that practice is liable to deprive the taxable person of adequate compensation for the loss caused by the unavailability of the sums concerned and is not capable of offsetting the economic burden of the amounts of tax unduly withheld.

European Court of Justice, Case C-453/22, “Michael Schütte v. Finanzamt Brilon”: Refund of Overpaid VAT Paid to Suppliers Regardless of the Statutory Limits

The ECJ has ruled that Council Directive 2006/112/EC of 28 November 2006 on the common system of VAT, as amended by Council Directive 2010/45/EU of 13 July 2010, and the principle of VAT neutrality and the principle of effectiveness must be interpreted as requiring that a receiver of supplies of goods has a direct right to claim from the tax authorities the reimbursement of improperly invoiced VAT paid to his or her suppliers and paid by those suppliers to the public purse, together with related interest, in circumstances where, first, that receiver cannot be criticised for fraud, abuse, or negligence but cannot claim that reimbursement from those suppliers because of the limitation period provided for by national law and, second, there is a procedural possibility of those suppliers subsequently claiming reimbursement of the overpaid tax from the tax authorities after having adjusted the invoices that were issued initially to the receiver of those supplies. Failing reimbursement of the VAT improperly charged by the tax authorities within a reasonable time, the damage suffered on account of the unavailability of the amount equivalent to that improperly charged VAT must be compensated by the payment of default interest.

Denmark Authorized to Continue to Apply the VAT Flat-Rate Scheme on Private Use of Business Cars

The Council of the European Union has authorized Denmark to extend the application of the special VAT Flat-Rate Scheme on the use of business cars for private purposes until 31 December 2026.

VAT Treatment of Supplies Under Fuel Card Schemes

Following the recommendations of the VAT Expert Group (VEG), the VAT Committee has published the Working Document 1067, addressing the VAT treatment of fuel cards under the commissionaire model.

European Court of Justice, Case C-505/22, Deco Proteste – Editores v. Autoridade Tributaria e Aduaneira: VAT Treatment of Gifts to Subscribers

The ECJ has ruled that the Article 2(1)(a) and the first paragraph of Article 16 of Council Directive 2006/112/EC of 28 November 2006 on the common system of VAT, must be interpreted as meaning that the provision of a subscription gift in return for taking out a subscription to periodicals constitutes a supply that is ancillary to the principal service of supplying periodicals, which falls within the concept of “supply of goods for consideration,” within the meaning of those provisions, and must not be regarded as a disposal of goods free of charge within the meaning of the first paragraph of Article 16.

European Court of Justice, Case C-146/22, YD v. Dyrektor Krajowej informacji Skarbowej: Different VAT Rates on Foodstuffs Containing the Same Main Ingredient Depending on Their Commercial Purpose

The ECJ has ruled that Article 98 of Council Directive 2006/112/EC of 28 November 2006 on the common system of VAT, as amended by Council Directive (EU) 2018/1713 of 6 November 2018, read in conjunction with points 1 and 12a of Annex III thereto, Article 6 of Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112, and the principle of fiscal neutrality, must be interpreted as not precluding national legislation, which provides that foodstuffs consisting of the same main ingredient and meeting the same need on the part of the average consumer are subject to two different reduced VAT rates, depending on whether they are sold at retail level in shops or are prepared and served hot to a customer at his or her request, with a view to their immediate consumption, provided that those foodstuffs do not have similar properties despite having a main ingredient in common or that the differences between those foodstuffs, including as regards the support services accompanying their supply, have a significant influence on the decision of the average consumer to purchase one or the other of those foodstuffs.

European Court of Justice, Case C-355/22, Osteopathie Van Hauwermeiren v. Belgische Staat: Prohibition on Keeping the Effects of a National Provision That Violates EU Law Regardless of the Difficulties It May Cause

The ECJ has ruled that a national court may not make use of a national provision empowering it to maintain certain effects of a provision of national law that it has found to be incompatible with Council Directive 2006/112/EC of 28 November 2006 on the common system of VAT, on the basis of an alleged impossibility of refunding the VAT wrongly levied to the customers of the services provided by a taxable person, in particular by reason of the large number of persons concerned or where those persons do not have an accounting system enabling them to identify those services and their value.

Implementing Regulation on the Treatment of Non-Collected VAT for National Accounts Purposes Adopted

The European Commission has implemented Regulation 2023/2493 on the treatment of the non-collected VAT because of VAT fraud and insolvency for national accounts purposes. The regulation aims to ensure the reliability of the Gross National Income (GNI) data by addressing the discrepancies between theoretical VAT receipts and actual VAT receipts.

This regulation is binding in its entirety and directly applicable in all member states as from 17 November 2023.

34th Meeting of the VEG

Following the 34th Meeting held in October 2023, the VEG published the minutes of the meeting. Among the several topics discussed, the VEG has addressed the state of play of the VAT in the Digital Age (ViDA) package, EU customs reform, VAT e-commerce package, travel and tourism package, and reporting on vouchers. In addition, the agenda also covered the members’ suggestions for explanatory notes on the SME scheme, the VAT treatment of donated and recycle goods, as well as the issues encountered in Germany when checking the validity of VAT ID number via VIES.

123rd Meeting of the VAT Committee

Following the 123rd Meeting held on 20 November 2023, the VAT Committee published the documents and agenda of the meeting. Among the topics discussed, the VAT Committee has addressed several aspects related to the special scheme for small enterprises and its interaction with other special schemes. In addition, the agenda also covered the VAT treatment of non-fungible tokens (NFTs) and the intention of Czech Republic to restrict right of deduction of VAT paid upon the acquisition of certain passenger motor vehicles.

European Court of Justice, Case C-532/22, “Direcția Generală Regională a Finanțelor Publice Cluj-Napoca v. SC Westside Unicat”: Place of Supply of Services Related to Interactive Sessions Broadcast on a Streaming Platform

The ECJ has ruled that the Article 53 of Council Directive 2006/112/EC of 28 November 2006 on the common system of VAT, as amended by Council Directive 2008/8/EC of 12 February 2008, must be interpreted as meaning that it does not apply to services provided by a video chat recording studio to the operator of an internet streaming platform and consisting of creating digital content that takes the form of interactive video sessions filmed by such a studio to make them available to that operator for the purpose of the latter streaming them on that platform.

European Parliament Adopts Opinion on ViDA

On 22 November 2023, the European Parliament has approved its opinions on three legislative procedures related to ViDA, namely a one-year postponement of the directive on ViDA and of the amendment to the regulation on administrative cooperation on fight against VAT fraud, and changes to the VAT rules for taxable persons that facilitate distance sales of imported goods from third territories.