ECJ Case No. C-294/20: The European court reaffirms the significance of tax deadlines

On 22 November 2021, EU Official Gazette published clarifications on Spanish VAT deduction rules for Case No. C-294/20. The case revolves around a German established company and Spanish tax authorities. The applicant, GE Auto Service Leasing GmbH, supplies automobiles to Spanish companies under lease contracts. They submitted a VAT refund request to Spanish tax authorities relating to VAT amounts paid in the years 2005 and 2006. Spanish tax authority denied the refund, stating that the taxpayer failed to submit the proper documentation confirming the transactions. Tax authorities can disregard documents needed to justify a tax refund if they are submitted late. 

The decision by the ECJ

The tax authorities requested for information and evidence to substantiate the VAT refund on several occasions. However, the applicant failed to respond on time. The EU Council VAT directive’s principles of neutrality allow Spanish Tax authorities to reject VAT refund applications if taxpayers fail to submit the required documents within the prescribed period. 

European Court Justice clarifies that the submission of required documents in a subsequent proceeding does not constitute an abuse of rights. The case reminds VAT registered business the importance of timely submission of all requirements and/or additional documentation requested by tax authorities to ensure the approval of claims for refund and to avoid penalties. 

Source: EUR-Lex, Case No. C-294/20