On 18 March 2021, the Court of Justice of the European Union (CJEU) handed down a favourable judgment for Polish taxpayers (C-895/19) regarding VAT on intra-Community acquisitions of goods (IC-a). I have already informed about the ruling in the blog post „Favourable CJEU ruling on turnover tax on intra-Community acquisition of goods” in April this year, in which I analysed in detail the essence of the dispute between the taxpayer and the director of the National Tax Chamber (KIS). After the publication of the justification of the CJEU judgment in May 2021, taxpayers began to file applications for acknowledgment of overpayment an masse in order to be on time before 9 June 2021, as on that day the deadline for filing the application together with the overpayment interest due expired. It is worth remembering that the expiry of this deadline, however, does not close the way to recover the interest paid on the untimely filed IC-a.
The essence of the dispute between the taxpayer and the Director of KIS
As I analysed in the post “Favourable CJEU ruling on turnover tax on intra-Community acquisition of goods”, the dispute arose on the grounds of an individual tax interpretation requested by the taxpayer in order to confirm whether it was possible to deduct input VAT in the same period as output VAT on the same transaction following the expiry of the statutory 3-month period.
The director of the KIS recognized the taxpayer’s opinion as incorrect and the dispute was referred to the Voivodship Administrative Court in Gliwice. The adjudicating panel decided to refer the question to the CJEU for a preliminary ruling and to examine whether the provisions of the domestic VAT Act are in conflict with Directive 2006/12/EC. Taxpayers were impatiently waiting for the CJEU verdict which finally confirmed the contradiction of the Polish regulations with the EU regulations.
In spite of the deadline, file a request for acknowledgement of tax overpayment with the tax office
According to the CJEU judgment, the taxpayer was not entitled to interest on arrears due to IC-a, which were paid by taxpayers due to the failure to meet the statutory deadline for declaring neutral IC-a.
After publication of the justification of the CJEU verdict in May 2021, taxpayers massively commenced filing overpayment claims in order to be on time before 9 June 2021 – the deadline for filing the application with interest on the overpayment. Filing a tax overpayment claim involves correcting returns for all tax periods covered by the claim, which can be a time-consuming activity. However, there is no need to worry as you can still recover the interest paid on the late filed IC-a.
In the case of applications for recognition of overpayments filed after 9 June 2021, the amount of interest due on the resulting overpayment will be reduced. According to the current regulations, submitting the application after 30 days from the publication of the CJEU judgment (i.e. after 9 June 2021) will result in the interest being calculated only until 9 June 2021. and not until the actual date of repayment.
Disputed provisions of the VAT Act still in legal circulation
Although a taxpayer may directly invoke the CJEU judgment and derive his rights from it, I am looking forward to the removal of the disputed provision on neutral IC-a from the VAT Act. A draft amendment to the VAT Act has already been submitted to the Sejm, which will adjust the provisions to the CJEU judgment, favourable for taxpayers.
In my experience, the tax authorities do not question the legitimacy of overpayment refunds. The clients of the Law Firm I advise have already received refunds of unduly paid interest, therefore I encourage them to contact the specialists of our tax department. The assistance of an experienced tax adviser will allow for a thorough verification of documentation and effective claiming of overpayment refund.
Aleksandra Philips, LL.B., VAT Specialist