CJEU Rules on Conditions for VAT Refund

Charles Riordan
January 25, 2021

The Court of Justice of the European Union (CJEU) has ruled that Member States must accept, as formally submitted, VAT refund requests that contain invoice identifiers other than sequential invoice numbers.

In case C-346/19 (Judgment of 17 December 2020), an Austrian taxpayer’s VAT Refund application was rejected by Germany’s Federal Central Tax Office, on the grounds that the “invoice numbers” listed on the application form were reference numbers rather than sequential invoice numbers.

The Austrian taxpayer challenged the notice, but the tax office ruled that the reference numbers didn’t comply with legal requirements and that the taxpayer had therefore failed to formally submit a valid refund request within the statutory time period allowed.

The CJEU disagreed, holding that a refund application under these circumstances must be considered validly submitted. In the court’s view, the substantive requirements of the application were satisfied, given that the reference numbers provided by the taxpayer allowed the invoices to be identified.

The court thought it particularly relevant that the Federal Central Tax Office had the ability to request further information, including copies of the original invoices, if it felt that the information provided by the taxpayer was insufficient to grant the refund. Declaring the application invalid without making a request for further information was a disproportionate penalty for the failure to comply with a purely formal requirement.

Ensuring VAT neutrality across the EU

This is not the first time that the CJEU has scrutinized the German tax authorities’ refund practices. In C371/19 (Judgment of 18 November 2020), the court held that the German authorities had violated the principle of VAT neutrality by systematically refusing to request information missing from VAT refund applications, such as copies of invoices or import documents. Instead, the authorities would immediately reject the applications, just as in C-346/19.

The court noted that the principle of VAT neutrality requires that a refund must be granted when all substantive conditions for the refund are fulfilled and that applicants must be given every opportunity to provide information needed to support a substantive claim. This ensures a taxpayer’s right to a settlement of VAT already paid is protected to the greatest extent possible.

Although the CJEU’s ruling in both cases was favorable for taxpayers, the court emphasized both times that failure to comply with a formal requirement could still prove fatal to an application if not corrected.

In C346/19, for example, the court noted that the tax office could officially request sequential invoice numbers from the taxpayer and could reject the application if those numbers weren’t provided within a month of the request.

Businesses need to understand and comply with tax authority regulations, even if a requirement is formal rather than substantive.

Take Action

To keep up to date with the changing VAT compliance landscape, download Trends: Continuous Global VAT Compliance and follow us on LinkedIn and Twitter to stay ahead of regulatory news and other updates.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.


Charles Riordan

Charles Riordan is a member of the Regulatory Analysis team at Sovos specializing in international taxation, with a focus on Value Added Tax systems in the European Union. Charles received his J.D. from Boston College Law School in 2013 and is an active member of the Massachusetts Bar.
Share this post

North America
June 6, 2024
Observations and Predictions: The Future of Tax and Compliance

When I became the CEO of Sovos one year ago, I knew that I was stepping into an innovative company in an industry primed for a seismic transformation. However, even with this knowledge in place, I must admit that the speed and scope of change over the past year has been extraordinary to witness. Here […]

July 18, 2024
The Impact of Climate-Related Events on Insurance Premium Tax (IPT)

Climate related events impact all industries; the insurance industry is no exception. Here’s how it’s affecting Insurance Premium Tax.

July 8, 2024
Hungary Insurance Premium Tax (IPT): An Overview

Regarding calculating Insurance Premium Tax (IPT), Hungary is the only country in the EU where the regime uses the so-called sliding scale rate model.

North America ShipCompliant
July 3, 2024
The Prospects and Perils of AI in Beverage Alcohol

I recently had the privilege of speaking on a panel at the National Conference of State Liquor Administrators (NCSLA) Annual Conference, a regular meeting of regulators, attorneys and other members of the beverage alcohol industry to discuss important issues affecting our trade. Alongside Claire Mitchell, of Stoel Rives, and Erlinda Doherty, of Vinicola Consulting, and […]

North America ShipCompliant
June 27, 2024
Shifting Focus: How to Make Wine Country Interesting to Millennials

Guest blog written by Susan DeMatei, President, WineGlass Marketing WineGlass Marketing recently conducted a study to explore how Millennials and Gen X feel about wine, wine culture and wine country. The goal was to gain insight into how we can make wine, wine club and wine country appealing to these new audiences. We’ll showcase in-depth […]

North America Sales & Use Tax
June 24, 2024
Illinois to Adjust Sales Tax Nexus Rules in Light of PetMeds Threat

Illinois is poised to change their sourcing rules again, trying to find their way in a world where states apply their sales tax compliance requirements equally to both in-state and remote sellers. With this tweak, they will effectively equalize the responsibilities of remote sellers with no in-state presence, to those that have an Illinois location. […]