A blog about local and foreign VAT matters, best practices, and tips from practioners.

On 21st March 2018, Volkswagen won a case in the European Court of Justice (ECJ) regarding the denial of partial VAT refund claim by the tax authorities on the grounds of expiry of the limitation period.


Case Summary

HELLA Slovakia Front-Lighting, a subsidiary of Hella KGaA Hueck & Co.; an internationally operating German automotive part supplier, supplied headlamps to Volkswagen between 2004 and 2010.

HELLA Slovakia Front-Lighting issued invoices to Volkswagen without charging the VAT; as they considered the transaction to be incomplete without the supply of goods. However, HELLA realised they are required to charge the VAT rates on any Slovakian transactions and would be held liable for any omissions. They reissued the invoices to Volkswagen with proper VAT included. Volkswagen filed supplementary tax returns for all years from 2004 to 2010 and paid the relevant VAT to the Treasury.

When Volkswagen submitted VAT refund claims to the Bratislava  Tax Office in 2011 ( in the Slovak Republic), they only received a partial refund for the supplies which took place in the period from 2007 to 2010 and not for the supplies  from 2004 to 2006, due to the expiration of the 5-year limitation period.

The case came to the ECJ and asked if Volkswagen can receive a refund on the VAT paid several years after the supply even after the limitation period has expired.

Even though the supply of goods was carried out during 2004 to 2010, Volkswagen adjusted the VAT until 2010 and drew up VAT invoices, filed supplementary VAT returns and paid the VAT due. Hence, it did not demonstrate any kind of lack of diligence, fraudulent collusion that could lead to tax evasion, the Court of Justice ruled in favour of Volkswagen.
Click here for the the detailed proceedings of the court


How does this affect your business?

According to the ruling of the ECJ, businesses in any EU Member State in a similar situation can request a full VAT refund if all circumstantial and formal conditions of the right to deduct VAT are fulfilled even if the time limitation period has expired.