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Brussels, 28 February 2008

Taxation: Commission requires Greece to change the way requests for refund of unduly paid taxes are treated

The Commission has issued a Reasoned Opinion addressed to Greece concerning its treatment of requests for the refund of unduly paid taxes following the Judgement of the European Court of Justice in Case C-62/93. The rights tax payers derive from Community VAT law include the right to obtain the repayment of taxes paid when Member States failed to transpose it correctly.

Where a Member State is found to have breached Community Law, in particular by failing to correctly transpose Community legislation, the right to obtain a refund of amounts of tax paid by reason of this incorrect transposition but not due is the consequence and complement of the rights conferred on individuals by Community Law.

According to the well-established Case-Law of the European Court of Justice, the procedural conditions governing the actions for safeguarding rights which individuals derive from Community Law are those laid down in national law. However, such national rules cannot be less favourable than those governing similar domestic actions (principle of equivalence), nor can they render the exercise of rights conferred by Community Law virtually impossible or excessively difficult (principle of effectiveness).

The Reasoned Opinion

Between 1987 and 1992, Greece applied a special VAT scheme to the importation and distribution of petroleum products. VAT was not levied, as mandated by the Directive, on each transaction in the distribution chain but rather as a single phase tax upon importation of the goods into the country. All further transactions were treated as exempt from VAT. The operators involved in those transactions were therefore prevented from deducting VAT on related inputs.

In this respect, a national court referred a question to the European Court of Justice under article 234 EC. In case C-62/93 BP Soupergaz, the ECJ ruled that Greece was precluded from applying the special scheme and that the operators involved in those transactions derived rights directly from the provisions in the VAT Directive concerning the right of deduction. Consequently it found that they were entitled to claim with retroactive effect the refund of the VAT they had been unable to deduct.

However, it appears from the Case-Law of the Greek Council of State that the practice is to render the exercise of this right de facto impossible. It has ruled that the operators will only be entitled to a refund if they can prove that the amounts of input VAT which, under the special scheme they could not deduct, exceeded the amounts of output VAT which they would have charged on their supplies, had Greece correctly transposed the Directive.

On the basis of a number of complaints, the Commission already sent a letter of formal notice to Greece, whose reply was not sufficient to conclude that Greece was not infringing EC law. Therefore, the Commission is now sending a reasoned opinion to the Greek State, formally requesting it to change the contested practice. Should Greece fail to do so, the Commission could then refer the State to the ECJ.

The reference number of the infringement procedure is 2005/4094

For the press releases issued on infringement procedures in the taxation or customs area see:

For the latest general information on infringement measures against Member States see:

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