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Brussels, 8 October 2009

VAT: Commission requires Greece to ensure in its legislation the refund of unduly paid VAT and other taxes

The Commission has addressed two Reasoned Opinions to Greece under Article 226 EC concerning its treatment of requests for the refund of unduly paid taxes including VAT. The rights tax payers derive from Community law include the right to obtain the repayment of taxes paid when they are levied by Member States in violation of Community law.

Where a Member State is found to have breached EC law, in particular by imposing a tax in violation of Community requirements, the right to obtain a refund of amounts of tax paid but not due is the consequence and complement of the rights conferred on individuals by EC law.

According to the well-established case-law of the European Court of Justice (ECJ), the procedural conditions governing the actions for safeguarding rights which individuals derive from EC 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 may they render the exercise of rights conferred by EC law virtually impossible or excessively difficult (principle of effectiveness).

Infringement case 2007/4407

The Reasoned Opinion has its origins in the ECJ judgment in joint Cases C‑78/02 to C‑80/02. The parties to the main proceedings were translators appointed by the Greek Ministry of Foreign Affairs. They submitted to the tax authorities a statement of account for VAT. They subsequently retracted those statements and sought reimbursement of the VAT claiming that it had been unduly paid. The reimbursement was denied on the grounds that they had mentioned VAT on the receipts issued in respect of the period in question. The issue was eventually referred to the ECJ which held that the amount mentioned as VAT on the invoice drawn up by a person providing services to the State may not be classified as VAT where that person erroneously believes that he is providing those services as a self-employed person whilst in reality there is an employer-employee relationship. Moreover, the VAT Directive does not preclude the reimbursement of an amount mentioned in error on an invoice where the services at issue are not subject to VAT.

In its Reasoned Opinion issued in the context of a new infringement procedure, the Commission points out that in the absence of Community rules on the repayment of national charges wrongly levied, it is for the domestic legal system of each Member State to lay down the detailed procedural rules for safeguarding the exercise of rights derived from EC law.

Following the judgement in joint cases C‑78/02 to C‑80/02 however Greece has not adopted a legal or administrative instrument to ensure the reimbursement of unduly levied charges to persons who mentioned on their invoices VAT in error. The Commission therefore considers that Greece has breached EC law.

Infringement case 2007/4581

Under Greek legislation, road assistance services supplied by the Greek Automobile Club to its members gave rise to the levy of VAT on their annual subscription. Considering that such transactions should be exempted from VAT under the VAT Directive, the Commission brought Greece before the ECJ. In its judgment in Case C-13/06, the ECJ confirmed the position of the Commission.

Even before the judgment, Greece modified its legislation to exempt road assistance services from VAT. However, the modifications also provided for the payment of VAT received by road assistance companies up to the date of submission of the modification to the Greek Parliament and precluded the refund of VAT paid on the basis of the repealed provisions. Following a complaint on the modifications restricting VAT refund, the Commission opened a new infringement procedure against Greece.

The modified legislation precludes the refund of VAT charged on road assistance services on the basis of the previous legislation, which the Commission finds to be in contravention with the above judgement by virtue of which road assistance services should have been VAT exempt from the date of entry into force of the VAT Directive.

While under the case-law of the ECJ, the refund of unduly levied charges may be restricted where the reimbursement of charges unduly levied would result in an undue enrichment of the person requesting the reimbursement, the modified legislation makes no reference to such unjust enrichment. The ECJ has also stated that it is for national authorities to demonstrate the occurrence of such undue enrichment by proving that the VAT or other tax has been passed on to another person.

The Commission therefore considers that by not adopting the appropriate legal and administrative measures to enable the exercise of the right of reimbursement in respect of VAT charged on road assistance services in contravention with the VAT Directive, Greece has failed to fulfil its obligations under EC law.

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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