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Brussels, 30 September 2010

Direct taxation: Commission requests UK to ensure reimbursement of taxes paid in violation of EU law

The European Commission has formally requested the United Kingdom to change its Finance Act 2007 to ensure that the abolition of the "remedy for repayment of taxes paid in mistake of law" is subject to proper transitional rules. Under EU law, the reimbursement of taxes paid in violation of EU rules should be granted according to the national rules on internal tax reimbursements and should not be made impossible or excessively difficult. A retroactive limitation of the rights of taxpayer in this respect contravenes this principle. The request of the Commission takes the form of a 'reasoned opinion', the second step of an EU infringement procedure. In the absence of a satisfactory response within two months, the Commission may refer the United Kingdom to the EU's Court of Justice.

The UK's Finance Act 2007 retroactively abolishes one of the remedies used by taxpayers seeking reimbursement of taxes paid in breach of EU law, thereby preventing the exercise of rights conferred by EU law in certain cases. This measure seems to exceed the limits of national procedural autonomy stemming from Article 4(3) of the Treaty on the European Union.

Since the limitation period introduced does not provide for any proper transitional rules (except in certain circumstances), it is therefore almost impossible to exercise the rights conferred by EU law.

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

For the most up-to-date general information on the infringement proceedings initiated against Member States, see:

For more information on EU infringement procedures, see MEMO/10/457

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