Up until the decision of the Austrian Higher Administrative Court (AHAC), an application for interest in the context of VAT only appeared to be possible if the taxpayer applied to the tax authority for a reduction in view of the VAT already paid while filing a complaint (so-called “complaint interest”). In its decision of 30/06/2021 (Ro 2017/15/0035), the AHAC confirmed the core statements of the European Court of Justice (ECJ C-844/19, “CS und technoRent International GmbH”) and basically granted the right to appropriate interest for delayed refunds of VAT credits for the taxpayers, although this has not yet been explicitly provided for in Austrian law. This decision is of great practical relevance, not only for Austrian resident taxpayers, but also for foreign companies registered for VAT purposes in Austria who are submitting Austrian VAT returns: in the case of (significant) delays in the reimbursement of VAT credits, such taxpayers have a fundamental right to demand interest on arrears for the period of liquidity disadvantage. Nevertheless, please note that this decision cannot be applied to VAT refund requests submitted by non-registered taxpayers, as there is a special provision in the directive 2008/9/EC in this regard.
Background
In this current ruling, the AHAC dealt with the following facts: a hotel operator requested a refund for an input VAT amount of approx. EUR 60,000, which he declared in the VAT return for period 08/2007. Nevertheless, the tax authority did not refund the whole amount of the correctly declared input VAT and instead reduced the input VAT amount to EUR 14,600. The taxpayer appealed this reduction. However, the appeal was not granted until 2013. The input VAT amount was refunded shortly thereafter. Due to the resulting disadvantages in terms of interest and liquidity, the taxpayer requested interest for the delayed refund for the period January 2012 until May 2013. The AHAC based its judgement on the decision of the European Court of Justice (ECJ C-844/19, “CS und technoRent International GmbH”) and granted the taxpayer interest of 2% above the base interest rate for the corresponding period. Nevertheless, the interest period and the beginning of the interest accrual were specified in this case so that the AHAC did not have to commit itself in this regard.
Open points
The enforcement of the right to receive interest for a delayed refund of a VAT credit cannot be based on the direct application of the EU VAT law nor on the direct application of the Austrian VAT law, but only in accordance with the relevant rulings of the AHAC and ECJ and an analogous application of Sec. 205, 205a and 212a of the Austrian Federal Fiscal Code (BAO).
It remains unclear as to how the taxpayer can successfully request the granting of interest. According to the ruling of the AHAC, the taxpayer can apply for interest in the case of a (significantly) delayed refund of a VAT credit. However, the legal basis for the application has not yet been settled. A possibility would be to make an initiative application with reference to the case law of the ECJ and the ruling of the AHAC, but such a proceeding would most likely be ignored due to the lack of a legal basis. Therefore, a legal title should be available to enable the entering into of legal proceedings. One way to achieve such a legal title could be to urge an official notification based on the standard booking information in conjunction with Sec. 216 of the Austrian Federal Fiscal Code (BAO). However, so far there has been no official statement from the Austrian fiscal administration regarding this issue.
The reasonable timeframe for the refund of the VAT credit amount is also still an open point. According to the ECJ jurisdiction, the taxpayer is entitled to receive the refund of the VAT credit within a reasonable timeframe (45 days). Each refund received outside this timeframe should be granted with interest. The Austrian perspective on the length of the reasonable timeframe can be based on Sec. 21 of the Austrian VAT code, which defines the limitation period for the taxpayers. This 45-day period could also be used as the processing period of the tax authority. However, the AHAC does not explicitly mention this issue in its ruling, nor does it define the Austrian VAT law for this period explicitly, so it remains open to discussion. Therefore, the Austrian legislature is called upon to create sufficiently clear interest regulations for VAT purposes also on the basis of which interest claims for overdue VAT credits can be asserted outside of the formal complaint procedures.
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