55thth
AnnualAnnual Avoir Fiscal ConferenceAvoir Fiscal Conference
2929thth
JanuaryJanuary 20102010
“The repayment of dire...
StructureStructure
The problem
The Greek rules for the repayment of taxes
The EU Law perspective
The impact of EU Law ...
1. The problem1. The problem
 Effect of Negative integration
 Domestic measures are considered compatible with
EU law, u...
2-1. The Greek rules for the2-1. The Greek rules for the
repayment of taxes unduly paidrepayment of taxes unduly paid
Two...
2-2. The Greek rules for the2-2. The Greek rules for the
repayment of taxes unduly paidrepayment of taxes unduly paid
B. ...
2-3. The Greek rules for the2-3. The Greek rules for the
repayment of taxes unduly paidrepayment of taxes unduly paid
B. ...
3-1. The EU law rules3-1. The EU law rules
Principle of effectiveness and
Principle of effective legal protection
⇓
Mem...
3-2. The EU rules3-2. The EU rules
(a) By granting an extension of the time
limit that applies for the reimbursement of
t...
3-3. The EU rules3-3. The EU rules
 ECJ case law
– Emmott: Mrs Emmott had no genuine opportunity to
claim her rights ⇒ ex...
3-4. The EU rules3-4. The EU rules
 ECJ case law
– Fantask (DK): the existence of a parallel domestic
remedy offering ful...
3-5. The EU rules3-5. The EU rules
 ECJ case law
– Kempter: the Court dealt with the time limit available
to a person in ...
3-6. The EU rules3-6. The EU rules
ECJ guidance:
– Assessment of the whole procedural status of
the claimant
– Is the bre...
3-7. The EU rules3-7. The EU rules
Arguments contra:
– “Legal certainty” is not capable of blocking a
national court from...
3-8. The EU rules3-8. The EU rules
 Arguments contra:
– The taxpayer never complained: Rejected by the ECJ
(Metalgesellsc...
3-9. The EU rules3-9. The EU rules
 Arguments contra:
– National procedural autonomy: it cannot be put above
the principl...
3-10. The EU rules3-10. The EU rules
Arguments contra:
– Budgetary certainty: Societe Bautiaa, para.
55: “The financial c...
4-1. The impact on Greece4-1. The impact on Greece
Currently: No “full protection” by either
remedy
– Reimbursement of ta...
4-2. The impact on Greece4-2. The impact on Greece
 Options:
– Access to the lawsuit for damages that is now not
availabl...
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The repayment of direct taxes paid contrary to comunity law

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My presentation at the 5th Avoir Fiscal Conference, London, 29-01-2010

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  • Fantask, para 41: “Community law precludes actions for the recovery of charges levied in breach of the Directive from being dismissed on the ground that those charges were imposed as a result of an excusable error by the authorities of the Member State inasmuch as they were levied over a long period without either those authorities or the persons liable to them having been aware that they were unlawful”
    Fantask para 40: “a general principle of national law under which the courts of a Member State should dismiss claims for the recovery of charges levied over a long period in breach of community law without either the authorities of that State or the persons liable to pay the charges having been aware that they were unlawful” would not satisfy the conditions of effectiveness and therefore it would be incompatible with community law
  • Societe Bautiaa – capital duty case
    Analogies with: the annulment of administrative acts and the repayment of state aids (the other side of the same coin)
    Also: Ciola – an administrative act that was issued in 1990 became contrary to community law after accession of Austria and the person complained in 1996 – the Court said the unlawful administrative act must be disregarded and annuled the fine based on that act.
  • The repayment of direct taxes paid contrary to comunity law

    1. 1. 55thth AnnualAnnual Avoir Fiscal ConferenceAvoir Fiscal Conference 2929thth JanuaryJanuary 20102010 “The repayment of direct taxes paid contrary to community law” Katerina Perrou
    2. 2. StructureStructure The problem The Greek rules for the repayment of taxes The EU Law perspective The impact of EU Law on the Greek system
    3. 3. 1. The problem1. The problem  Effect of Negative integration  Domestic measures are considered compatible with EU law, until they are challenged before the ECJ  The incompatibility is established only when the judgment of the ECJ is delivered.  Very late for the taxpayers to have recourse to the legal remedies provided under their national procedural rules because the applicable time limits have expired.
    4. 4. 2-1. The Greek rules for the2-1. The Greek rules for the repayment of taxes unduly paidrepayment of taxes unduly paid Two options: – A. Reimbursement of taxes – B. Lawsuit for damages (State liability rules) A. Reimbursement of taxes: – Simple procedure (administration or court) – Time limit for filing an application: 3 years from the day the payment was made – Scope: tax + penalties for up to 3 years back
    5. 5. 2-2. The Greek rules for the2-2. The Greek rules for the repayment of taxes unduly paidrepayment of taxes unduly paid B. Lawsuit for damages – Application of the general state liability rules – Conditions:  Illegal action or omission by a State agent during the course of its service  The illegal action or omission does not violate a provision set in favor of the general public interest  The illegal action or omission has caused damage to the taxpayer (pecuniary or moral) BUT not the TAX itself!
    6. 6. 2-3. The Greek rules for the2-3. The Greek rules for the repayment of taxes unduly paidrepayment of taxes unduly paid B. Lawsuit for damages – Time limit: 5 years (general rule for pecuniary – non tax – claims against the State) – Scope: pecuniary claims or moral damage  Currently NOT available for cases concerning the repayment of taxes
    7. 7. 3-1. The EU law rules3-1. The EU law rules Principle of effectiveness and Principle of effective legal protection ⇓ Member States must ensure that their legal systems guarantee the full effectiveness of Community Law: effective judicial protection of the taxpayer and restitution of taxes paid contrary to EC Law
    8. 8. 3-2. The EU rules3-2. The EU rules (a) By granting an extension of the time limit that applies for the reimbursement of taxes paid contrary to Community law Or (b) By granting access to an alternative remedy (sue for damages) The appropriate solution is: the extension of the time-limits of the existing remedy
    9. 9. 3-3. The EU rules3-3. The EU rules  ECJ case law – Emmott: Mrs Emmott had no genuine opportunity to claim her rights ⇒ extension of the time-limits of the normally available legal remedy – Steenhorst-Neerings: Mrs S-N had a genuine opportunity to claim her right but did not use it ⇒ no protection – Peterbroeck: special features of the procedure in question ⇒ the litigant did not have a genuine appropriate chance to make a claim of his rights ⇒ protection granted (own motion of the national court)
    10. 10. 3-4. The EU rules3-4. The EU rules  ECJ case law – Fantask (DK): the existence of a parallel domestic remedy offering full compensation (claim for damages) led the court to deny the extension of the time limit of the claim for reimbursement of taxes – Edis: the case did not concern the time-limits for the right of the individual to ask for repayment; it refers to the time after the delivery of the ECJ decision within which the taxpayer is entitled to present his case. In Edis the ECJ rejected the extension of the time limits BUT no arguments why. – Arcor and i-21: no extension of time limit BUT existence of a national law remedy that provides full protection (annulment of administrative act)
    11. 11. 3-5. The EU rules3-5. The EU rules  ECJ case law – Kempter: the Court dealt with the time limit available to a person in order to present his case AFTER the case is re-opened; not relevant here as we examine if there should be a time limit to reopen the case – Danske Slageterier: The Court in this case examined the argument of whether an ECJ judgment finding an infringement can be a condition the lack of which could bar the taxpayers’ access to the courts and it ruled that this is not possible; it did not examine a situation where the delivery of an ECJ judgment finding an infringement actually opens the doors for the individuals to claim their rights nor can the Danske Slageterier judgment can be regarded as covering this issue as well.
    12. 12. 3-6. The EU rules3-6. The EU rules ECJ guidance: – Assessment of the whole procedural status of the claimant – Is the breached community law right somehow adequately protected?  If yes, then: no need for intervention in the national procedural autonomy  If no, then: application of an appropriate rule – The extension of the time limit for the appropriate remedy IS an option
    13. 13. 3-7. The EU rules3-7. The EU rules Arguments contra: – “Legal certainty” is not capable of blocking a national court from granting an extension of the already expired time limit, when it is established that by not doing so the taxpayer is left basically unprotected – Excusable error of the (breaching) State: Rejected by the ECJ (in Fantask, para 41) – Settled practice: Rejected by the ECJ (in Fantask, para 40)
    14. 14. 3-8. The EU rules3-8. The EU rules  Arguments contra: – The taxpayer never complained: Rejected by the ECJ (Metalgesellschaft, para 106, Thin Cap para 126) – The taxpayer had a duty to mitigate his exposure: This cannot apply in tax cases; rejected by the ECJ (Metalgesellschaft, para 99, Thin Cap para 124) – Finality of court decisions or administrative acts: YES, BUT…  A.G. Bot, Kempter :“74. Having regard to the importance of the principles of legal certainty and res judicata in the community and national legal systems, the rule is that community law does not require a national authority to reopen a final decision which it has adopted, even if the decision is incompatible with community law as subsequently interpreted by the Court. 76. However, if it is shown that a national procedural rule preventing the review of a final decision is contrary to the principle of equivalence and/or the principle of effectiveness, that rule should be disregarded by the national court.”
    15. 15. 3-9. The EU rules3-9. The EU rules  Arguments contra: – National procedural autonomy: it cannot be put above the principle of effectiveness; since there is a degree of (negative) integration of substantive rules the procedural rules have to follow – Relations established in Good faith: Meilicke para. 35: “It is only exceptionally that, in application of a general principle of legal certainty which is inherent in the community legal order, the Court may decide to restrict the right to rely upon a provision, which it has interpreted, with a view to calling in question legal relations established in good faith”
    16. 16. 3-10. The EU rules3-10. The EU rules Arguments contra: – Budgetary certainty: Societe Bautiaa, para. 55: “The financial consequences which might ensue for a government owing to the unlawfulness of a tax or imposition have never in themselves justified limiting the effects of a judgment of the Court. Furthermore, to limit the effects of a judgment solely on the basis of such considerations would considerably diminish the judicial protection of the rights which taxpayers have under community fiscal legislation”.
    17. 17. 4-1. The impact on Greece4-1. The impact on Greece Currently: No “full protection” by either remedy – Reimbursement of tax: tax + interest  (+ any penalties)  3 years from PAYMENT of tax – Lawsuit for damages:  expenses (replacement of confiscated car)  other costs (cash flow problems /financial costs)  moral damage (fear of risking imprisonment / synonymy imprisonment)  5 years
    18. 18. 4-2. The impact on Greece4-2. The impact on Greece  Options: – Access to the lawsuit for damages that is now not available for tax cases? Yes, for “losses” not covered by the reimbursement – Extension of time limit for the reimbursement of taxes? – the time limit cannot start counting BEFORE the time the unlawfulness of the tax becomes apparent – Annulment/setting aside of administrative acts based on provisions that are contrary to community law (unlimited but useless if repayment is blocked by the 3-year time-limit)

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