Return of unjustly collected tax
The ECJ stated, inter alia, the following: If a certain performance taxed at the basic rate should have been tax exempt pursuant to domestic law and tax is therefore overpaid, the general principles of Community law shall be applied, including the principle of tax neutrality, so that the economic entity which realized this performance is granted the right to refund of the amounts incorrectly demanded for said performance.
Even if the principles of equal treatment and tax neutrality are applied to the matter of the original proceedings, they are not infringed simply because rejection of returning the tax is based on unjustified enrichment of the relevant person obliged to pay the tax. On the contrary, the principle of tax neutrality prevents the prohibition of unjustified enrichment to be objected only vis-à-vis persons obliged to pay the tax such as payment traders (persons obliged to pay the tax whose collected output tax in the relevant accounting period is higher than the paid input tax) and not vis-à-vis persons obliged to pay the tax such as repayment traders (persons obliged to pay the tax whose situation is contrary to that of the above persons) if such persons obliged to pay the tax bring comparable products to the market. The domestic court is competent to verify this fact in the matter under consideration. In addition, the general principle of equal treatment, the infringement of which may be represented by discrimination affecting economic entities which are not necessarily competitors but in a comparable situation in other relations, prevents discrimination between payment traders and repayment traders that is not objectively justified.
The ECJ’s resolution must be interpreted as follows: if an economic entity pays a tax higher than the correct amount, they must be allowed to correct the tax and be refunded the incorrectly paid tax. In this sense, the Czech VAT Act currently does not fulfill the conditions of tax neutrality but the amendment to the VAT Act, approved by the Senate in July and awaiting the president’s signature and publication in the Collection of Law, at least eliminates the previous impossibility to correct incorrectly charged higher tax rates. As of 1 January 2009, tax charged incorrectly may be corrected pursuant to the Czech Vat Act and the ECJ’s resolution.
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