European Legal Review, vol II 2012 – The Right to Default Interest on Late VAT Refunds, Case C-107-10 Enel Maritsa Iztok 3



Case С-107/10 Enel Maritsa Iztok 3  Veselina Petkova1

Case C-107/10 was heard by the Court of Justice following a reference for a preliminary ruling by the Bulgarian Sofia Administrative Court made in the course of the proceedings between Enel Maritsa Iztok 3 AD (‘Enel’) and the Bulgarian tax authorities.

The reference concerns the right of Enel to default interest on the VAT refunded to the company following a three-month VAT deduction carry-forward period and a 45-day VAT refund period which was prolonged due to an initiated VAT audit by the Bulgarian tax authorities. Due to a change in the VAT legislation which was adopted in the meantime the revenue authorities refused to pay default interest to Enel for the period between the lapse of the initial 45 days for VAT refund and the end of the tax audit proceedings and paid default interest to the company only for the time period between the end of the tax audit and the actual remittance of the money.

The Court of Justice examined the questions referred to it in the light of the existing case law and of the common principles of fiscal neutrality, protection of legitimate expectations and proportionality  and concluded that Article 183 of Directive 2006/112 is to be interpreted as precluding national legislation under which the normal period for refunding excess value added tax, at the expiry of which default interest is payable, is extended where a tax investigation is instigated, the effect of the extension being that such interest is payable only from the date on which the investigation is completed.