In the March VAT News, we provide a comprehensive overview of noteworthy court decisions pertaining to VAT. For instance, the Court of Justice of the European Union has deliberated on the commencement of the time limit for correcting paid taxes when a claim becomes challenging to recover. Additionally, the Advocate General of the Court of Justice has expressed a controversial opinion on the existing rules on the formation of establishments for VAT purposes, suggesting that prior CJEU decisions in this area may have become outdated. Furthermore, the Supreme Administrative Court has examined the criteria for categorising land earmarked for development as building land.
In Case C-314/22 Consortium Remi Group, the Court of Justice deliberated on the commencement of the time limit for correcting paid taxes when a claim becomes challenging to recover. Contrary to setting a fixed starting point, the Court opted for a relative approach, seeking a threshold of uncertainty regarding the definitive non-payment of the claim. Notably, the Czech VAT Act, which derives the beginning of the time limit from the chargeable event, stands in clear contradiction to the Court’s perspective.
Cases C-341/22 Feudi and C-87/23 Latvijas (for now, focusing solely on the Advocate General’s opinion) delve into the issue of the exercise of economic activity and the entitlement to deduct input tax. In both instances, the emphasis is placed on how the performance is carried out rather than solely on its financial aspect. As a result, economic activity may still be recognised as such, even if it consistently operates at a loss. While this perspective aligns with the Court’s previous case law, it could be perceived as inconsistent with certain recent rulings.
In Case C-533/22 Adient, the Advocate General of the Court of Justice tackles the issue of the formation of establishments for VAT purposes. According to their perspective, the Court’s prior decisions regarding establishments may be perceived as outdated, suggesting that the analysis should concentrate on the alignment between the activities of the establishment and those of its founder. At the same time, in certain situations, for example, it may not be necessary for the establishment to have stable staff. This viewpoint is relatively contentious.
In its decision 4 Afs 64/2023-44 concerning the classification of land under the VAT Act, the Supreme Administrative Court ruled that land designated for development should be treated as building land. The Court emphasised that while the intention of the parties involved is significant, it is just one of several factors indicating the land’s intended purpose for development, although it is commonly a pivotal one. Other factors, such as the presence of administrative acts like an existing zoning plan or a proposed amendment to such a plan, are also relevant in establishing the land’s intended purpose. The opinion of the Supreme Administrative Court corresponds to the Czech VAT Act and conceptually aligns its provisions with those of the EU VAT Directive.
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