Court of Justice of the European Union

Judgment of 18 April 2013 (Case C-565/11)

«Repayment of taxes levied by a Member State in breach of European Union Law – National system limiting the interest payable by the Members State of the repaid tax – Principles of equivalence, effectiveness and proportionality»

In this case, following a reference for a preliminary ruling, the Court of Justice of the European Union was requested to rule on the consequences of a Member State charging a tax that is incompatible with European Union law – article 110 of the Treaty on the Functioning of the European Union.

The court argued that, based on ample case-law, where a Member States levies taxes in breach of provisions of European Union law, taxpayers are entitled to the repayment not only of the unduly paid tax but also of the amounts paid to or retained by the State in direct relation to such tax.

According to the Court of Justice of the European Union, a provision that limits the payment of interest to those payable from the day following the date of the claim for repayment of the unduly paid tax is inconsistent with the principle of effectiveness.

Accordingly, the Court advocated that the law of the European Union should be interpreted as meaning that it precludes national legislation that limits legal interest payable for the repayment of the amount of unduly levied tax from the day following the date of the claim for repayment of such tax.