In the Volkswagen AG v Slovak Republic case, the ECJ have held that Volkswagen was entitled to reclaim input VAT in circumstances where the VAT was charged and paid several years after delivery of the goods following the late issue of a VAT invoice. The case related to the provision of parts for cars to Volkswagen by a Slovakian supplier which did not charge VAT for a number of years but, in 2010, realised that it should have done so. The supplier then issued VAT invoices to Volkswagen and filed the relevant VAT returns with the tax authority. Volkswagen applied to the Slovak tax authority for a VAT refund and the tax authority permitted the refund for the prior 5 years but refused the claim for earlier years on the basis that it was out of time.
In coming to this decision, the Slovak tax authority asserted that the relevant VAT point was the time of delivery of the goods and not the time of issue of the VAT invoice. The ECJ allowed Volkswagen’s recovery for all years and held that EU law must be interpreted as allowing claims for VAT refunds by reference to the time when the VAT is paid and not when the goods were delivered. The Court stated that the right to deduct VAT is an integral part of the VAT system and may not be limited so that in this case, where there was no abuse or fraudulent conduct between Volkswagen and the supplier and Volkswagen had not demonstrated any lack of diligence in making its VAT reclaim, it was entitled to recover the VAT that was paid by reference to the time of issue of the late invoices.