The ECJ found that an amendment to Bulgarian law, which restricted the payment of interest on VAT refunds (which normally arose 45 days after the submission of a return) in circumstances where an enquiry had been opened, placed the taxpayer at an economic disadvantage and offended the principle of fiscal neutrality.

Court further found that in circumstances like those of Enel, where a return had been submitted before the legislation came into force, it was incompatible with the principle of the protection of legitimate expectations for interest to be denied as a consequence of that change since it had the effect of “retroactively depriving a taxable person of a right he had derived from earlier legislation”.

This Judgment confirms the Court’s earlier decisions in M&S and Molenheide.