On May 10, 2019 (C-371/19), the European Commission brought an action against Germany for its input tax refund procedure for EU taxable persons. In the view of the European Commission, Germany is violating the relevant EU regulations through the practical design of the input VAT reimbursement procedure. The Federal Tax Office (Germany) does not request missing information or supporting documents in the context of the examination of the applications, but rather rejects the refund applications directly. In the Commission's view, this procedure leads to inadmissible discrimination against EU foreign taxable persons in cases where such information can be submitted only after the deadline of September 30. The Commission submits that the Federal Tax Office’s approach infringes the principle of VAT neutrality, the principle of the effectiveness of the VAT refund regime, and the principle of the protection of legitimate expectations.

DLA Piper comment: The practices of the Member States' tax authorities in the VAT refund procedures for nondomestic taxable persons (either EU or non-EU businesses) are known to be strict and often excessively formalistic. Where such formalism, paired with long administrative waiting time for the application to be processed, results in essentially fully barring the applicant from VAT refunds for any slight formal flaw or shortfall because the September 30 deadline (EU applicants) has lapsed, the principle of VAT neutrality is endangered. The CJEU now has the chance to declare that the claim for input tax refunds cannot automatically be rejected for reason of missing information or documents that can be provided, be it before or after the stated deadline.