This document summarizes a presentation on the repayment of direct taxes paid contrary to EU law. It discusses the Greek rules for tax repayment, which allow for reimbursement within 3 years or a damages lawsuit with a 5-year limit. However, these rules may not fully comply with EU law principles of effectiveness and legal protection. The EU requires member states to ensure taxpayers can obtain repayment when taxes were unlawfully collected. This may require extending time limits or allowing alternative remedies to ensure taxpayers have a genuine opportunity to claim their rights under EU law. The presentation analyzes options like extending Greece's 3-year limit to ensure it complies with these EU law principles.

1. 55thth
AnnualAnnual Avoir Fiscal ConferenceAvoir Fiscal Conference
2929thth
JanuaryJanuary 20102010
“The repayment of direct taxes
paid contrary to community law”
Katerina Perrou

2. StructureStructure
The problem
The Greek rules for the repayment of taxes
The EU Law perspective
The impact of EU Law on the Greek
system

3. 1. The problem1. The problem
 Effect of Negative integration
 Domestic measures are considered compatible with
EU law, until they are challenged before the ECJ
 The incompatibility is established only when the
judgment of the ECJ is delivered.
 Very late for the taxpayers to have recourse to the
legal remedies provided under their national
procedural rules because the applicable time limits
have expired.

4. 2-1. The Greek rules for the2-1. The Greek rules for the
repayment of taxes unduly paidrepayment of taxes unduly paid
Two options:
– A. Reimbursement of taxes
– B. Lawsuit for damages (State liability rules)
A. Reimbursement of taxes:
– Simple procedure (administration or court)
– Time limit for filing an application: 3 years
from the day the payment was made
– Scope: tax + penalties for up to 3 years back

5. 2-2. The Greek rules for the2-2. The Greek rules for the
repayment of taxes unduly paidrepayment of taxes unduly paid
B. Lawsuit for damages
– Application of the general state liability rules
– Conditions:
 Illegal action or omission by a State agent during
the course of its service
 The illegal action or omission does not violate a
provision set in favor of the general public
interest
 The illegal action or omission has caused damage
to the taxpayer (pecuniary or moral) BUT not the
TAX itself!

6. 2-3. The Greek rules for the2-3. The Greek rules for the
repayment of taxes unduly paidrepayment of taxes unduly paid
B. Lawsuit for damages
– Time limit: 5 years (general rule for pecuniary
– non tax – claims against the State)
– Scope: pecuniary claims or moral damage
 Currently NOT available for cases concerning the
repayment of taxes

7. 3-1. The EU law rules3-1. The EU law rules
Principle of effectiveness and
Principle of effective legal protection
⇓
Member States must ensure that their legal
systems guarantee the full effectiveness of
Community Law: effective judicial
protection of the taxpayer and restitution
of taxes paid contrary to EC Law

8. 3-2. The EU rules3-2. The EU rules
(a) By granting an extension of the time
limit that applies for the reimbursement of
taxes paid contrary to Community law
Or
(b) By granting access to an alternative
remedy (sue for damages)
The appropriate solution is: the extension
of the time-limits of the existing remedy

9. 3-3. The EU rules3-3. The EU rules
 ECJ case law
– Emmott: Mrs Emmott had no genuine opportunity to
claim her rights ⇒ extension of the time-limits of the
normally available legal remedy
– Steenhorst-Neerings: Mrs S-N had a genuine
opportunity to claim her right but did not use it ⇒ no
protection
– Peterbroeck: special features of the procedure in
question ⇒ the litigant did not have a genuine
appropriate chance to make a claim of his rights ⇒
protection granted (own motion of the national court)

10. 3-4. The EU rules3-4. The EU rules
 ECJ case law
– Fantask (DK): the existence of a parallel domestic
remedy offering full compensation (claim for
damages) led the court to deny the extension of the
time limit of the claim for reimbursement of taxes
– Edis: the case did not concern the time-limits for the
right of the individual to ask for repayment; it refers
to the time after the delivery of the ECJ decision
within which the taxpayer is entitled to present his
case. In Edis the ECJ rejected the extension of the
time limits BUT no arguments why.
– Arcor and i-21: no extension of time limit BUT
existence of a national law remedy that provides full
protection (annulment of administrative act)

11. 3-5. The EU rules3-5. The EU rules
 ECJ case law
– Kempter: the Court dealt with the time limit available
to a person in order to present his case AFTER the
case is re-opened; not relevant here as we examine if
there should be a time limit to reopen the case
– Danske Slageterier: The Court in this case examined
the argument of whether an ECJ judgment finding an
infringement can be a condition the lack of which
could bar the taxpayers’ access to the courts and it
ruled that this is not possible; it did not examine a
situation where the delivery of an ECJ judgment
finding an infringement actually opens the doors for
the individuals to claim their rights nor can the
Danske Slageterier judgment can be regarded as
covering this issue as well.

12. 3-6. The EU rules3-6. The EU rules
ECJ guidance:
– Assessment of the whole procedural status of
the claimant
– Is the breached community law right
somehow adequately protected?
 If yes, then: no need for intervention in the
national procedural autonomy
 If no, then: application of an appropriate rule
– The extension of the time limit for the
appropriate remedy IS an option

13. 3-7. The EU rules3-7. The EU rules
Arguments contra:
– “Legal certainty” is not capable of blocking a
national court from granting an extension of
the already expired time limit, when it is
established that by not doing so the taxpayer is
left basically unprotected
– Excusable error of the (breaching) State:
Rejected by the ECJ (in Fantask, para 41)
– Settled practice: Rejected by the ECJ (in
Fantask, para 40)

14. 3-8. The EU rules3-8. The EU rules
 Arguments contra:
– The taxpayer never complained: Rejected by the ECJ
(Metalgesellschaft, para 106, Thin Cap para 126)
– The taxpayer had a duty to mitigate his exposure: This cannot
apply in tax cases; rejected by the ECJ (Metalgesellschaft, para
99, Thin Cap para 124)
– Finality of court decisions or administrative acts: YES, BUT…
 A.G. Bot, Kempter :“74. Having regard to the importance of the
principles of legal certainty and res judicata in the community and
national legal systems, the rule is that community law does not
require a national authority to reopen a final decision which it has
adopted, even if the decision is incompatible with community law as
subsequently interpreted by the Court.
76. However, if it is shown that a national procedural rule
preventing the review of a final decision is contrary to the principle
of equivalence and/or the principle of effectiveness, that rule should
be disregarded by the national court.”

15. 3-9. The EU rules3-9. The EU rules
 Arguments contra:
– National procedural autonomy: it cannot be put above
the principle of effectiveness; since there is a degree
of (negative) integration of substantive rules the
procedural rules have to follow
– Relations established in Good faith: Meilicke para.
35: “It is only exceptionally that, in application of a
general principle of legal certainty which is inherent
in the community legal order, the Court may decide to
restrict the right to rely upon a provision, which it has
interpreted, with a view to calling in question legal
relations established in good faith”

16. 3-10. The EU rules3-10. The EU rules
Arguments contra:
– Budgetary certainty: Societe Bautiaa, para.
55: “The financial consequences which might
ensue for a government owing to the
unlawfulness of a tax or imposition have never
in themselves justified limiting the effects of a
judgment of the Court. Furthermore, to limit
the effects of a judgment solely on the basis of
such considerations would considerably
diminish the judicial protection of the rights
which taxpayers have under community fiscal
legislation”.

17. 4-1. The impact on Greece4-1. The impact on Greece
Currently: No “full protection” by either
remedy
– Reimbursement of tax: tax + interest
 (+ any penalties)
 3 years from PAYMENT of tax
– Lawsuit for damages:
 expenses (replacement of confiscated car)
 other costs (cash flow problems /financial costs)
 moral damage (fear of risking imprisonment /
synonymy imprisonment)
 5 years

18. 4-2. The impact on Greece4-2. The impact on Greece
 Options:
– Access to the lawsuit for damages that is now not
available for tax cases? Yes, for “losses” not covered
by the reimbursement
– Extension of time limit for the reimbursement of
taxes? – the time limit cannot start counting BEFORE
the time the unlawfulness of the tax becomes apparent
– Annulment/setting aside of administrative acts
based on provisions that are contrary to community
law (unlimited but useless if repayment is blocked by
the 3-year time-limit)