Repaying the repayment

A Netherlands company issued invoices charging VAT which it accounted for to the tax authority. It subsequently claimed a repayment on the basis that the relevant services had not been supplied in the Netherlands. This was repaid.

However during an inspection in 2000 the tax authority discovered that the company had not issued any credit notes or pass on the repayment to its customers. Therefore it claimed back the repaid taxes.

The company appealed and the matter was referred to the European Court of Justice for preliminary ruling on the interpretation of Article 21(1)(c) of the EC Sixth Directive.

The court ruled that Article 21(1)(c) meant that VAT was due to the member state to which the VAT mentioned on the invoice even if the transaction in question was not taxable in that member state. It was for the national court to decide to which...