TAX NEWS - DECEMber 2009

European Union VAT: ECJ decision may provide VAT refund opportunity

The European Court of Justice (ECJ) issued a decision on 3 December 2009 that may provide a significant opportunity for businesses in the EU whose refund claims under the Eighth Directive for VAT incurred in another EU Member State have been disallowed due to an "incorrect" signature (Yaesu Europe BV, Case C-433/08). The ECJ has concluded that VAT refund claims under the directive may be signed by an agent of the taxpayer.

The case involves a refund claim of a Dutch company, Yaesu Europe BV, which was signed by the company's German lawyers who were the company's legal representatives. The German tax authorities denied the claim on the grounds that it was not personally "signed" by the taxpayer. At issue was whether the term "signature" for purposes of a VAT refund request means that the claim must actually be signed by the taxable person, or, with respect to a legal person, by its statutory representative, or whether the signature of an agent (e.g. a tax representative or employee of the legal person) is sufficient. The Eighth Directive does not contain a definition of "signature," nor does it make any specific reference to the law of the Member States for purposes of determining the meaning and scope of the term.

The German tax authorities have narrowly interpreted the signature requirements on VAT refund claims (and annual VAT returns). The relevant forms need to be "personally" signed by the claimant, which in the context of a company claiming a VAT refund, means that only the managing director or a director of the board may be a signatory. This requirement has resulted in the rejection of many refund claims under the 8th Directive and a number of cases in the German courts.


ECJ decision

In concluding that signatures by agents (including employees of a company and external advisers) are sufficient for the purposes of Eighth Directive refund claims, the Court confirmed that the signature requirement on an Eighth Directive claim form must have the same meaning and scope in all EU Member States, and based on the principles of EU law and previous ECJ decisions, the refund application does not need to be signed by the taxable person.

The decision in Yaesu Europe BV is the first case referred to the ECJ on this issue and will be of interest to parties throughout the EU. While the case specifically addresses an Eighth Directive claim submitted to the German authorities, the decision applies in all EU Member States with similar strict signature requirements. This decision presents a potentially significant opportunity for Eighth Directive claims submitted to any EU Member State that have been rejected due to an "incorrect" signature to be resubmitted. Affected taxpayers should immediately review any Eighth Directive claims that have been rejected to resubmit them.