On 24 January 2023, Piotr Andrzejak and Stanislaw Gordziałkowski from SK&S’ tax team obtained, for one of Europe’s largest construction companies, a favourable judgment of the Supreme Administrative Court (case no. I FSK 1085/22) regarding the calculation of the amount of interest due to a taxpayer on a multimillion VAT amount that was not returned on time.
The case concerned the amount of interest on the VAT amount which the authority returned to the taxpayer only after losing the dispute before the Supreme Administrative Court. The tax authority applied a reduced amount of interest equal to the grace fee inherent in the VAT amount that is returned after the deadline due to the verification activities carried out by the tax authority. The taxpayer argued that it was entitled to statutory interest because the authority did not refund the VAT after the verification activity but only after losing the case before the administrative court.
The SAC agreed with the taxpayer that a tax refund based on a decision issued after an administrative court ruling does not mean that its legitimacy was established during the tax proceedings. Interest in the amount of the prolongation fee is an exception to the rule and can only be applied if the verification of the legitimacy of the refund was made in one of the modes indicated in the VAT Law (e.g. tax proceedings). When the tax refund follows a final court judgment, as it was in this case, the interest is due to the taxpayer in the full amount, and not only in the amount of the grace fee.
The above case is related to an earlier favourable judgment of the Supreme Administrative Court (ref. I FSK 1148/17) obtained by SK&S for this client, in which, the Supreme Administrative Court confirmed that the lack of the formal acceptance of a construction service means that it has not been performed in full for the purposes of VAT liability, and the tax authority cannot automatically estimate the amount of the VAT tax base based on the value of civil law claims asserted by the construction company in a dispute with the ordering party.
Therefore, it is worth verifying that the tax authority’s tax refunds with interest are in the correct amount.
