Reimbursement of Wrongly Paid Value Added Tax

Facts

The case concerns a professional association (respondent) that registered in the VAT register in 1995. During an audit of the tax years 1995 to 1998, the Federal Tax Administration (appellant) found that the membership fees collected by the association were exempt from VAT. Therefore, it corrected the input taxes claimed and deleted the association from the register of VAT taxpayers. The association filed an objection against the deletion and the subsequent tax assessment. The Federal Tax Appeal Commission partially upheld the appeal and referred the matter back to the administration to calculate the VAT minus input tax. It found that the association was rightly not declared VAT-liable and that the tax paid should be refunded to it. The Federal Tax Administration filed an administrative court appeal against this decision to the Federal Supreme Court.

Considerations

The Federal Supreme Court states that the subject matter was legitimately extended by the assessment of the reimbursement issue, as there is a close connection between the question of tax liability and the reimbursement of taxes wrongly paid. On the merits, the Federal Supreme Court holds that the principle of self-assessment must be observed in the reimbursement of undue VAT. The taxpayer is responsible for the correct VAT…