+ Word must be in search result. - Words must not be in search result. * Word start/end on characters before/after symbol. ""Words in quotes will be searched as phrase.


Time limits for collection of budgetary compensation for VAT: what has changed after the decision of the Grand Chamber of the Supreme Court of Ukraine?

authors: Alexander Shemiatkin, Andrii Kulida

01 March, 2023 Exclusive

The state systematically ignores its own obligation to budgetary compensation for VAT. A vivid example of the systemic nature of the problem is the decision in case No. 140/1770/19, in which the agreed budgetary compensation for 2007-2010 is still not returned to the taxpayer, as well as that the relevant issues have been considered by the Grand Chamber of the Supreme Court twice already.

The Decision of the Grand Chamber outlines the conclusion that the taxpayer can apply to the court for the collection of budgetary compensation within 6 months after learning about the violation of its rights.

What does this decision change? In our opinion, nothing, since it does not clarify in any way from which moment the taxpayer found out or should have found about the violation of its right to budget compensation.

We would like to remind that the Supreme Court, when referring the case for consideration to the Grand Chamber, indicated the existence of three different approaches to this issue, namely: (1) the application of a general period of 6 months from the day when the taxpayer found out about the violation of its rights, (2) application of the concept of “fair balance” between taxpayers and tax authorities and usage of a period of 1 095 days from the date of agreement of budgetary compensation, (3) application of the concept of “continuing offense”, which essentially consists in that the taxpayer, in view of the continuing unlawful inactivity of tax authorities, may apply to the court without limitation of procedural terms.

In the Decision of the Grand Chamber, (3) the concept of “continuing offense” was ignored completely. In fact, the Grand Chamber considered only the application of the terms of (1) 6 months or (2) 1095 days.

The essence of the concept of “continuing offense” is largely based on a very simple idea – the state must comply with its own laws. If the state ignores its duty to comply with the laws, then this cannot serve as a basis for releasing the state from the legally defined duty.

The Decision of the Grand Chamber is a demonstrative example of the ineffectiveness of the existing mechanism for protecting the rights of taxpayers on budgetary compensation. From the point of view of procedural economy and effectiveness of judicial protection, claims for cancellation of tax notification decision and collection of budgetary compensation should be considered in one process, the result of which should be an executive document for compulsory collection of budgetary compensation.

The full version of the article is available in Ukrainian by the link.

Kind regards,

© WTS Consulting LLC, 2023

Views 1097


What are the deadlines to file a claim for the recovery of the “old” VAT refund according to the Supreme Court of Ukraine? 04 October, 2023    383

Yuliia Kryvomaz spoke at the online meeting of the Ukrainian Bar Association on VAT problems 13 February, 2023    1680

Cases on blocking/additional requirements for the registration of a VAT invoice in view of the nature of VAT as an indirect tax.
Can the buyer appeal the blocking of the registration of the invoice?
23 December, 2022    401

Alexander Minin participated in the round table “Challenges for the tax system of Ukraine during the war in the context of the EU-Ukraine cooperation” 09 December, 2022    450

The Judgement of the Court of Justice of the EU regarding the national practice of tax authorities on refusal of the right to deduct VAT in the event of improper conduct on the part of the issuer of the invoice 14 November, 2022    495

VAT problem which manifests itself now in Ukraine
(or why VAT in Ukraine does NOT correspond to the VAT system in the EU)
26 October, 2022    592

Alexander Minin and Yuliia Kryvomaz delivered reports in the XI Tax Forum of the Ukrainian Bar Association 26 October, 2022    1825

Verkhovna Rada has adopted the Draft Law No. 4184: “Google Tax” and other important changes 09 June, 2021    2336

The President of Ukraine signed the Law, which reduces the VAT rate for certain agricultural products 23 February, 2021    1327

Review of VAT changes in Draft Law 4184, or not only Google 22 February, 2021    2132

What do the VAT statistics show? 16 October, 2020    4770

“Backdating” VAT exemption: what to do? 02 April, 2020    1390