Deadlines for exercising the right to compensation or refund of VAT


Judgment of the Spanish Central Economic-Administrative Court of 22 September 2015.

A company submitted the VAT return corresponding to the fourth quarter of 2008 with a result of 505.532,14 euros “to be compensated in further periods”. Subsequently, the Spanish Tax Authorities, regarding this VAT return, issued a provisional liquidation for which the amount to be compensated was only 158.450,76 euros since, according to the Administration had expired the right to compensate about 347.081,38 euros.

Then, the company submitted before the Spanish Tax Authorities a VAT refund claim amounting to 347.081,38 euros, corresponding to the VAT quotas that had not been able to be compensated by having expired the right to compensation. However, that VAT refund claim was rejected by the Administration, so the company lodged an appeal before the Spanish Central Economic-Administrative Court.

The question to be solved by this Court is whether the refund of the VAT paid by the society after four years of an accrual basis.

This Economic-Administrative Court, according to the doctrine of the Spanish Supreme Court, considers that there is a right on return of the VAT quotas that not had been able to offset as a result of over four years by the taxpayer and that, therefore, there is not the forfeiture of that right, since somehow it would lead to an unjust enrichment for the administration.

In this sense, according to the doctrine of the Spanish Supreme Court, the possibilities of compensation or refund must operate alternatively. But even if the taxable person elects to compensate during the four years following that period in which there was excess tax supported on the accrual, you must be eligible for the refund of the differential balance remaining after offset. The taxable person has a credit against the Treasury which is abstracted from its cause and that should be able to recover even after the conclusion of the term of expiration.

The loss by the taxable person of the right to recover completely the VAT paid would undermine the spirit and purpose of the tax”.

The conclusion that can be obtained is that after expiry of the period of expiration, during which the taxable person has not been able to compensate excess VAT quotas and has not requested the refund, arises a right of credit in favour of it, subjected to the general deadline on tax matters (four years).

In terms of the procedure in which this refund can be requested, shows that while there is not a specific procedure for this purpose, the taxpayer could submit a VAT refund claim before the Spanish Tax Authorities (which is exactly what this company did).

According to what said, the Court held the right of the claimant company to obtain the refund of the pending VAT quotas as well as the corresponding delay interest.

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TEAC 22 9 2015

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