Interest must be applied to positive VAT balances due to taxpayers

Austrian tax law does not provide any rules for interest to be applied to positive VAT balances, although there is a provision in the Federal Tax Code that governs claims to interest. Interest claims can arise in the form of interest on amounts due (to the benefit of the tax authority) or interest on credit balances (to the benefit of the taxable person). Both result from the difference between prepayments made, and the amount of tax due according to the tax assessment for the year. However, this provision only applies in respect of income tax and corporate income tax.

ECJ ruling

According to the ECJ judgment, the principle of tax neutrality demands that financial losses resulting from an overpayment of input tax not being reimbursed within an appropriate period of time must be compensated by payments of default interest. This also applies to VAT reimbursements resulting from a reduction in the basis of assessment.
With regard to this ruling, there is a regulatory gap in Austrian law. It remains to be seen whether the gap will be filled by analogous application of the existing provisions governing interest claims, or by a change in the law.