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24 Jan 2017

The EU Charter of Fundamental Rights Applies to VAT

In a recent Judgement rendered by the District Court of Luxembourg-city (Tribunal d’arrondissement de Luxembourg), the application of the Charter of Fundamental Rights of the European Union (the “Charter”) to value added tax (“VAT”) was confirmed.

Even though the Charter was solemnly proclaimed at the Nice European Council on December 7th 2000, it became only legally binding on the EU institutions and on national governments with the entry into force of the Lisbon Treaty on December 1st 2009.

The judges of the District Court recalled, in their decision dated December 7th 2016 (Civil Judgment I No. 432/16, docket No. 168 940, the “Judgement”) that the Charter applies to all situations governed by EU law. VAT being an indirect tax, which is harmonised at EU level, the District Court concluded that the Charter applies to it.

Although, to our knowledge, the Judgement is the first domestic decision which deals with the applicability of the Charter to VAT, the European Court of Justice (the “ECJ”) already ruled that the Charter applies to VAT (ECJ, February 26th 2013, case C-617/10, Akerberg Fransson).

This recognition cn be seen as an undeniable step forward regarding the rights of taxpayers.

This recognition at both EU and national levels can be seen as an undeniable step forward regarding the rights of taxpayers, especially because the application of the Luxembourg domestic law procedural safeguards contained in the law dated December 1st 1978 on non-contentious administrative procedure (procédure administrative non contentieuse) and its implementing Grand-Ducal Decree of June 8th 1979 to VAT is still disputed in Luxembourg case law.