SAC confirms right to interest on wrongly assessed customs duties
In its recent judgment, the Supreme Administrative Court (SAC) has reconsidered its existing case law and granted a taxpayer the right to interest on wrongly assessed customs duty. The SAC emphasised that this right is guaranteed by EU law and that national legislation cannot simply rule it out.
The case concerned a company for whom a customs debt was assessed in 2016. Subsequently, the appellate authority reversed the decision, and the customs administrator returned the amount without any interest on late payment under the Tax Procedure Code, as the Customs Act expressly excludes the application of the provisions on interest on incorrectly assessed tax. This approach had been previously confirmed by the Supreme Administrative Court (SAC) in judgment No 4 Afs 219/2022-68.
The turnaround in the interpretation came with the judgement of the Court of Justice of the EU (CJEU) in the Gräfendorfer case - a landmark decision stating that EU law not only gives an individual the right to the reimbursement of any amount collected from them in breach of EU law, but also the right to interest compensating them for their limited ability to use the funds. This judgment was followed by the Constitutional Court which, in judgement No. I. ÚS 2293/23 declared the earlier decision of the Supreme Administrative Court unconstitutional.
Based on these conclusions, the Supreme Administrative Court has reconsidered its previous interpretation and in its current judgment explicitly stated that the application of the Tax Procedure Code cannot be simply ruled out where it concerns a refund of wrongly assessed customs duties. The decisive factor is the reason why the refund was made - if customs duty was assessed in breach of EU law, the taxpayer shall be entitled to appropriate interest already in the tax proceedings. In this respect, the SAC also held that the application of the Act on Liability for Damage Caused in the Exercise of Public Authority is not appropriate in such cases, as it is intended to compensate for damage, not to pay interest. Also, its application involves a considerable legal uncertainty, procedural complexity and burden of proof. In the SAC’s view, such a procedure does not meet the requirements of EU law for effective and fair legal protection.
The judgment significantly strengthens the legal protection of taxpayers who in similar cases may demand interest directly under the Tax Procedure Code. At the same time, it clearly confirms the obligation of national authorities to ensure the full and effective application of EU law also in the customs area.