Case C-591/10 Littlewoods and Others vs Commissioners for Her Majesty’s Revenue and Customs

13 Sep 2012

In Littlewoods and Others v Commissioners for Her Majesty’s Revenue and Customs (Case C-591/10), the European Court of Justice (“ECJ”) has decided that each Member State must set the conditions in which interest on overpaid tax must be paid, including the rate of interest, subject to the principles of effectiveness and equivalence. The principle of effectiveness requires that the interest paid must give the taxpayer “adequate indemnity for the loss occasioned” through the overpayment of the tax. The judgment is less clear about the operation of the principle of equivalence. That principle requires national rules to be applied without distinction to actions based on an infringement of EU law and those based on infringements of national law,where those actions have a similar purpose and the cause of action is similar. It does not require Member States to extend their most favourable rules to interest claims for overpaid VAT.