VAT Refund in Italy: CJEU Reaffirms the Principle of VAT Neutrality

On 12 March 2026, the Court of Justice of the European Union (CJEU) issued an important decision for European companies submitting VAT refund claims in another EU Member State under the EU 8th Directive procedure. This decision is particularly relevant for foreign businesses that incur professional expenses in Italy and seek to obtain an Italian VAT refund under the EU procedure applicable to taxable persons not established in the Member State of refund.

In case C-527/24, Harry et Associés, the Court recalled a key principle: a company cannot be deprived of its right to a VAT refund or its right to judicial review merely because of a technical malfunction affecting the electronic transmission of its refund application.

Article 170 and Article 171(1) of Council Directive 2006/112/EC… read in conjunction with the second sentence of Article 15(1), Article 20(1) and Article 23(2) of Council Directive 2008/9/EC…

must be interpreted as precluding national legislation, as interpreted by a final judicial decision, according to which a taxable person established in a Member State other than the Member State of VAT refund is deprived of both the right to a VAT refund and the right of access to the courts so as to challenge a failure to act on the part of the tax authorities of the Member State of refund, to which that taxable person’s VAT refund application has been made, on the ground that that application cannot be considered submitted owing to a technical fault in its electronic transmission.

The case concerned a company established in France that had submitted a claim for the refund of Italian VAT relating to expenses incurred in 2015. The application was submitted on time to the French tax authorities and then electronically transmitted to the competent Italian tax administration. However, a technical issue affected the transmitted file, making the application unreadable for the Italian tax authorities. The administration neither processed nor rejected the application, nor did it request that the company regularise the situation.

Subsequently, the Italian courts considered that, since the file was technically unusable, the refund application could not be regarded as validly submitted. As a result, the taxpayer’s appeal against the implicit rejection of the claim was declared inadmissible.

Principles governing EU VAT refunds

The CJEU recalled that the right to a VAT refund is a fundamental principle of the VAT system and cannot be denied on the basis of purely formal requirements where the substantive conditions are satisfied.

This principle is particularly important for international businesses that incur professional expenses in other EU Member States and seek to obtain foreign VAT recovery, particularly in countries such as Italy.

In this case, several elements were decisive:

• the refund application had been submitted within the statutory deadline;
• it had been transmitted using the prescribed electronic procedure;
• it had been received by the relevant tax administrations;
• nothing suggested that the substantive right to a VAT refund did not exist.

According to the Court, a technical malfunction not attributable to the applicant cannot justify presuming that no refund claim has been submitted. On the contrary, the tax administration should notify the taxpayer of the issue and allow the application to be regularised, for example by requesting the submission of a new functional electronic file.

The ruling is also significant from a procedural perspective: the CJEU confirmed that businesses must be able to challenge administrative inaction.

While this decision is favourable to businesses, it also highlights a practical reality: in the field of foreign VAT refunds, the process does not end once the claim has been submitted.

It remains essential to:

• retain proof of submission;
• monitor the status of the application after transmission;
• identify technical or administrative issues quickly;
• follow up in case of prolonged silence from the authorities;
• and, where necessary, initiate an appeal within the applicable deadlines.

In practice, this judgment confirms that substantive requirements prevail over purely formal conditions, but it also shows that poorly monitored claims can become significantly more complex if electronic portals malfunction or if tax authorities remain inactive.

For businesses, the decision serves as a reminder that VAT refund claims must be closely monitored, properly documented and, where necessary, actively defended.

This issue is particularly relevant for international companies involved in projects or events in Italy, especially in the context of the Milano-Cortina 2026 Winter Olympic Games, which are expected to generate substantial business expenses subject to Italian VAT.

Securing foreign VAT refunds

BTOBNICE assists companies with foreign VAT refund claims worldwide.

In particular, we support foreign businesses with their Italian VAT refund applications as well as with foreign VAT recovery procedures across the European Union.

Our services cover both the full management of VAT refund claims and the takeover of problematic cases already initiated by companies, including:

• follow-ups with foreign tax authorities,
• responses to requests for additional information,
• management of appeals and litigation procedures.

Contact our experts for foreign VAT recovery in Europe and in more than 25 non-EU countries: contact@btobnice.com

Source : EUR-Lex