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Supreme Court of Denmark

Was SKAT liable to refund input VAT etc. or for compensation? 

Case no. 49/2017

Judgment delivered on 14 February 2018

Aarhus Business College
The Danish Ministry of Taxation 

A decision holding that a school’s course activity was exempt from VAT was set aside by the High Court, after which the school instituted proceedings against the tax authorities claiming a refund of input VAT etc. or compensation for the loss suffered by the school 

In June 2006, SKAT (the Danish tax authorities) came to the decision that Aarhus Business College did not engage in course activities subject to VAT. In May 2010, this decision was set aside by the High Court of Western Denmark.

The case concerned whether the school had a financial claim against SKAT arising from the High Court’s overruling of SKAT’s decision – either in the form of a refund or a claim for compensation under EU law or the general rules of Danish law.  

The Supreme Court held that Aarhus Business College did not, under VAT law, have a claim for a refund of the input VAT etc. that the school had not been able to deduct, without also taking into account an estimated amount of output VAT which had not been charged for the course activities.

Also, the Supreme Court ruled that any claim for compensation was not time-barred, as the limitation period had to be regarded as having been suspended several times. The Supreme Court found that the conditions for holding SKAT liable for compensation were not met, as, at the time of SKAT’s decision, there was reason to doubt whether Aarhus Business College’s course activity could be regarded as being subject to VAT.

The High Court had reached the same conclusion.

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