BAUER secures yet another win in a VAT refund dispute with the State Revenue Service

On 9 February 2024, the Administrative District Court ruled in favour of the German company BAUER Spezialtiefbau GmbH in case No A420160223 ordering the State Revenue Service of Latvia to refund the value added tax of over EUR 187,800.

The dispute concerns BAUER’s right, as a taxable person in another EU Member State which does not carry out economic activity in Latvia, to receive a tax refund for services received in Latvia from another taxable person in relation to the construction of immovable property. Importantly, BAUER had repeatedly applied to the State Revenue Service for a VAT refund, which the State Revenue Service refused to consider on its merits, arguing that it was not possible to submit a second application for the same taxation period. This decision was challenged by BAUER in court.

In the dispute, the Administrative District Court confirms BAUER’s arguments that the conclusions of the Supreme Court on the legal nature of the refusal to refund VAT cannot be assessed formally, and that taxpayers retain the right to apply to the State Revenue Service with a new application for a VAT refund. However, it is up to the State Revenue Service to justify the reasons for the refusal from the outset at the institutional level in order to avoid the introduction of new arguments during court proceedings.

The State Revenue Service did not appeal the decision.

COBALT team representing BAUER included Partner Sandija Novicka, Specialist Counsel Sabīne Vuškāne and Senior Associate Gabriela Šantare.