Communicated on 5 September 2016
FIRST SECTION
Application no. 68039/14
EUROMAK METAL DOO
against the former Yugoslav Republic of Macedonia
lodged on 16 October 2014
STATEMENT OF FACTS
The applicant, Euromak Metal DOO, is a company registered under Macedonian law that deals in waste aluminium. It is represented before the Court by Mr I. Spirovski, a lawyer practising in Skopje.
The circumstances of the case
The facts of the case, as submitted by the applicant, may be summarised as follows.
The applicant company trades with aluminium. The company purchases waste aluminium from numerous suppliers, recycles it, and then offers it for sale. The applicant company was registered for the purposes of the VAT Act, and it declared VAT on all issued invoices. VAT was also declared on all the incoming invoices. This made it possible for the applicant to periodically request VAT deductions from the State, which he did (following the rules of the “tax credit” system).
During October – November 2009 the applicant was subjected to a tax audit by the internal revenues office (“Управа за Јавни Приходи”). The period 2005 – 2009 was examined. The audit found that some of the applicant’s suppliers had not declared or paid VAT to the State authorities, although it was clearly declared in the invoices sent to the applicant. This conclusion was based on earlier audits of these companies that remained unspecified. The audit further concluded that some of the invoices did not contain the addresses of the suppliers. Lastly, the audit concluded that all invoices from the suppliers have been paid in full by the applicant.
As a consequence of the audit, the applicant was ordered to pay an additional amount of MKD 3,827,546 (around 60,000 euros (EUR)) plus interest as VAT to the State for the reason that it had wrongfully deducted VAT in the past.
On 22 March 2010 the applicant received a written reprimand from the internal revenues office. The reprimand stipulated the full amount (interest included) to be paid by the applicant on the basis of the tax audit. It amounted to MKD 6,059,124 (around EUR 100,000).
The applicant appealed against the decision before the second instance commission and, later, before the administrative court. The administrative court dismissed the appeal. It reiterated that some of the applicant’s suppliers had not declared and/or paid their VAT to the State, and, as a consequence, the applicant could not deduct his VAT as he had done. The court further reiterated that it was the obligation of the applicant to be careful in its choice of business partners and that it should bear the responsibility in this regard.
The applicant appealed, but the appeal was dismissed by the High Administrative Court on 13 March 2014. The court reiterated the reasons given by the lower court. The applicant’s lawyer received this decision on 23 April 2014.
COMPLAINT
The applicant complains under Article 1 of Protocol No. 1 of the Convention that he had a legitimate expectation with regard to his right to obtain VAT deductions. He claims that, due to circumstances beyond his control, his right of peaceful enjoyment of his possessions was breached by the State.
QUESTIONS TO THE PARTIES
Has there been an interference with the applicant company’s right to peaceful enjoyment of its possessions, within the meaning of Article 1 of Protocol No. 1? If so, was that interference: (a) necessary to secure the payment of taxes; (b) in the general interest, considering that the applicant company complied with its VAT reporting obligations; and (c) with regard to the payment required by the State, did it impose an excessive individual burden on the applicant company (see Business Support Centre v. Bulgaria, no. 6689/03, § 21 -23, 18 March 2010)?
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