Brussels, 13/01/2012 (Agence Europe) - A taxpayer who has paid too much VAT in breach of EU legislation has the right to reimbursement of the VAT collected and a right to payment of interest on the main sum to be reimbursed. This must be determined by the member states in respect of the equivalency principle, according to more favourable modalities that apply to similar domestic law on repaying interest. Through the conclusions made on Thursday, 12 January in Case C-591/10, Advocate General Verica Trstenjak suggests that the European Court of Justice respond in these terms to questions posed by the High Court of England and Wales (United Kingdom), to which several companies and members of the Littlewoods Ltd. Group referred after having paid too much VAT on certain deliveries and services rendered (from 1973 to 2004). They called for the overpayment to be repaid by the competent administration in question. Since October 2004, this administration has reimbursed the VAT overpayment and the simple interest in compliance with national law but Littlewoods is also demanding that compound interest be paid because, in their view, that sum is the benefit the United Kingdom received through the use of the principal amounts of tax overpaid illegally. The British court rejected this demand under national law but would like to know whether its decision complies with Union law. It is asking the European Court of Justice, within the framework of Union law, whether the member state has to reimburse the taxpayer the overpayment with simple interest but also the compound interest on the main amount (interest generated during the period of the previous calculations added to the capital, which therefore is also part of the basic calculation of interest generated over the following periods). Trstenjak explains that under the most recent jurisprudence of the European Court of Justice, member states that deducted taxes in violation of Union law must reimburse the excess of interest to compensate for period in which the amounts paid were unavailable to the interested parties. It is incumbent on member states to establish the modalities of these repayments and decide whether the interest should be paid as part of a simple interest system or as part of a system of compound interest in respect of the principles of effectiveness and equivalence. To verify whether these principles are respected, the national court in question is obliged to “to interpret and apply the national rules in such a way that interest is paid on the VAT collected in breach of EU law in accordance with the more favourable rules which apply to similar domestic claims”. (FG/transl.fl)