Estonia, Financial Services, Legislation, Markets and Companies, Retail, Taxation

Tallinna Kaubamaja Grupp has previously said that its subsidiaries are requesting the City of Tallinn to pay back sales tax in the total amount of 3.3 million euros paid by the companies from June 1, 2010 until Dec. 31, 2011.

Proceeding of the complaints of Selver AS and Kaubamaja AS, which cover also the sales tax paid on the sale of excise goods, was suspended last year with the decision of Tallinn administrative court until enforcement of the decision of the European Court of Justice concerning excise goods in the case C-553/13. On March 5, 2015, the European Court of Justice made a decision in the mentioned case, based on which the sales tax applied in Tallinn in the said period was not in compliance with the excise directive and collection of sales tax on the sale of excise goods was not legal.

The Tallinn administrative court partially satisfied the claims filed by Selver AS and Kaubamaja AS against the tax assessment notices issued by the Tallinn Enterprise Department, taking the position that the tax assessment notices should be cancelled in the extent to which the sales tax was applied to the transactions, the object of which were excise goods. Selver AS and Kaubamaja AS appealed the administrative court ruling in the extent to which the claims were not satisfied. The administrative court ruling was initially also appealed by the City of Tallinn, which found that it was legal to collect sales tax from excise goods. Now, the city of Tallinn has foregone appealing the administrative court ruling and adopted new decisions, by which the claim for refund of the sales tax from excise goods filed by Kaubamaja AS was satisfied in the total amount of 21,000 euros and the claim filed by Selver AS in the total amount of 297,000 euros.

If a claim is filed, the City of Tallinn must, in addition to refunding the sales tax, pay an interest in the amount exceeding 124,000 euros. The disputes regarding the sales tax refund claims filed by Kaubamaja AS and Selver AS with respect to non-excise goods are ongoing at the Tallinn circuit court.

The Administrative Court of Tallinn rejected the appeals filed by AS Viking Motors, AS TKM King, and OU TKM Beauty Eesti against the tax assessment notices issued by the Tallinn Enterprise Department, by which the department refused to refund sales tax in the total amount of 210,000 euros. The subsidiaries appealed the administrative court ruling to the circuit court.  

On Monday, the Tallinn circuit court rejected the appeal. The subsidiaries of Tallinna Kaubamaja Grupp shall analyse in more detail but will probably file an appeal in cassation against the ruling of the circuit court.