ECJ Case: Hungarian VAT Deduction Rules

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The European Union’s Official Gazette has published a preliminary ruling by the European Court of Justice (ECJ) regarding Case No. C-532/23, which addresses Hungarian input VAT deduction rules.


The case involved a taxpayer who produced equipment in Hungary and was initially unable to deduct input VAT due to regulations requiring purchases to be fully paid to qualify for deductions. A subsequent legislative amendment allowed for these deductions following a court ruling. However, the tax agency refused to pay interest on the taxpayer’s refunds.


Upon reviewing the request for a preliminary ruling, the ECJ made several key determinations:


  1. Under the common system of VAT, taxpayers are entitled to claim a VAT refund, including late payment interest, when there is an infringement of a regulatory requirement.
  2. Taxpayers can submit a second claim for late payment interest despite a time limitation if this claim is related to the same EU law infringement as the first claim.
  3. Taxpayers can also make a second claim for interest based on new case law, especially if the potential to extend the temporal scope of the first claim was only recognized following a national judicial decision.
  4. Each EU member state has the authority to establish procedures for supplementing initial claims for late payment interest.



Source: europa.eu

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