ECJ Case: VAT deduction denial in Hungary challenged
The European Court of Justice (ECJ) issued a preliminary ruling on Case C-270/24, addressing the denial of input VAT deductions by Hungarian tax authorities on the basis of alleged fraudulent transactions.
Published in the EU Official Gazette on June 2, the ruling concerns a Hungarian company that purchased machinery through a domestic intermediary to qualify for a national credit scheme. The Hungarian tax authority rejected the company’s input VAT deduction claim, arguing that the invoice used was fictitious.
Following a request for a preliminary ruling, the ECJ clarified the interpretation of Directive 2006/112/EC on the common system of VAT. The Court concluded that:
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Tax authorities cannot deny VAT deductions solely due to formal defects on the invoice or assumptions of fraud, unless it is proven that the taxpayer knowingly participated in VAT fraud.
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A deduction cannot be refused if the tax authority already has all the necessary information to assess the validity of the deduction.
This decision reinforces taxpayer protections under EU VAT law and emphasizes the need for concrete evidence of intent or knowledge in fraud-related VAT denial cases.
Source: europa.eu
