ECJ case: Hungarian VAT rules on refund to VAT paid wrongly

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The European Court of Justice (ECJ) issued the preliminary ruling for Case No. C-397/21. This is in response to a request for a refund of the VAT that was incorrectly applied to a transaction that included assets located in another member state and was not subject to VAT in Hungary.




HUMDA provides services in connection with the project for the construction of Hungary’s pavilion at the World Expo held in 2015 in Milan, Italy. The business issued nine invoices including VAT and paid to the Hungarian tax authority the VAT invoiced.

However, the Hungarian tax office discovered that the VAT was not payable in Hungary in accordance with Hungarian VAT law because the services in question were tied to Italian property where the VAT had been incorrectly invoiced. As a result, HUMDA requested a refund equal to the amount of the VAT that was incorrectly paid, as well as the payment of interest on that amount, to retrieve the VAT that was unlawfully paid.




In accordance with the principles of VAT neutrality and effectiveness, the ECJ decided that whenever a service provider enters liquidation after mistakenly billing and paying VAT on behalf of a taxpayer, it requires the Member State to provide for the necessary instruments that allows the application of reimbursement.  

In addition, it is also evident that whenever the tax authority fails to process a refund within a reasonable amount of time after receiving a request, interest must be paid along with the refunded VAT. 



Source: europa.eu 

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