The Court of Justice of the European Union (herein ‘CJEU’) has recently rendered a judgment concerning the Hungarian tax procedural rules for VAT refund claims of taxable persons not established in the Member State of the refund (8th Directive VAT refund claims).

In a specific case that forms the basis of the CJEU judgment, the foreign taxable person applying for a VAT refund failed to comply with the obligation to provide additional information within the applicable one-month period to the Hungarian Tax Authority. Consequently, the Hungarian Tax Authority rejected the VAT refund claim.

The foreign taxable person submitted an appeal against the rejective decision and attached the requested additional information and documents to the appeal.

The second-instance tax authority refused the appeal. In its decision, it referred to Hungarian tax procedural rules which prohibit the taxable persons from referring information and facts which were available to them before the issuance of the first instance decision, but which had not been provided to the first-instance tax authority. According to the standpoint of the second-instance tax authority, information and documents that were available to the taxable person before the issuance of the first instance decision but submitted only alongside the appeal against the rejective first instance decision cannot be taken into consideration during the assessment of the appeal.

The CJEU concluded that the concerned provision of Hungarian tax procedural rules is contrary to EU law. In addition, with reference to its previous case practice, the CJEU confirmed that the one month period applicable for the submission of additional information and documents is not a preclusive time limit.

Considering the findings and interpretations embodied in the recent CJEU judgment, reviewing the previously rejected VAT refund claims and procedures is advised.

KPMG Hungary is happy to provide support and assistance in reviewing previously rejected VAT refund claims and procedures and with assessment regarding the possibility of exercising the right to VAT refunds in Hungary.

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