As of 1 March 2025, Section 129 of Act CXXVII of 2007 on Value Added Tax (hereinafter: VAT Act), which regulates the assignment of the right to deduct import VAT, has been amended.
Instead of the importer, its indirect customs representative may exercise the right to deduct import VAT if they meet the new requirements set out in the VAT Act.
One of the new requirements is that the importer must qualify as a monthly filer in the VAT reporting period when the right to deduct VAT arises.
Another new requirement relates to the tax status of the importer.
If the importer is classified as a reliable taxpayer under Act CL of 2017 on the Rules of Taxation (hereinafter: Taxation Act), the assignment can take place, provided that the other conditions are met. In such cases, the indirect customs representative is not required to perform a so-called partner due diligence, but should monitor the importer's taxpayer status.
Where an importer is classified as a high-risk taxpayer under the Taxation Act, the assignment cannot be exercised.
If the importer is not classified as a reliable taxpayer according to the Act, and furthermore is not a high-risk taxpayer, the indirect customs representative must carry out a so-called partner due diligence. The right to deduct VAT can only be assigned if the partner's due diligence does not reveal any tax risk.
Partner due diligence should be conducted both before entering into the contract for indirect customs representation and thereafter, on a monthly basis, by the last day of the month in those months when imports are made on behalf of the same importer.
The indirect customs representative determines the method of partner due diligence, collects the necessary data and evaluates it. However, assistance from the Tax Authority can be requested for data collection. During the evaluation, particularly the publicly available data about the importer, the data requested from the importer and the data obtained from the Tax Authority may be taken into account.
To reduce risks, the indirect customs representative is advised to conduct the partner's due diligence thoroughly. The Tax Authority may deny the right to deduct VAT during a tax audit if it finds that the indirect customs representative did not conduct the partner due diligence with the necessary care. The denial of the VAT deduction may lead to the determination of tax shortfall or unjustified refund claims, which could result in the imposition of a tax penalty.
The indirect customs representative must promptly provide the Tax Authority with data on the completion and results of the partner's due diligence, but no later than by the conclusion of the contract and by the 10th day of the month following the relevant month, through electronic means.
The scope of data to be reported by indirect customs representatives in the VAT return has also been expanded. They must include specific data related to imports affected by the assignment in their VAT return.
KPMG experts are available to assist with compliance regarding partner due diligence obligations, including the development of methodology, execution, and the fulfillment of data reporting requirements.
