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CJEU ruling : Hungarian VAT refund to foreign companies


The recent judgment of the Court of Justice of the European Union reaffirms the primacy of the principle of VAT neutrality for taxable persons, prioritising the substantive conditions for the exercise of their right to VAT deduction and VAT refund. This principle remains applicable both under the conditions of common law for resident companies and under the conditions of the 8th European Directive which regulates the VAT refunds to companies established and registered in a foreign member state.

In the present case C-746/22 judged on May 16 and opposing the Slovak-established  company against the Hungarian tax authorities, the CJEU confirms that the one-month deadline laid down in Article 20, paragraph 2, of the 8th European Directive for provision of additional documents to the tax authorities of the member state of refund is not a limitation period. In the event of the VAT reclaim rejection due to non-transmission of the requested documents within a period of 30 days, the foreign company has the right to provide them within an appeal procedure, at a later stage, regardless the instance :

  • before a first-tier tax authority (judgment of May 2, 2019, Sea Chefs Cruise Services, C-133/18)
  • before a second-tier tax authority (judgment of May 16, 2024, Slovenské Energetické Strojárne a.s., C-746/22)

Thus, non-resident companies having obtained a refusal of VAT refund in Hungary for the reasons mentioned above, will be able to maintain their right to reimbursement, provided that they have filed an appeal against the decision of the tax administration and that this appeal was supported by documents requested within the information request of the Hungarian tax authorities. This notwithstanding the Hungarian national legislation which excludes the production of new elements in the second instance.

It should be noted that the CJEU judgment in question is enforceable in respect of all EU member states, in similar cases. The submission of appeals must be studied on a case-by-case basis, depending on the specific situation and on the financial issues.

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