- The applicant, a company providing printing and printing services, had accepted orders for the production of printed matter. However, following an investigation, the tax authority concluded that the printing work was mainly carried out by Crew Kft itself.
- Crew Kft. had therefore received and deducted invoices for printing services unlawfully and subsequently reduced the tax due using false invoices from subcontractors in such a way that the taxpayers who were at the end of the consciously constructed billing chain did not pay VAT.
- According to the tax authority, these facts and the tax evasion are by Crew Kft. was necessarily and objectively known to the applicant, since the director of the two companies was the same person and the two companies had the same seat, the same place of business and the same accountant.
- The applicant has therefore seriously infringed the principle of good faith exercise enshrined in the tax law. In her claim, the applicant claims that the legal requirements were met and was therefore entitled to deduction. With regard to the question whether she knew that she was evading tax, she states that it follows from the case-law of the Court that the recipient of an invoice does not have to carry out tax checks and is not obliged to investigate all chain participants.
The administrative and labor courts of Hungary question whether the mere fact that the tax authorities have established that the content of the invoices is not credible can form a basis for the refusal of the right to deduct VAT. It is doubtful for the referring court whether the direction, scope and depth of such a check are consistent with the principles of fiscal neutrality, effectiveness and proportionality. Furthermore, the question arises as to whether the practice of the tax authorities meets the requirement of proof in accordance with legal obligations, when he expects a taxable person to check the circumstances with a thoroughness that is incompatible with the time-limit for carrying out transactions in the course of trade and which is objectively impossible for other reasons, while considering the circumstances that led to the establishment of does not fully map the chain. In summary, in its questions the referring court asks whether the scope, depth and scope of the evidence required by the tax authorities as a condition for exercising the right to deduct VAT,
- If the answer to the previous question is in the affirmative:
- is the requirement to establish the facts on the basis of objective circumstances met where the tax authorities .. bases this solely on the witness statements of a number of employees of the subcontractor,
- without reviewing the characteristics and specific circumstances of the economic activity .. and without hearing the decision-making directors of the taxpayer and the subcontractors involved in the chain?
- If so, is it relevant whether the taxable person or the participants in the chain are capable of providing the services and is it necessary to appoint an expert to investigate this?
- Are national interpretation and practice compatible with Directive 2006/112 and the principle of effectiveness
- when they allow the tax authorities to refuse input VAT recovery on the basis of circumstances which are not objective
- solely on the ground that those circumstances occur in their entirety for a sufficiently large number of the participants in the established chain that have been investigated?