The General Court has released the facts and questions in the case T-198/25 (G. Kft).
Articles in the EU VAT Directive
Articles 167, 168, 179, 180, 183, 250 and 252 of Council Directive 2006/112/EC
Facts
- Background of the Applicant: The applicant, part of the Dutch company A.B.V., has been renting out machinery and equipment since July 2011, primarily focusing on returnable trays and pallets for the food industry. The rental system involved a security deposit, which was initially invoiced with VAT.
- Change in VAT Invoicing Practice: Following ministerial decisions in June 2015, the applicant corrected its invoicing practice to exclude VAT on deposits, as these were not subject to VAT. The applicant began issuing amended invoices accordingly after November 2015.
- Tax Inspection Findings: The Hungarian National Tax and Customs Authority conducted a tax inspection from December 2017, concluding in July 2018. While no VAT assessment was issued, the authority identified a corporation tax debt and imposed penalties. The applicant did not contest this decision.
- Request for Re-inspection: In November 2020, the applicant requested a re-inspection, claiming to have issued amended invoices that were not included in previous VAT returns. The first-tier tax authority rejected this request, stating that the applicant had sufficient opportunity to correct its practices prior to the inspection.
- Authority’s Justification: The authority emphasized that the applicant could not rely on new circumstances to justify a re-inspection, as it had previously received guidance through ministerial decisions and an audit report. The request was denied due to the lack of new significant facts and failure to demonstrate good faith in addressing its tax obligations. The authority’s decision was consistent with prior ECJ rulings on similar matters.
Question
Must Articles 167, 168, 179, 180, 183, 250 and 252 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (‘the VAT Directive’), together with the principles of tax neutrality, effectiveness and proportionality, be interpreted as permitting national legislation – in this case Paragraph 92(b) of the adóigazgatási rendtartásról szóló 2017. évi CLI. törvény (Law CLI of 2017 regulating the Tax Authority; ‘the Law regulating the Tax Authority’) – and an interpretation and application of that legislation, to the effect that, in relation to a period closed by means an inspection, the correction and refunding of value added tax (‘VAT’) improperly invoiced are only possible if there are new facts and circumstances that the taxable person did not previously have, nor could in good faith have had, at its disposal, or of which the taxable person was not, nor could in good faith have been, aware, even if there was no risk of any loss of tax revenue, because the tax improperly invoiced and which the taxable person is seeking to correct has been paid to the tax authorities?
Source
Reference to other ECJ Cases
- Zabrus Siret (C-81/17): This case, decided on April 26, 2018, discusses the requirements for tax authorities when assessing new facts or circumstances that may justify the reopening of tax assessments. It emphasizes the importance of establishing good faith and compliance with mandatory requirements.
- Terracult (C-835/18): Rendered on July 2, 2020, this judgment addresses the principles surrounding the self-correction of tax returns and the conditions under which a taxpayer may seek to rectify previously submitted information based on new insights or regulations.
- Nestrade (C-562/17): This case, decided on February 14, 2019, focuses on the obligations of tax authorities in relation to the verification of facts presented by taxpayers and the conditions under which tax rights may be exercised in good faith.
These cases collectively reinforce the notion that taxpayers must demonstrate good faith and provide substantial new evidence to warrant the reopening of tax assessments or inspections after an initial review has concluded. The decisions illustrate the ECJ’s stance on the balance between tax compliance and the rights of taxpayers to amend their obligations based on evolving interpretations of VAT law.
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