EGC T-198/25 (G. Kft) – Judgment – National VAT Adjustment Restrictions Upheld for Closed Periods

On June 3, 2026, the General Court has released the judgment in the case T-198/25 (G. Kft).

Context: Reference for a preliminary ruling – Taxation – Common system of VAT – Directive 2006/112/EC – Adjustment of VAT improperly invoiced – Transactions relating to a period closed by a tax inspection – National legislation making the initiation of a new inspection subject to a new fact updated by the taxpayer – Principle of effectiveness – Principle of tax neutrality – Proportionality

Articles in the EU VAT Directive

Articles 167, 168, 179, 180, 183, 250 and 252 of Council Directive 2006/112/EC

Facts

Facts: G Kft. improperly invoiced VAT on deposit fees. After an initial tax inspection closed without VAT findings, G Kft. sought a new inspection to correct past VAT, claiming “new facts” (unaccounted invoices, rulings). The Hungarian tax authority denied the request, stating these were not genuinely “new facts” as G Kft. had prior opportunities to correct.
Issue: The General Court had to determine if Hungarian national legislation, which restricts new tax inspections for closed periods to cases with genuinely “new facts or circumstances” unknown to the taxpayer, violates EU law principles (effectiveness, tax neutrality, proportionality) regarding the adjustment of improperly invoiced VAT, even if there’s no risk of tax revenue loss.
Decision: The Court ruled that EU law does not preclude such national legislation, provided the taxable person had a reasonable period to exercise their right to adjust the VAT through other available means.
Argumentation – Effectiveness: The Court found that G Kft. had a “reasonable period” (over three years, including pre-inspection self-correction, during-inspection adjustments, and complaint procedures) to correct the VAT. Therefore, the national rule, while limiting new inspections, did not make the exercise of the right to adjust VAT “virtually impossible or excessively difficult.”
Argumentation – Fiscal Neutrality and Proportionality: The Court stated that fiscal neutrality is an interpretative principle and cannot override procedural rules that are not excessively difficult. It also found the national legislation proportionate, as G Kft. was not absolutely denied the right to adjust VAT, but rather had ample opportunity to do so within the established procedural framework.

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?

AG Opinion

None

Decision

Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and the principles of effectiveness, fiscal neutrality and proportionality

must be interpreted as not precluding national legislation which makes the exercise of the right to adjust value added tax improperly invoiced in respect of a period which has already been the subject of a tax inspection subject to conditions linked to the submission of a new fact capable of resulting in a change to the findings of that inspection, even in the absence of risk of any loss of tax revenue, provided that the taxable person concerned is actually able to exercise his or her right to the adjustment for a reasonable period.

Source

Curia

Reference to other ECJ Cases

Judgment of 14 February 2019, Nestrade, C‑562/17, EU:C:2019:115, paragraph 28 and 40: This case is cited for the principle that the EU judicature can extract relevant points of EU law from the national court’s request, even if not explicitly referred to, and for analyzing the role of national procedural provisions in the overall procedure.
Judgment of 13 March 2025, Greentech, C‑640/23, EU:C:2025:175, paragraph 35 and 36: This judgment is referenced for the principle that Member States lay down conditions for adjusting improperly invoiced VAT, and that such adjustment is possible when the invoice issuer shows good faith.
Judgment of 8 May 2019, EN.SA., C‑712/17, EU:C:2019:374, paragraph 33: This case supports the idea that adjustment of improperly invoiced VAT is possible when the risk of tax revenue loss has been wholly eliminated in sufficient time.
Judgment of 2 July 2020, Terracult, C‑835/18, EU:C:2020:520, paragraph 28, 32, 34, 36 and 37: This judgment is cited multiple times. It clarifies that if the risk of tax revenue loss is eliminated, good faith of the issuer is not a condition for adjustment. It also discusses the principle of legal certainty and reasonable time limits for exercising rights, and the proportionality of penalties for negligence.
Judgment of 17 March 2022, Daimler, C‑232/20, EU:C:2022:196, paragraph 92: This case is referred to for the principle that the General Court must consider the factual and legislative context as described by the referring court.
Judgment of 11 April 2019, PORR Építési Kft., C‑691/17, EU:C:2019:327, paragraph 39: This judgment is cited for the principles of procedural autonomy, equivalence, and effectiveness in the absence of EU rules on tax repayment applications.
Judgment of 12 February 2015, Surgicare, C‑662/13, EU:C:2015:89, paragraph 27: This case supports the idea that the Court can provide indications to the referring court to assist in determining compatibility with the principle of effectiveness.
Judgment of 15 December 2011, Banca Antoniana Popolare Veneta, C‑427/10, EU:C:2011:844, paragraph 25: This judgment is used as an analogy to establish what constitutes a “reasonable period” in the context of the principle of effectiveness.
Judgment of 26 April 2018, Zabrus Siret, C‑81/17, EU:C:2018:283, paragraph 41: This case is distinguished from the current one, as it concerned situations where the taxable person had a very short period to exercise their rights.
Judgment of 7 July 2022, X, C‑194/21, EU:C:2022:535, paragraph 49 and 50: This judgment clarifies that the principle of fiscal neutrality is an interpretative principle, not a primary rule, and cannot allow adjustment if procedural rules (which are not excessively difficult) were not followed.

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Briefing Document: General Court Ruling on VAT Adjustment After Tax Inspection (G Kft. Case)

Date of Ruling: 3 June 2026 Case Reference: T-198/25 Court: General Court (Second Chamber, sitting with five Judges) Subject: Interpretation of the VAT Directive and EU principles concerning the adjustment of improperly invoiced VAT in respect of a period closed by a tax inspection, specifically national conditions requiring “new facts” for a new inspection.

I. Executive Summary

The General Court, in its judgment of 3 June 2026, ruled on the compatibility of Hungarian national legislation with EU law regarding the adjustment of improperly invoiced Value Added Tax (VAT) after a period has been closed by a tax inspection. The Court concluded that EU law (specifically the VAT Directive and the principles of effectiveness, fiscal neutrality, and proportionality) does not preclude national legislation that makes the exercise of the right to adjust improperly invoiced VAT subject to conditions linked to the submission of a “new fact” for a new inspection on a closed period, provided that the taxable person had a reasonable period to exercise their right to adjustment through other available means.

This ruling emphasizes the principle of procedural autonomy for Member States, balanced against the principles of effectiveness and legal certainty, and clarifies that while the right to VAT adjustment is fundamental, its exercise can be governed by national procedural rules that ensure a reasonable timeframe for action and prevent indefinite challenge of tax positions.

II. Key Facts of the Case

Parties: G Kft. (a Hungarian company) vs. Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága (Hungarian Appeals Directorate of the National Tax and Customs Authority).
Background: G Kft. rented trays and pallets, operating a deposit system where VAT was initially charged on deposit fees.
Advance Tax Rulings: On 1 June 2015, the Ministry of the Economy considered these deposit transactions outside the scope of VAT and advised G Kft. to correct invoices and VAT returns via “self-correction” for improperly invoiced VAT. G Kft. stopped including VAT after November 2015.
Initial Tax Inspection: On 12 December 2017, an inspection was initiated for the period January 2015 to July 2017. Under Hungarian law, G Kft. could no longer use “self-correction” for this period from the start of the inspection.
Inspection Closure: The inspection closed on 19 July 2018 without VAT findings, and the decision became final on 22 August 2018. This period was then considered “closed by an inspection” under Hungarian law.
Request for New Inspection: On 13 November 2020, G Kft. requested a new VAT inspection for the closed period, arguing that it had found, after the initial inspection, that some corrected invoices were not included in VAT returns, and others were issued after the first inspection began. G Kft. claimed this information constituted “new facts” entitling it to a VAT refund.
Refusal by Tax Authority: The Hungarian tax authority rejected the request, stating that the conditions of Paragraph 92(b) of the Law regulating the tax authority were not met. It considered the advance tax rulings not to be “new facts” as G Kft. had the opportunity to self-correct earlier. Similarly, the invoices not included in returns were not “new facts” as supporting documents were available earlier.
National Court Proceedings: G Kft. appealed to the Fővárosi Törvényszék (Budapest-Capital Regional Court, the referring court), arguing infringement of fiscal neutrality, effectiveness, and proportionality. The national court sought clarification from the General Court.

III. Legal Question Referred for Preliminary Ruling

The Fővárosi Törvényszék asked, in essence, whether Articles 167, 168, 179, 180, 183, 250 and 252 of the VAT Directive, along with the principles of tax neutrality, effectiveness and proportionality, “Must be interpreted as permitting national legislation – in this case Paragraph 92(b) of [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 [of] an inspection, the correction and refunding of [VAT] improperly invoiced are only possible if there are new facts [or] circumstances that the taxable person did not previously have, nor could in good faith have had, at [his or her] 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?”

The General Court clarified that the dispute primarily concerned the adjustment of improperly invoiced VAT, and thus focused its interpretation on the principles of effectiveness, fiscal neutrality, and proportionality, assuming no risk of tax revenue loss as posited by the referring court.

IV. Main Themes and Most Important Ideas/Facts

Member States’ Procedural Autonomy and EU Principles:

In the absence of specific EU rules for VAT refund applications, Member States retain procedural autonomy.
However, national conditions must respect the principles of equivalence (no less favourable than domestic claims) and effectiveness (not rendering EU rights virtually impossible or excessively difficult to exercise).
Quote: “the detailed procedural rules designed to ensure the protection of the rights which individuals acquire under EU law are a matter for the domestic legal order of each Member State… the conditions under which such applications may be made must observe the principles of equivalence and effectiveness.” (Paragraph 30)

Principle of Effectiveness and “Reasonable Period”:

The core of the Court’s analysis revolved around whether the Hungarian procedural rules rendered G Kft.’s right to adjust VAT virtually impossible or excessively difficult.
The Court found that a “reasonable period” for exercising rights is crucial for effectiveness and legal certainty.
Opportunities for G Kft.: The Court highlighted multiple opportunities for G Kft. to adjust the VAT:
Pre-inspection “self-correction”: More than two and a half years (from June 2015 advance ruling to December 2017 inspection start).
During inspection: Over seven months (from December 2017 to July 2018) to submit corrected invoices to the tax authority.
Complaint against inspection decision: An additional period after the inspection closed.
Overall Period: The Court concluded that G Kft. had a “period of time of more than three years during which that taxable person could request the adjustment of VAT improperly invoiced. Such a period is, in principle, reasonable in the light of the principle of effectiveness.” (Paragraph 37)
No Special Circumstances: G Kft.’s claim that a high number of invoices made adjustment difficult was not considered an objective impediment.
Distinction from Prior Cases: The Court distinguished the present case from previous rulings (e.g., Zabrus Siret, Terracult) where national rules were found to infringe effectiveness because they provided “very short period[s] of time to exercise… rights.” (Paragraph 43)

Principle of Legal Certainty:

The principle of effectiveness is balanced by legal certainty, which “requires the tax position of the taxable person, having regard to his or her rights and obligations vis-à-vis the tax authorities, not to be open to challenge indefinitely.” (Paragraph 31)
Temporal limitations on exercising rights are permissible if reasonable and do not render rights virtually impossible to exercise.

Principle of Fiscal Neutrality:

Fiscal neutrality is an “interpretation principle,” not a primary rule, and must be applied concurrently with other principles like legal certainty.
Quote: “the principle of fiscal neutrality cannot, in itself, have the effect of allowing a taxable person to adjust VAT improperly invoiced in a situation in which he or she did not exercise his or her right to such an adjustment in accordance with the procedural rules laid down by national law, where those rules are not liable to render virtually impossible or excessively difficult the exercise of that right.” (Paragraph 45)

Principle of Proportionality:

While an “absolute denial” of the right to refund VAT incorrectly invoiced would be disproportionate, this was not the situation here.
G Kft. was “not in fact deprived of the possibility of exercising that right, before the initiation of the earlier tax inspection, during that inspection and in the context of a complaint against the decision closing that inspection.” (Paragraph 47)
Therefore, the application of the national rules, even if it leads to denial in a new inspection, was not considered disproportionate, given the prior reasonable opportunities.

“New Fact” Condition:

The Hungarian condition requiring “new facts” for a new inspection on a closed period (Paragraph 92(b)) was interpreted as referring to whether the taxpayer could have been aware of or had at their disposal the fact earlier, not to the taxpayer’s good faith in invoicing VAT. (Paragraph 28)
This condition is permissible under EU law if, as explained above, other avenues for adjustment were reasonably available.

V. Conclusion/Ruling

The General Court ruled:

“Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and the principles of effectiveness, fiscal neutrality and proportionality must be interpreted as not precluding national legislation which makes the exercise of the right to adjust value added tax improperly invoiced in respect of a period which has already been the subject of a tax inspection subject to conditions linked to the submission of a new fact capable of resulting in a change to the findings of that inspection, even in the absence of risk of any loss of tax revenue, provided that the taxable person concerned is actually able to exercise his or her right to the adjustment for a reasonable period.” (Paragraph 48 and the operative part of the judgment)

VI. Implications

This judgment clarifies that while the right to adjust improperly invoiced VAT is crucial, Member States retain significant latitude in establishing the procedural rules for its exercise. National laws requiring “new facts” for revisiting closed tax inspection periods are permissible under EU law, even if no tax revenue loss is at risk, provided that taxpayers are afforded a “reasonable period” through other available procedural mechanisms (e.g., self-correction, during an ongoing inspection, or through administrative appeals) to rectify their VAT position. Taxpayers must be diligent in utilizing these available opportunities, as their failure to do so within reasonable national timeframes will not automatically be remedied by a later claim based on broader EU principles if those principles of effectiveness and proportionality have been met by the national system as a whole.