Comments on T-198/25 (G. Kft) – General Court Confirms Limits on VAT Adjustment After Tax Audit

General Court Confirms Limits on VAT Adjustment After Tax Audit

A Hungarian company (G Kft.) had charged VAT on deposit operations that were later determined not to be subject to VAT. Although it stopped charging VAT from that point, it did not fully regularize all unduly charged VAT for a period that was subsequently subject to a tax audit.
After the audit was closed, G Kft. requested a new audit to recover the unregularized VAT, claiming that some corrective invoices had not been included in time or had not even been issued. The administration rejected the request based on national regulations that only allow reopening a closed period if the taxpayer provides new facts or circumstances that they did not know or could not have known in good faith previously.
The General Court ruled that the VAT Directive and the principles of effectiveness, fiscal neutrality, and proportionality do not preclude such national legislation. This is provided that the taxpayer had an effective opportunity and a reasonable period to regularize the VAT (before, during, or immediately after the audit), and there were no objective circumstances preventing them from doing so.

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General Court Upholds Limits on VAT Adjustment Post-Audit in G Kft. Case

G Kft. sought to reclaim VAT on invoices previously omitted from returns, but the Hungarian tax authorities rejected the request, stating that the ruling and invoices were not “new facts or circumstances” and could have been corrected earlier.
The General Court was asked to determine if EU law principles (fiscal neutrality, effectiveness, proportionality) preclude a national provision allowing VAT adjustment for an already audited period only with “new facts,” even without tax loss, referencing relevant CJEU case law.
The General Court ruled that EU law and its principles do not preclude such national legislation, provided the taxpayer had a reasonable period (more than three years in this case) to exercise their right of adjustment, as the principle of legal certainty justifies limiting rights beyond a reasonable timeframe.

Hungarian conditions for VAT adjustment not contrary to EU law

G Kft., a Hungarian company, sought a VAT refund in 2020 for wrongly charged VAT on a deposit system, despite a 2018 tax investigation concluding with no VAT consequences and the tax authorities rejecting a new audit request due to a lack of “new data.”
The Hungarian court referred the case for a preliminary ruling, which was then referred to the General Court.
The General Court ruled that it is not contrary to EU law for Hungary to impose conditions on the exercise of the right to adjust wrongly charged VAT for a period already subject to a tax inspection, even if there’s no risk of tax revenue loss, provided the taxpayer had a reasonable period to effectively exercise this right.