tag: EU

Connecting a holiday in Tenerife with remote work? Sending an employee to China for three months? While ten years ago, these questions were considered unique, today, international mobility has become an everyday part of employment relationships.

This year, the most frequently mentioned buzzwords in the IT sector are "cybersecurity" and "compliance." This is due to the NIS2 directive, which is being uniformly introduced across the EU, and the tasks associated with it span the entire year. Moreover, in just a few days, Hungarian businesses must move past the second phase as well.

For years now, opportunities to reclaim VAT on bad debts have come up again and again. Although many had thought they had definitely missed the boat on this one, taxpayers have just been given one last chance.

For the first time, the Supreme Court ruled on the merits concerning the refund of VAT on bad debts – and the decision was in favour of taxpayers. The judgments serve as a guideline in a number of similar cases, and may even help taxpayers with refunds claimed under the rules that came into force in 2020.

Reclaiming VAT on bad debts under the new 2020 rules may well conjure up images of a TV show obstacle course.  Initial experiences suggest that anyone trying to reclaim VAT will be up against the wall. But the undertaking isn’t unfeasible.

Recently, a Hungarian court accepted the right of a taxpayer to recover VAT on a bad debt where the VAT claim has already elapsed. The court made it clear that the statute of limitations does not count from the day of the original invoice but from the date when the debt became definitively irrecoverable. This decision may give hope to taxpayers in many pending cases.

When it comes to instances of compensation, this is not always the case. The European Court of Justice (ECJ) has recently reiterated that compensation for damages or contractual penalties may also qualify as consideration for a service for the purposes of VAT. This is important because consideration (i.e. the price of a service) is subject to VAT, whereas compensation is not. This could affect so-called loyalty periods or other fixed-term services in particular.

It has long been a problem that the tax authority refuses to refund to a supplier the VAT that has already paid by him, even if the customer has not paid the gross purchase price at all. However, in a recent ruling, the European Court of Justice has clearly ruled that if the claim has become definitively unrecoverable, the Hungarian tax authority NAV is also required to refund the VAT on that claim to the seller. This decision now also allows other affected taxpayers to request a refund of the VAT on their unrecoverable receivables within a maximum of six months.