tag: tax litigation

One of the most frequent areas of dispute between the tax authority and taxpayers relates to the conditions under which a taxable entity participating in a chain transaction can deduct the VAT passed on to it. The tax authority (NAV) was recently struck another blow in the tussle when the Supreme Court, in a precedent-setting ruling, took issue with the tax authority’s practice of regularly reclassifying the participants in chain transactions as agents. What’s more, the Curia’s ruling goes significantly further, and questions in general the tax authority’s right to reclassify the transactions of taxable entities on a whim.

As it is commonly known, the calculation of the corporate tax liability of Hungarian enterprises is based on the accounting figures. But a nasty surprise could lie in store for those who believe that they can apply the principles of accounting recognition fully in the course of calculating corporate tax.