tag: VAT

Another milestone in VAT recovery on bad debt

Tamás Fehér | 23 July 2020

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.

Legal and tax tips for the coronavirus shutdown

Ákos Baráti | 6 April 2020

Due to the state of emergency related to the coronavirus outbreak, sooner or later many business owners, company managers, and chief legal or financial officers will be relieved of their more routine, day-to-day work. This is a time when it might be worthwhile to sort out the company’s legal or financial issues that you may not have had time for during your day-to-day operations. Here are five tips worth considering.

It walks like a duck, and quacks like a duck, then it’s a duck, right

Kitti Vizler | 20 November 2019

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.

The ECJ has decided: taxpayers have six months to reclaim VAT

Tamás Fehér | 5 November 2019

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.

Security Firms – Can You Be Sure They’re on the Level?

Péter Barta | 23 July 2019

A recently released NAV guidance gives a list of those signs that could indicate that a security firm is involved in VAT fraud. The list will certainly help companies that accept invoices from such security firms, but it’s still a pity that the guidance wasn’t issued ten years earlier.

It will soon be officially possible to reclaim VAT on bad debts

Tamás Fehér | 20 June 2019

It has been clear for some time that Hungary is in breach of EU law by not allowing the refunding of VAT on bad debts. The fact that cases of Hungarian taxpayers have now been brought before the European Court of Justice (ECJ) has forced Hungarian lawmakers to move on the issue. While the package of tax amendments submitted last week provides an opportunity to reclaim such VAT, in certain cases – due to the planned administrative restrictions – it will still only be possible to enjoy this right with reference to EU law.

On the way to a fairer VAT system

Anilla Gondi | 30 May 2019

The European Court of Justice (ECJ) has declared in a recent case that when checking VAT transactions, the tax authority cannot ignore examining the full budgetary impact. Thus it is not acceptable for the authorities to deny the right of VAT deduction to a taxpayer without allowing the other taxpayer to accordingly reclaim the VAT that it paid. Furthermore, the court also found it unacceptable for the tax authority to base a fine only on the amount of the VAT deducted unlawfully without examining the tax shortfall actually caused. The ruling can be considered as another important step towards the creation of a fair VAT system.

Nothing is impossible – deducting the VAT on shareholdings

Tamás Fehér | 12 December 2018

The deductibility of the VAT content of incoming invoices has long been a source of consternation both for equity investors and for the holding companies heading up corporate groups. In a relaxation of the general ban on VAT deduction in these cases, the European Court of Justice (“ECJ”) has given ‘active’ holding companies a way around the restrictions. Meanwhile, other recent judgments by the Court have further expanded the opportunities for VAT deduction. Nevertheless, the ECJ’s decisions also show that it’s better to err on the side of caution.

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The law is constantly in flux. While many people may find this intimidating, for us it’s precisely what makes it so exciting. We’d like to share this attitude with businesspeople and managers, and with those who just have an interest in business law, in the form of a regularly updated blog that discusses the latest tax law and commercial law issues in an accessible style. Feel free to send your questions and suggestions for topics you’d like us to cover to blog@jalsovszky.com.

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