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Germany, Hungary Referred To ECJ Over VAT Rules

by Ulrika Lomas,, Brussels

05 October 2017

The European Commission has written to Germany and Hungary to ask that they bring their VAT systems into line with EU rules.

According to the Commission, Germany is currently in violation of EU rules on VAT refunds. The Commission said that at present a taxable person established in Germany applying for a VAT refund from another EU member state via a German web portal can lose the right to a refund, because Germany does not follow up on potential error messages from the member state of refund.

The Commission said that Germany is also in violation of administrative cooperation rules in cases where it is requested by a member state of refund to notify resident taxpayers of the relevant rules and decisions but fails to do so.

In the case of Hungary, the Commission said that under the Electronic Trade and Transport Control system, companies are obliged to provide the Hungarian tax authorities with detailed information for VAT purposes on certain business-owned transport that use public roads. The Commission said that this infringes the EU's VAT Directive as it primarily affects cross-border EU transactions and introduces administrative formalities connected with the crossing of borders.

Both requests take the form of a letter of formal notice. If either Germany or Hungary fails to act on the Commission's request within the next two months, it may take the next step in infringement proceedings, and issue a reasoned opinion to one or both authorities.

TAGS: compliance | tax | business | European Commission | value added tax (VAT) | Hungary | VAT cross-border transactions | Germany | European Union (EU) | VAT refunds | VAT compliance matters | Europe

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