Notice on the VAT refund procedures to be applied by taxable persons not established in Hungary as of 1 January, 2010
Act CX of 2009 on the amendment of certain tax laws with the purpose of complying
with European Community legal harmonisation obligations amends, among others,
Chapter XVIII of Act CXXVII of 2007 on Value Added Tax (hereinafter: the VAT Act)
as of 1 January, 2010.
As per the amendment based on Council Directive 2008/9/EC (12 February, 2008),
VAT refund procedures change as follows:
Definition of basic concepts:
Member State of refund means the Member State of the European Community in which the purchase after which VAT was charged took place, and which decides on the refund application and – in case of a positive decision – refunds VAT. Hungary (in case of being a Member State of refund) carries out tasks related to VAT refund through the Hungarian national tax administration (hereinafter in this Notice: national tax administration).
Member State of establishment means the Member State of the European Community where the taxable person applying
for VAT refund is established for business purposes and where the refund application
1. Procedure applicable to taxable persons established in another Member State
of the Community that is not the Member State of refund:
A.) The general conditions for refund from the taxable person’s perspective do not change significantly from the current provisions:
A taxable person is eligible for VAT refund if he is not established in Hungary
for business purposes (or if no such established seat exists, his domicile or
normal place of residence is not in Hungary) and does not carry out supply of
goods or services in Hungary (with the exception of certain transactions).
B.) The conditions for the application of the VAT refund legislation change in
their merit from the currently in force provisions as follows:
The application of the taxable person not established in Hungary must be submitted
electronically to the tax administration of the Members State where he is established, in the
way and form required in that country (including applications submitted after
1 January 2010, even though they might refer to 2009). The Member State of establishment
shall, after the necessary checks are carried out, forward the application electronically
within 15 days to the Member State of refund, that is, to the national tax administration.
The VAT refund application shall be submitted to the Member State of establishment
at the latest on 30 September of the calendar year following the refund period.
This is a term of preclusion, in case the deadline is not observed, no application
for justification is admitted.
Accordingly, applications submitted after the 30 September to the Member State
of establishment shall be forwarded, but the national tax administration shall
reject them without consideration. The forms available for providing information
in the Member State of establishment can be filled out in Hungarian or in English.
The exact form of the application, and extent and the maximum size of the attachments
shall be determined by the tax administration of the Member State of establishment.
It is mandatory to attach to the application the invoice or the advance invoice
that is a proof of the transaction, and the decision on the free trade of the
product where the taxable amount on an invoice or importation document is EUR
1 000 or more or the equivalent in HUFs, or in case the invoice concerns fuel,
the threshold is EUR 250 or the equivalent in HUFs.
C.) Procedure by the national tax administration
The national tax administration sends electronic notice to the applicant or to
the epresentative identified in the application on the arrival of the application
forwarded electronically by the Member State of establishment. The administration
procedure starts on the day the application is received by the national tax administration.
After the application is received, the national tax administration studies it
on its merits as provided by Hungarian law, and makes a decision within 4 months.
The period for administrative action can be extended as per the law, but it may
not be more than 8 months.
In case the national tax administration decides to accept or to partially accept
the VAT refund application, provisions are made for payment of the VAT refund
simultaneously with the decision, or the latest within 10 working days of such
decision. The national tax administration informs the applicant and the tax administration
of the Member State of establishment of the decision and of the rulings electronically.
The e-mail address given in the application form submitted to the Member State
of establishment for electronic contact shall be used by the national tax administration
for electronic correspondence.
The application shall be submitted in the Member State of establishment by the
applicant, or by the representative duly authorised as per the rules of the Member
State of establishment. The national tax administration shall communicate with
the so called contact person dentified in the application, at the given e-mail
address. In case the applicant wishes to give a proxy in the given procedure to
a person other than the applicant as identified in the application, the applicant
must comply with the rules of representation as provided in Section 7 of Act XCII
of 2003 on the Rules of Taxation.
Summary: As of 1 January, 2010, taxable persons not established in Hungary shall
submit their VAT refund applications electronically only in the Member State of
establishment. The application form is drawn up by the Member State of establishment,
and is made public on its web site. Paper based applications that are submitted
shall be deemed rejected without consideration.
2. Procedure applicable to persons not established in a Member State of the European
Community, but established in a so called recognized third country (currently
the Swiss Confederation and the Principality of Lichtenstein)
The subjective conditions of eligibility for VAT refund and the circumstances for applying them shall not change in their merits in the future, meaning that applications shall continue to be submitted on paper to the national tax administration. Applications shall be submitted before 30 September, 2009 in such a way that they are received by the national tax administration by this date. This is a term of preclusion, in case the deadline is not observed, no application for justification is admitted. Electronic submission is not mandatory, but it is possible as provided by Section 251/M of the VAT Act.