Govt to discuss VAT refunds at Wednesday's cabinet meeting

The Hungarian government will be discussing plans at Wednesday's cabinet meeting for the release later this fall of HUF 260 billion in retained VAT which was ruled by the EU to have been illegitimately withheld, reports Portfolio.hu based on information obtained by news portal Origo.hu.

Claims will not be subject to any qualification procedure, however, businesses that fail to make a claim by October 20 will forfeit their rights for a refund, according to the draft to be discussed tomorrow.

Sums of up to HUF 1 million are allegedly to be refunded within 30 days, with a 45-day proposed time frame for higher amounts.

According to a proposal by the Economy Ministry, withheld VAT will be refunded  to approximately 40,000 businesses  as soon as possible.  

The proposed new legislation is to bring Hungary's VAT laws in line with the EU's accrual-based approach, which requires that businesses be able to claim VAT refunds regardless of whether supplier bills have been paid or not at the time of the claim, Origo noted. 

In addition to withheld VAT, businesses will also become entitled to a refund of penalties and late fees approved by the Tax Office (NAV) earlier on the basis of tax regulations now found to be in breach of EU law. 

According to Origo, businesses that should have been receiving VAT refunds in the past (due to a surplus in their VAT account balance) but are no longer in a position to do so (as their balance is currently zero or negative) may not see their files closed yet as the proposal does not discuss the issue of late interest in such cases.

The preamble to the proposal, which will not be fully available to the general public until the new law is passed, notes that the state may face lawsuits from businesses, which indicates companies may have to take legal action if they are to claim interest or damages.