The European Commission (EC) has called on Hungary to modify its Electronic Public Road Trade Control System (EKÁER) to comply with the relevant European regulations, which may lead to the easing of the administrative burden on Hungarian companies, while possibly slowing down the fight against tax fraud, according to a press release from advisory firm Deloitte.
The EC says that EKÁER is in violation of community VAT regulations as it creates administrative burdens on cross-border trade. Furthermore, the Commission says the Hungarian regulation hurts the principles of neutrality and rationality, as well as restricting the freedom of conducting economic activities, as defined in the Charter of Fundamental Rights of the European Union.
According to the ECʼs letter of formal notice, the first step in an infringement procedure, Hungary has two months to carry out the required measures. In case this does not happen, the Commission will send a reasoned opinion, detailing why it considers that the country is breaching EU law.
"With the EKÁER requirements, significant results were achieved in the fight to push tax fraud back, so it must be considered whether this tendency could be kept up with the decrease of the amount of requirements," says Dorottya Fábián, senior manager at Deloitte Tax & Legal in Hungary. "At the same time, either simplifying or doing away with the EKÁER requirements would mean a significant ease on the administrative burden of Hungarian companies. Additionally, it would decrease the exposure to potential sanctions in case of an unsatisfactory completion of requirements."
Fábián added that no significant effect is expected in other fields such as tracking community deliveries, as the EKÁER system did not replace duties of reporting on deliveries that require authentication, such as CMR cargo.