The European Commission on Thursday issued a reasoned opinion asking Hungary to change VAT rules that go against the principle of fiscal neutrality.
The reasoned opinion is the second step of an infringement procedure.
The Commission said Hungarian tax rules require taxpayers to pay VAT to the tax office on receivables even if those receivables are unpaid. At the same time, the rules do not allow VAT on inputs to be reclaimed until bills are settled, obliging some taxpayers to carry forward refunds, thus affecting the neutrality of VAT.
The EU's VAT Directive allows member states some leeway in determining the conditions for VAT refunds, but the European Court of Justice has held in its case-law that the principle of fiscal neutrality must be respected. (MTI-ECONEWS)