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Hungary gets derogations for two tax measures

EU

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Hungary has been granted a derogation from European Union rules for two tax measures until the end of 2024, state secretary for tax affairs Norbert Izer told state news wire MTI.

The Council decisions, published in the Official Journal of the EU, grant the derogations for a Hungarian provision allowing businesses to deduct half of VAT on rented cars and another requiring buyers, rather than suppliers, to pay VAT on purchases over HUF 100,000 if the supplier is under liquidation or in bankruptcy, Izer said.

"The government has successfully defended Hungarian interests in Brussels," he added.

He said the provision, in force from 2019, allowing businesses to deduct half of VAT from car rental fees through a simple declaration that their vehicle leases are for business purposes presents a "significant reduction of the bureaucratic burden" as well as tax savings.

The measure could affect some 100,000 company cars, he added.

Hungary had argued in the case of the other derogation involving reverse VAT that companies under liquidation or subject to insolvency procedures often don't pay VAT due, while business partners of those companies may still deduct the VAT incurred. Hungary had also noted cases of fraud in which companies under liquidation would issue fictitious invoices to active companies to reduce their payable tax without any assurances the issuer would pay the VAT due.

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