The european judicial practice regarding the vat deduction right and its impact on the hungarian practice

Author:Zoltan Nagy, Roland Zilahi
Position:Professor, Phd, habil., Faculty of Law, University of Miskolc, Miskolc, Hungary
Pages:68-76
SUMMARY

The purpose of the below study is to compare the European judicial practice with the Hungarian practice in terms of VAT deduction right. In the meantime, the study gave us the opportunity to get to know the complex requirements of VAT deduction right. In addition, we were also able to assess whether the Hungarian VAT Act is in line with the community legislation. Keywords: Value added tax,... (see full summary)

 
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LESIJ NO. XXVI, VOL. 1/2019
THE EUROPEAN JUDICIAL PRACTICE REGARDING THE VAT DEDUCTION
RIGHT AND ITS IMPACT ON THE HUNGARIAN PRACTICE
Zoltan NAGY
Roland ZILAHI
Abstract
The purpose of the below study is to compare the European judicial pra ctice with the Hungarian
practice in terms of VAT deduction right. In the meantime, the study gave us the oppor tunity to get to
know the complex requirements of VAT deduction right. In addition, we were also able to assess
whether the Hungaria n VAT Act is in line with the community legislation.
Keywords: Value added tax, deduction right, Eur opean judicial practice, ta x fraud, Hunga rian
VAT.
Introduction
The valuОă aННОНătaбă (‘VAT’)ăТsă oПtОnă
МallОНă asă tСОă‘quОО năo ПătaбОs ’ăаСТМСă namОă
has several reasons. One of the most
important reasons is that VAT provides the
largest amount (appr. 1/3) of tax to the
Hungarian budget comparing to other taxes.1
From an economical point o f view, a tax
may be considered as good if it meets the
following three requirements: (1) it is fair
and square, (2) the direct cost of tax
administration is relatively low and (3) it
hardly i mpacts on the b ehaviour of private
individuals and busine sses. However, the
Professor, Phd, habil., Faculty of Law, University of Miskolc, Miskolc, Hungary, (e-mail: jogdrnz@uni-
miskolc.hu), Ferenc Mádl Institute of Comparative Law, Budapest (e-mail: zilahiroli@gmail.com).
 Indirect tax consultant, Deloitte Co.Ltd., Budapest, Hungary.
1 https://www.portfolio.hu/gazdasag/adozas/kell-e-nekunk-ez-az-afa.192931.html Lentner Csaba:.Az
adórendszer és a közpénzügyek egyes elméleti, jogszabályi és gyakorlati összefüggései. Európai Jog: Európai
Jogakadémia Folyóirata, 18. évf. 5. szám, p. 30-36.ăCsrös,ăGabrТОlla:ăTaбăsвstОmăТnăHunРarвăanНăТtsăМСanРОsăНuОă
to the crisis pioneer or hazardous method of sectoral taxation? In: Marcin BurzecPawel Smolen (eds.): Tax
authorities in the Visegrad Group countires. Common experience after accession to the European Union.
Wydawnictwo KUL, Lublin, 2016. p. 103105.
2 Ercsey Zs. Az általános forgalmi adóról, Jura Kiadó, Budapest 2012, p. 73. Lentner Csaba : The New Hungarian
Public Finance System in a Historical, Institutional and Scientific Context. Public Finace Quaterly, Vol. 60. no. 4.
p. 447-461. Zoltán Nagy-Beáta Gergely-Balázs Katona: Problems Relating to Tax Avoidance and Possible Solutions
ТnătСОăEuropОanăUnТon’săanНăHunРarТană’săRОРulatТon,ăCurОntulăJurТНТМăББI.ănoă3.(7Ő),ă2018.ă
completion of these requirements in case of
VAT is argued nowadays. Indirect taxes are
generally fair and square thus taxable
persons have the right to decide how much
they spend of their income and consequently
how much tax they pay. The direct cost of
tax administration is also considered as low
in case of VAT.2
After joining the European Union
(‘EU’)ă taбatТonă bОМamОă onОă oПă tСОă mostă
important and interesting fields. W ithin
taxation, VAT has an esp ecially important
role thus the citizens of the EU meet this type
of tax every da y and the rate of the
Hungarian VAT is very hi gh which means

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