Hungary - non-deductibility of VAT if there is no document proving ownership
Preliminary ruling requested from the ECJ on non-deductibility of VAT if taxable person has no document proving that it owned the sold product.
On 22 February 2011, the Baranya Megyei Country Court (Baranya Megyei Biróság) requested a preliminary ruling from the Court of Justice of the European Union (ECJ) in Mahagében Kft v. Nemzeti Adó és Vámhivatal Dél-dunántúli Regionális Adó Főigazgatósága (Case C-80/11).
The referring Court wishes to know whether:
"The EU VAT Directive must be interpreted as meaning that a taxable person who fulfils the material conditions for the right to deduct VAT in accordance with the provisions of that Directive may be deprived of his right to deduct by national legislation or practice that prohibits deductions in respect of VAT paid when a product is bought, where the invoice is the only valid document that confirms that the product was sold, and the taxable person is not in possession of any document from the issuer of the invoice which certifies that it was in possession of the product, and could have supplied it or satisfied its obligations as regards declaration?
A Member State may require the recipient of the invoice to be in possession of a document proving that it is in possession of the product, or that the product was supplied or delivered to it, to ensure the correct collection of VAT and to prevent evasion under Art. 273 of the Directive?
The concept of due diligence set out in Par. 44(5) of the Hungarian VAT Law is compatible with the principles of neutrality and proportionality already upheld several times by the ECJ in connection with the application of the Directive if, in applying that concept, the tax authority and established case-law require the recipient of the invoice to ascertain whether the issuer of the invoice is a taxable person, whether it has entered goods purchased in its records and is in possession of the purchase invoice, and whether it has satisfied its obligations as to declaration and payment of VAT?
Arts. 167 and 178(a) of the EU VAT Directive must be interpreted as meaning that they preclude national legislation or practice that requires a taxable person receiving an invoice to verify compliance with the law by the company issuing the invoice in order for the former to assert his right to deduct?"
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