New CJEU rulings: previously lost VAT positions and interest claims may reopen

Recently, the Court of Justice of the European Union (“CJEU”) confirmed that, in the case of intra-Community acquisitions of goods, the right of deduction cannot be denied solely because the taxable person received the related invoice at a later stage, provided that the taxpayer acted in good faith and exercised their right to deduct VAT within the limitation period.

Furthermore, based on an earlier CJEU decision, if a taxpayer did not receive a VAT refund in time due to a national rule that is contrary to EU law, they may be entitled not only to the repayment of VAT but also, as compensation, to extended default interest.

VAT deemed previously lost due to a late-received invoice

According to the CJEU’s ruling, it is contrary to EU law for a Member State not to allow a taxable person to exercise their right to deduct VAT related to intra-Community acquisitions of goods upon receipt of the invoice within the limitation period, and instead to link this right exclusively to the date of supply, i.e. the moment when the tax liability arises. The CJEU emphasized that the existence of an invoice is merely a formal requirement, whereas the right of deduction is primarily linked to substantive conditions. The function of the invoice is to enable the tax authority to verify whether the substantive conditions for deduction are met.

This is particularly relevant in Hungarian practice, as businesses are required to report the VAT payable on intra-Community acquisitions in their VAT return at the latest for the period covering the month following the supply. However, Hungarian regulation also links the deduction of input VAT in such cases to the same period in which the tax liability arises. As a result, if the taxpayer receives the invoice only at a later date, they must amend the earlier VAT return by way of self-revision to exercise their right of deduction.

The CJEU’s decision may therefore be especially significant in cases where self-revision of prior periods is no longer possible—for example, because the tax authority has already closed the given period through an audit. In such cases, the taxpayer is not required to submit a request for a repeated audit for the closed period and will not be dependent on the tax authority’s decision on whether to reopen it. By relying on the CJEU ruling, the taxpayer may, within the limitation period, also account for the deductible VAT related to the intra-Community acquisition in the VAT return covering the period of receipt of the invoice. This ensures that the taxpayer’s right of deduction is not infringed even in cases where Hungarian authorities previously denied the deduction solely due to late receipt of the invoice, a formal deficiency, or an incorrect reporting period.

Interest claims in cases of unlawfully withheld VAT refunds

In a previous decision, the CJEU confirmed that if a taxpayer did not receive a VAT refund in due time because national rules were contrary to EU law, they are entitled not only to the refund itself but may also be eligible for default interest.

An important takeaway from the ruling is that if the taxpayer had previously submitted a claim for default interest but only for the period allowed under the then-prevailing national interpretation, a subsequent additional claim does not necessarily constitute a new claim. If the taxpayer only becomes aware, based on a later court decision, that interest is also due for an additional period not previously claimed, then the new submission may be regarded as a supplement to the original claim.

This is significant because, in such cases, the tax authority cannot automatically reject the claim on the grounds that it constitutes a new claim that is already time-barred. Accordingly, the practical relevance of the decision is that, even in older VAT refund cases, it may be worthwhile to re-examine whether the company has fully enforced its interest claims, as earlier partial claims may, in certain circumstances, still be supplemented.

The applicability of extended interest claims is well illustrated by a case where a Hungarian company was unable to recover VAT over several periods, because domestic regulation—contrary to EU law—made the right to deduct VAT conditional upon the financial settlement of invoices (the “paid” condition).

After the CJEU declared this “paid” condition to be incompatible with EU law, the Hungarian authorities reimbursed only part of the default interest due to the company.

However, based on the CJEU’s decision, provided that interest should have been payable for the full period of delay, the company is entitled to request payment of the remaining interest in a second submission. According to the CJEU’s interpretation, this submission should not be treated as a new claim—subject to time limitations that could prevent the enforcement of the remaining interest—but rather as a supplement to the earlier interest claim, and therefore it cannot be automatically rejected on limitation grounds.

When preparing VAT refund claims and reviewing previously submitted interest claims, it may be advisable to seek expert assistance. Should you have any questions regarding the affected legal provisions, please do not hesitate to contact Deloitte’s tax experts.