{"attribution":{"source":"legal.exploreworldai.com","canonical":"https://legal.exploreworldai.com/api/public/v1/judgment-text?id=eu:c-610-19","cite_as":"NovaCopilot, legal.exploreworldai.com (https://legal.exploreworldai.com/api/public/v1/judgment-text?id=eu:c-610-19)","license":"https://legal.exploreworldai.com/revision","version":"legal-2026-10-13","fingerprint":"ewai:eu:a03983","proof":"sha256:d6f54490fd30375abf7b2fe5e93b0ce27d6ba229f0a7c65a5369d10fa7bd5a2b","jurisdiction":"eu","lang":"en","publisher":"NovaCopilot by ExploreWorld Legal","terms":"https://legal.exploreworldai.com/om"},"brand_source":"Source: NovaCopilot","item":{"schema_version":"1.0.0","id":"eu:c-610-19","jurisdiction":"eu","lang":"en","brand_source":"Source: NovaCopilot","brand":{"product":"NovaCopilot","platform":"ExploreWorldAI","infrastructure":"ExploreWorld Legal","infrastructure_url":"legal.exploreworldai.com","legal_entity":"Valkiv Ventures AB","permanent_url":"https://legal.exploreworldai.com/novacopilot","source":"Source: NovaCopilot","powered_by":"Powered by NovaCopilot","license":"https://legal.exploreworldai.com/licensvillkor"},"sections":[{"title":"62019CO0610","paragraphs":[]},{"title":"ORDER OF THE COURT (Tenth Chamber)","paragraphs":[]},{"title":"3 September 2020 (\n *1\n )","paragraphs":["para_4","para_5","para_6","para_7","para_8","para_9","para_10","para_11","para_12","para_13","para_14","para_15","para_16","para_17","para_18","para_19","para_20","para_21"]},{"title":"Order","paragraphs":[]},{"title":"1","paragraphs":["para_24"]},{"title":"2","paragraphs":["para_26"]},{"title":"Legal context","paragraphs":[]},{"title":"EU law","paragraphs":[]},{"title":"3","paragraphs":["para_30"]},{"title":"4","paragraphs":[]},{"title":"Under Article 14(1) of Directive 2006/112:","paragraphs":["para_33"]},{"title":"5","paragraphs":[]},{"title":"Article 168 of that directive provides:","paragraphs":["para_36"]},{"title":"(a)","paragraphs":["para_38","para_39"]},{"title":"6","paragraphs":[]},{"title":"Article 178 of Directive 2006/112 states:","paragraphs":["para_42"]},{"title":"(a)","paragraphs":["para_44","para_45"]},{"title":"7","paragraphs":[]},{"title":"Article 220 of that directive provides:","paragraphs":["para_48"]},{"title":"(1)","paragraphs":["para_50","para_51"]},{"title":"8","paragraphs":["para_53"]},{"title":"9","paragraphs":[]},{"title":"Under the first paragraph of Article 273 of Directive 2006/112:","paragraphs":["para_56"]},{"title":"Hungarian law","paragraphs":[]},{"title":"10","paragraphs":["para_59","para_60"]},{"title":"11","paragraphs":[]},{"title":"Paragraph 26 of that law provides:","paragraphs":["para_63"]},{"title":"12","paragraphs":[]},{"title":"Under Paragraph 119(1) of Law No CXXVII of 2007 on value added tax:","paragraphs":["para_66"]},{"title":"13","paragraphs":[]},{"title":"Paragraph 120(a) of that law provides:","paragraphs":["para_69"]},{"title":"(a)","paragraphs":["para_71","para_72"]},{"title":"14","paragraphs":[]},{"title":"Paragraph 127(1)(a) of Law No CXXVII of 2007 states:","paragraphs":["para_75"]},{"title":"(a)","paragraphs":["para_77","para_78"]},{"title":"15","paragraphs":["para_80","para_81"]},{"title":"16","paragraphs":[]},{"title":"Paragraph 15(3) of that law provides:","paragraphs":["para_84"]},{"title":"17","paragraphs":[]},{"title":"Paragraph 166(1) and (2) of the Law on Accounting provides:","paragraphs":["para_87","para_88"]},{"title":"18","paragraphs":["para_90","para_91"]},{"title":"19","paragraphs":[]},{"title":"Under Paragraph 97(4) and (6) of the Code of fiscal procedure:","paragraphs":["para_94","para_95","para_96"]},{"title":"20","paragraphs":[]},{"title":"Paragraph 170(1) of that code provides:","paragraphs":["para_99"]},{"title":"21","paragraphs":[]},{"title":"Paragraph 171(1) and (2) of the Code of fiscal procedure is worded as follows:","paragraphs":["para_102","para_103","para_104"]},{"title":"The dispute in the main proceedings and the questions referred for a preliminary ruling","paragraphs":[]},{"title":"22","paragraphs":["para_107"]},{"title":"23","paragraphs":["para_109"]},{"title":"24","paragraphs":["para_111"]},{"title":"25","paragraphs":["para_113"]},{"title":"26","paragraphs":["para_115"]},{"title":"27","paragraphs":["para_117"]},{"title":"28","paragraphs":["para_119"]},{"title":"29","paragraphs":["para_121"]},{"title":"30","paragraphs":["para_123"]},{"title":"31","paragraphs":["para_125"]},{"title":"32","paragraphs":["para_127"]},{"title":"33","paragraphs":["para_129"]},{"title":"34","paragraphs":["para_131"]},{"title":"35","paragraphs":["para_133"]},{"title":"36","paragraphs":["para_135","para_136","para_137"]},{"title":"(2)","paragraphs":["para_139"]},{"title":"(3)","paragraphs":["para_141"]},{"title":"(4)","paragraphs":["para_143"]},{"title":"(5)","paragraphs":["para_145"]},{"title":"(6)","paragraphs":["para_147"]},{"title":"Consideration of the questions referred","paragraphs":[]},{"title":"37","paragraphs":["para_150"]},{"title":"38","paragraphs":["para_152"]},{"title":"The first four questions","paragraphs":[]},{"title":"39","paragraphs":["para_155"]},{"title":"40","paragraphs":["para_157"]},{"title":"41","paragraphs":["para_159"]},{"title":"42","paragraphs":["para_161"]},{"title":"43","paragraphs":["para_163"]},{"title":"44","paragraphs":["para_165"]},{"title":"45","paragraphs":["para_167"]},{"title":"46","paragraphs":["para_169"]},{"title":"47","paragraphs":["para_171"]},{"title":"48","paragraphs":["para_173"]},{"title":"49","paragraphs":["para_175"]},{"title":"50","paragraphs":["para_177"]},{"title":"51","paragraphs":["para_179"]},{"title":"52","paragraphs":["para_181"]},{"title":"53","paragraphs":["para_183"]},{"title":"54","paragraphs":["para_185"]},{"title":"55","paragraphs":["para_187"]},{"title":"56","paragraphs":["para_189"]},{"title":"57","paragraphs":["para_191"]},{"title":"58","paragraphs":["para_193"]},{"title":"59","paragraphs":["para_195"]},{"title":"60","paragraphs":["para_197"]},{"title":"61","paragraphs":["para_199"]},{"title":"62","paragraphs":["para_201"]},{"title":"63","paragraphs":["para_203"]},{"title":"64","paragraphs":["para_205"]},{"title":"65","paragraphs":["para_207"]},{"title":"66","paragraphs":["para_209"]},{"title":"The fifth question","paragraphs":[]},{"title":"67","paragraphs":["para_212"]},{"title":"68","paragraphs":["para_214"]},{"title":"69","paragraphs":["para_216"]},{"title":"70","paragraphs":["para_218"]},{"title":"71","paragraphs":["para_220"]},{"title":"72","paragraphs":["para_222"]},{"title":"The sixth question","paragraphs":[]},{"title":"73","paragraphs":["para_225"]},{"title":"74","paragraphs":["para_227"]},{"title":"75","paragraphs":["para_229"]},{"title":"76","paragraphs":["para_231"]},{"title":"Costs","paragraphs":[]},{"title":"77","paragraphs":["para_234"]},{"title":"On those grounds, the Court (Tenth Chamber) hereby orders:","paragraphs":["para_236","para_237","para_238"]}],"paragraphs":[{"text":"62019CO0610","paragraph_id":"para_1"},{"text":"ORDER OF THE COURT (Tenth Chamber)","paragraph_id":"para_2"},{"text":"3 September 2020 (\n *1\n )","paragraph_id":"para_3"},{"text":"(Reference for a preliminary ruling – Article 99 of the Rules of Procedure of the Court of Justice – Value added tax (VAT) – Directive 2006/112/EC – Articles 168, 178, 220 and 226 – Principles of fiscal neutrality, of effectiveness and of proportionality – Right to deduct VAT – Refusal – Conditions for the existence of a supply of goods – Evasion – Proof – Penalty – Article 47 of the Charter of Fundamental Rights of the European Union – Right to an effective judicial remedy)","paragraph_id":"para_4"},{"text":"In Case C‑610/19,","paragraph_id":"para_5"},{"text":"REQUEST for a preliminary ruling under Article 267 TFEU from the Fővárosi Közigazgatási és Munkaügyi Bíróság (Budapest Administrative and Labour Court, Hungary), made by decision of 5 July 2019, received at the Court on 13 August 2019, in the proceedings","paragraph_id":"para_6"},{"text":"Vikingo Fővállalkozó Kft.","paragraph_id":"para_7"},{"text":"v","paragraph_id":"para_8"},{"text":"Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága,","paragraph_id":"para_9"},{"text":"THE COURT (Tenth Chamber),","paragraph_id":"para_10"},{"text":"composed of I. Jarukaitis (Rapporteur), President of the Chamber, E. Juhász and M. Ilešič, Judges,","paragraph_id":"para_11"},{"text":"Advocate General: P. Pikamäe,","paragraph_id":"para_12"},{"text":"Registrar: A. Calot Escobar,","paragraph_id":"para_13"},{"text":"having regard to the written procedure,","paragraph_id":"para_14"},{"text":"after considering the observations submitted on behalf of:","paragraph_id":"para_15"},{"text":"–","paragraph_id":"para_16"},{"text":"the Hungarian Government, by M.Z. Fehér and G. Koós, acting as Agents,","paragraph_id":"para_17"},{"text":"–","paragraph_id":"para_18"},{"text":"the European Commission, by J. Jokubauskaitė and Zs. Teleki, acting as Agents,","paragraph_id":"para_19"},{"text":"having decided, after hearing the Advocate General, to rule by reasoned order, pursuant to Article 99 of the Rules of Procedure of the Court of Justice,","paragraph_id":"para_20"},{"text":"makes the following","paragraph_id":"para_21"},{"text":"Order","paragraph_id":"para_22"},{"text":"1","paragraph_id":"para_23"},{"text":"This request for a preliminary ruling concerns the interpretation of Articles 168(a), 178(a), 220(1) and 226 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax ( OJ 2006 L 347, p. 1 ), read in conjunction with the principles of fiscal neutrality, of effectiveness and of proportionality, and Article 47 of the Charter of Fundamental Rights of the European Union (‘the Charter’).","paragraph_id":"para_24"},{"text":"2","paragraph_id":"para_25"},{"text":"The request has been made in proceedings between Vikingo Fővállalkozó Kft. (‘Vikingo’) and the Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága (Appeals Directorate of the National Taxation and Customs Authority, Hungary) concerning the right to deduct input value added tax (VAT) in respect of two invoices relating to the purchase of machines.","paragraph_id":"para_26"},{"text":"Legal context","paragraph_id":"para_27"},{"text":"EU law","paragraph_id":"para_28"},{"text":"3","paragraph_id":"para_29"},{"text":"Having regard to the dates of the facts of the main proceedings, it must be noted that it is the version of Directive 2006/112, as amended by Council Directive 2010/45/EU of 13 July 2010 ( OJ 2010 L 189, p. 1 ), applicable as from 1 January 2013, which applies ratione temporis to some of those facts. However, the amendments made by that directive are not directly relevant to the present case.","paragraph_id":"para_30"},{"text":"4","paragraph_id":"para_31"},{"text":"Under Article 14(1) of Directive 2006/112:","paragraph_id":"para_32"},{"text":"‘“Supply of goods” shall mean the transfer of the right to dispose of tangible property as owner.’","paragraph_id":"para_33"},{"text":"5","paragraph_id":"para_34"},{"text":"Article 168 of that directive provides:","paragraph_id":"para_35"},{"text":"‘In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay:","paragraph_id":"para_36"},{"text":"(a)","paragraph_id":"para_37"},{"text":"the VAT due or paid in that Member State in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person;","paragraph_id":"para_38"},{"text":"…’","paragraph_id":"para_39"},{"text":"6","paragraph_id":"para_40"},{"text":"Article 178 of Directive 2006/112 states:","paragraph_id":"para_41"},{"text":"‘In order to exercise the right of deduction, a taxable person must meet the following conditions:","paragraph_id":"para_42"},{"text":"(a)","paragraph_id":"para_43"},{"text":"for the purposes of deductions pursuant to Article 168(a), in respect of the supply of goods or services, he must hold an invoice drawn up in accordance with Articles 220 to 236 and Articles 238, 239 and 240;","paragraph_id":"para_44"},{"text":"…’","paragraph_id":"para_45"},{"text":"7","paragraph_id":"para_46"},{"text":"Article 220 of that directive provides:","paragraph_id":"para_47"},{"text":"‘Every taxable person shall ensure that, in respect of the following, an invoice is issued, either by himself or by his customer or, in his name and on his behalf, by a third party:","paragraph_id":"para_48"},{"text":"(1)","paragraph_id":"para_49"},{"text":"supplies of goods or services which he has made to another taxable person or to a non-taxable legal person;","paragraph_id":"para_50"},{"text":"…’","paragraph_id":"para_51"},{"text":"8","paragraph_id":"para_52"},{"text":"Article 226 of Directive 2006/112 lists the only details which, without prejudice to the particular provisions laid down in that directive, are required for VAT purposes on invoices issued pursuant to Articles 220 and 221 of that directive.","paragraph_id":"para_53"},{"text":"9","paragraph_id":"para_54"},{"text":"Under the first paragraph of Article 273 of Directive 2006/112:","paragraph_id":"para_55"},{"text":"‘Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirement of equal treatment as between domestic transactions and transactions carried out between Member States by taxable persons and provided that such obligations do not, in trade between Member States, give rise to formalities connected with the crossing of frontiers.’","paragraph_id":"para_56"},{"text":"Hungarian law","paragraph_id":"para_57"},{"text":"10","paragraph_id":"para_58"},{"text":"Paragraph 27(1) of the általános forgalmi adóról szóló 2007. évi CXXVII. törvény (Law No CXXVII of 2007 on value added tax) provides:","paragraph_id":"para_59"},{"text":"‘Where goods are sold successively in such a way that they are dispatched or transported directly from the original supplier to the final customer mentioned as recipient, Paragraph 26 shall apply exclusively to a single supply of goods.’","paragraph_id":"para_60"},{"text":"11","paragraph_id":"para_61"},{"text":"Paragraph 26 of that law provides:","paragraph_id":"para_62"},{"text":"‘Where dispatch or transport is effected by the supplier, by the customer or, on behalf of either, by a third party, the place of supply of the goods shall be the place where the goods are located at the time of dispatch or of departure of transport mentioning the customer as the recipient.’","paragraph_id":"para_63"},{"text":"12","paragraph_id":"para_64"},{"text":"Under Paragraph 119(1) of Law No CXXVII of 2007 on value added tax:","paragraph_id":"para_65"},{"text":"‘Unless otherwise provided in this Law, a right of deduction shall arise at the time the amount due in respect of input VAT is determined (Paragraph 120).’","paragraph_id":"para_66"},{"text":"13","paragraph_id":"para_67"},{"text":"Paragraph 120(a) of that law provides:","paragraph_id":"para_68"},{"text":"‘In so far as the taxable person, acting as such, uses or otherwise exploits goods or services in order to carry out a taxable supply of goods or services, he or she shall be entitled to deduct from the tax that he or she is liable to pay:","paragraph_id":"para_69"},{"text":"(a)","paragraph_id":"para_70"},{"text":"the amount of tax he or she was charged, in connection with the purchase of the goods or the use of the services, by another taxable person – including any person or entity subject to simplified corporation tax;","paragraph_id":"para_71"},{"text":"…’","paragraph_id":"para_72"},{"text":"14","paragraph_id":"para_73"},{"text":"Paragraph 127(1)(a) of Law No CXXVII of 2007 states:","paragraph_id":"para_74"},{"text":"‘Exercise of the right of deduction shall be subject to the substantive condition that the taxable person is himself or herself in possession:","paragraph_id":"para_75"},{"text":"(a)","paragraph_id":"para_76"},{"text":"in the situation referred to in Paragraph 120(a), of an invoice issued in his or her name which attests to the performance of the transaction;","paragraph_id":"para_77"},{"text":"…’","paragraph_id":"para_78"},{"text":"15","paragraph_id":"para_79"},{"text":"Paragraph 1 of számvitelről szóló 2000. évi C. törvény (Law C of 2000 on Accounting, ‘the Law on Accounting’) is worded as follows:","paragraph_id":"para_80"},{"text":"‘This Law defines the accounting and reporting obligations of those persons falling within its scope, the principles to be observed in bookkeeping and the preparation of accounts, the rules established on the basis of such principles, as well as disclosure, publication and audit requirements.’","paragraph_id":"para_81"},{"text":"16","paragraph_id":"para_82"},{"text":"Paragraph 15(3) of that law provides:","paragraph_id":"para_83"},{"text":"‘The transactions shown in the accounts and in the annual accounts must in fact exist, be capable of proof and also be capable of being established by third parties. Their assessment must be in accordance with the valuation principles provided for in this law and the assessment procedures relating thereto (“reality principle”).’","paragraph_id":"para_84"},{"text":"17","paragraph_id":"para_85"},{"text":"Paragraph 166(1) and (2) of the Law on Accounting provides:","paragraph_id":"para_86"},{"text":"‘1.   An “accounting document” means any document drawn up or prepared by an economic operator, or drawn up or prepared by a natural person or any other economic operator having a business or other relationship therewith (invoice, contract, agreement, record, certificate of credit institution, bank account extract, legislative or regulatory provision and other comparable documents), which serves as a support for the accounting (declaration) of an economic transaction.","paragraph_id":"para_87"},{"text":"2.   The information in an accounting document must, both formally and substantively, be plausible, reliable and correct. It must be drafted in accordance with the principle of clarity.’","paragraph_id":"para_88"},{"text":"18","paragraph_id":"para_89"},{"text":"Paragraph 2(1) of the adózás rendjéről szóló 2003. évi XCII. törvény (Law No XCII of 2003 on the Code of fiscal procedure, ‘the Code of fiscal procedure’) provides as follows:","paragraph_id":"para_90"},{"text":"‘All rights in legal relationships for tax purposes shall be exercised in accordance with their purpose. Under the tax laws, the conclusion of contracts or the carrying out of other transactions whose purpose is to circumvent the provisions of tax laws may not be classified as exercise of rights in accordance with their purpose.’","paragraph_id":"para_91"},{"text":"19","paragraph_id":"para_92"},{"text":"Under Paragraph 97(4) and (6) of the Code of fiscal procedure:","paragraph_id":"para_93"},{"text":"‘4.   In the course of the inspection, it shall be the duty of the tax authority to establish and prove the facts unless, by virtue of legislation, the burden of proof lies with the taxpayer.","paragraph_id":"para_94"},{"text":"…","paragraph_id":"para_95"},{"text":"6.   When establishing the facts, the tax authority shall have a duty also to seek facts favourable to the taxpayer. Except where estimates are made, an unproven fact or circumstance shall not be assessed to the taxpayer’s disadvantage.’","paragraph_id":"para_96"},{"text":"20","paragraph_id":"para_97"},{"text":"Paragraph 170(1) of that code provides:","paragraph_id":"para_98"},{"text":"‘If the tax payment is insufficient, this shall give rise to a tax penalty. The amount of the penalty, save as otherwise provided for in this law, shall be 50% of the unpaid amount. The amount of the penalty shall be 200% of the unpaid amount if the difference compared with the amount to be paid is …","paragraph_id":"para_99"},{"text":"21","paragraph_id":"para_100"},{"text":"Paragraph 171(1) and (2) of the Code of fiscal procedure is worded as follows:","paragraph_id":"para_101"},{"text":"‘1.   The amount of the fine may be reduced, or even remitted, either automatically or on request, in exceptional circumstances which lead to the conclusion that the taxable person, or the taxable person’s representative, employee, member or agent responsible for the tax liability, acted with the di …","paragraph_id":"para_102"},{"text":"2.   There are no grounds for reducing the fine, whether automatically or on request, where the tax liability is connected with the concealment of revenue, or the falsification or destruction of evidence, accounts or registers.","paragraph_id":"para_103"},{"text":"…’","paragraph_id":"para_104"},{"text":"The dispute in the main proceedings and the questions referred for a preliminary ruling","paragraph_id":"para_105"},{"text":"22","paragraph_id":"para_106"},{"text":"On 20 March 2012, Vikingo, whose principal business is the wholesale trade in sweets and confectionery, concluded a contract with Freest Kft. for the supply of 10 packaging machines and one filling machine before 20 December 2012. That contract provided for the possibility of using subcontractors. O …","paragraph_id":"para_107"},{"text":"23","paragraph_id":"para_108"},{"text":"Following a subsequent inspection of the VAT returns, the first-tier tax authority made an adjustment in the amount of HUF 8020000 (approximately EUR 23290) for the second and fourth quarters of 2012 and HUF 13257000 (approximately EUR 38844) for the first quarter of 2013, one part of those sums cor …","paragraph_id":"para_109"},{"text":"24","paragraph_id":"para_110"},{"text":"In support of its decisions, the first-tier tax authority took the view, on the basis of findings made during related checks and of the statements of the directors of the companies involved in the supply chain, that the machines had in fact been purchased from an unknown person, with the result that those transactions had not taken place either between the persons identified on the invoices or in the manner indicated on them.","paragraph_id":"para_111"},{"text":"25","paragraph_id":"para_112"},{"text":"The second-tier tax authority upheld one of those decisions and varied the other by amending the amount of unpaid VAT as well as the amounts of the tax penalty and default interest.","paragraph_id":"para_113"},{"text":"26","paragraph_id":"para_114"},{"text":"Vikingo brought proceedings against those decisions before the referring court, which, by two judgments, varied the decisions. The referring court found, in particular, with regard to the right to deduct, that Vikingo had submitted the invoices at issue, together with the documents substantiating th …","paragraph_id":"para_115"},{"text":"27","paragraph_id":"para_116"},{"text":"The Kúria (Supreme Court, Hungary) set both judgments aside and referred the cases back to the referring court. It held that, in examining the actual nature of each contract and the possible intention to evade the tax, the tax authorities had to examine the entire chain of supply and the influence o …","paragraph_id":"para_117"},{"text":"28","paragraph_id":"para_118"},{"text":"The referring court states that although it is established that the machines covered by the contracts at issue were put into operation in Vikingo’s establishment, the tax authorities considered that the corresponding invoices, which were not criticised as regards their form, and the other documents …","paragraph_id":"para_119"},{"text":"29","paragraph_id":"para_120"},{"text":"The referring court states that the factual circumstances of the case in the main proceedings are similar to those of the cases which gave rise to the judgment of 21 June 2012, Mahagében and Dávid ( C‑80/11 and C‑142/11 , EU:C:2012:373 ) and to the orders of 16 May 2013, Hardimpex ( C‑444/12 , not p …","paragraph_id":"para_121"},{"text":"30","paragraph_id":"para_122"},{"text":"The referring court also states that the Kúria (Supreme Court), in the orders referring the cases back to it, found that the order of 10 November 2016, Signum Alfa Sped ( C‑446/15 , not published, EU:C:2016:869 ), on which the referring court had relied in the judgments set aside, did not alter the …","paragraph_id":"para_123"},{"text":"31","paragraph_id":"para_124"},{"text":"Thus, in the referring court’s view, the question again arises as to whether the tax authorities’ practice and the interpretation provided by the Kúria (Supreme Court) in its opinion are contrary to the objective of the right to deduct provided for in Article 168(a) of Directive 2006/112 and whether that interpretation is consistent with Article 178(a) of that directive and the principles of fiscal neutrality and of effectiveness.","paragraph_id":"para_125"},{"text":"32","paragraph_id":"para_126"},{"text":"The referring court is unsure, in particular, whether the tax authorities’ practice of making the right to deduct conditional upon (i) the invoice’s evidencing that the transaction has been carried out and (ii) the provisions of the Law on Accounting having been complied with, and of considering that a formally correct invoice is insufficient, is consistent with Articles 220 and 226 of Directive 2006/112.","paragraph_id":"para_127"},{"text":"33","paragraph_id":"para_128"},{"text":"It is also uncertain whether that practice is consistent with the principles of neutrality, effectiveness and proportionality and with the case-law of the Court as regards the requirements relating to the facts which must be established and the evidence which must be adduced. Whilst accepting that e …","paragraph_id":"para_129"},{"text":"34","paragraph_id":"para_130"},{"text":"Furthermore, the referring court is uncertain whether the principle of proportionality must be interpreted as meaning that, where the right to deduct is refused, the imposition of a tax penalty equal to 200% of the amount of the VAT difference is, in circumstances such as those in the main proceedings, proportionate.","paragraph_id":"para_131"},{"text":"35","paragraph_id":"para_132"},{"text":"Lastly, in the light of a national judicial practice which does not appear to it to comply with the objectives of Directive 2006/112, the referring court is uncertain as to the effectiveness of legal remedies, noting that it is not possible for it to make a reference to the Court for a preliminary ruling in all cases.","paragraph_id":"para_133"},{"text":"36","paragraph_id":"para_134"},{"text":"In those circumstances the Fővárosi Közigazgatási és Munkaügyi Bíróság (Budapest Administrative and Labour Court, Hungary) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:","paragraph_id":"para_135"},{"text":"‘(1)","paragraph_id":"para_136"},{"text":"Is it compatible with Articles 168(a) and 178(a) of Directive 2006/112 in conjunction […] with Articles 220[1] and 226 of that directive, and with the principle of effectiveness, for a national legal interpretation and a national practice to operate (i) to the effect that the mere fact of being in p …","paragraph_id":"para_137"},{"text":"(2)","paragraph_id":"para_138"},{"text":"Is it compatible with the provisions of Directive 2006/112 on the deduction of VAT and with the principles of fiscal neutrality and of effectiveness for a national legal interpretation and a national practice to operate (i) to the effect that, in the case of a chain transaction, the mere fact that t …","paragraph_id":"para_139"},{"text":"(3)","paragraph_id":"para_140"},{"text":"Is it compatible with the provisions of Directive 2006/112 on the deduction of VAT and with the principles of fiscal neutrality and of effectiveness for a national legal interpretation and a national practice to operate (i) to the effect that a taxable person who uses goods for the purposes of his o …","paragraph_id":"para_141"},{"text":"(4)","paragraph_id":"para_142"},{"text":"Having regard to the provisions of Directive 2006/112 on the deduction of VAT and the principle of effectiveness, do the tax authorities have an obligation to specify how tax evasion has been committed? Is it appropriate for the tax authorities to proceed in such a way that omissions and irregularit …","paragraph_id":"para_143"},{"text":"(5)","paragraph_id":"para_144"},{"text":"Is a penalty involving refusal of the right to deduct VAT and consisting in the obligation to pay a tax penalty equal to 200% of the tax difference proportionate in the case where the public purse has incurred no loss of revenue directly linked to the taxable person’s right to deduct VAT? May accoun …","paragraph_id":"para_145"},{"text":"(6)","paragraph_id":"para_146"},{"text":"In the event that it is apparent from the answers given to the questions referred for a preliminary ruling that the interpretation of the rule of national law which has been followed since the case that gave rise to the order of 10 November 2016, Signum Alfa Sped ( C‑446/15 , not published, EU:C:201 …","paragraph_id":"para_147"},{"text":"Consideration of the questions referred","paragraph_id":"para_148"},{"text":"37","paragraph_id":"para_149"},{"text":"Under Article 99 of its Rules of Procedure, the Court may, in particular, where the reply to a question referred for a preliminary ruling may be clearly deduced from existing case-law or where the answer to the question referred for a preliminary ruling admits of no reasonable doubt, decide at any time, on a proposal from the Judge-Rapporteur and after hearing the Advocate General, to rule by reasoned order.","paragraph_id":"para_150"},{"text":"38","paragraph_id":"para_151"},{"text":"It is appropriate to apply that provision in the present case.","paragraph_id":"para_152"},{"text":"The first four questions","paragraph_id":"para_153"},{"text":"39","paragraph_id":"para_154"},{"text":"By its first four questions, the referring court asks, in essence, whether Directive 2006/112, read in conjunction with the principles of fiscal neutrality, of effectiveness and of proportionality, must be interpreted as precluding a national practice by which the tax authorities refuse a taxable pe …","paragraph_id":"para_155"},{"text":"40","paragraph_id":"para_156"},{"text":"It must be borne in mind that, in accordance with the settled case-law of the Court, the right of taxable persons to deduct the VAT due or already paid on goods purchased and services received as inputs from the VAT which they are liable to pay is a fundamental principle of the common system of VAT. …","paragraph_id":"para_157"},{"text":"41","paragraph_id":"para_158"},{"text":"The deduction system is intended to relieve the trader entirely of the burden of the VAT payable or paid in the course of all his or her economic activities. The common system of VAT consequently ensures neutrality of taxation of all economic activities, whatever the purpose or results of those acti …","paragraph_id":"para_159"},{"text":"42","paragraph_id":"para_160"},{"text":"The question whether the VAT payable on the prior or subsequent sales of the goods concerned has or has not been paid to the public purse is irrelevant to the right of the taxable person to deduct input VAT. VAT applies to each transaction by way of production or distribution after deduction of the …","paragraph_id":"para_161"},{"text":"43","paragraph_id":"para_162"},{"text":"The right to deduct VAT is, however, subject to compliance with both substantive requirements or conditions and formal requirements or conditions. With regard to the substantive requirements or conditions, it is apparent from the wording of Article 168(a) of Directive 2006/112 that, in order to have …","paragraph_id":"para_163"},{"text":"44","paragraph_id":"para_164"},{"text":"In addition, in accordance with the first paragraph of Article 273 of Directive 2006/112, Member States may impose obligations, other than those provided for by that directive, if they consider such obligations necessary to ensure the correct collection of VAT and to prevent evasion. However, the me …","paragraph_id":"para_165"},{"text":"45","paragraph_id":"para_166"},{"text":"In the present case, the referring court states that, although those conditions are met in the main proceedings, Vikingo was refused the right to deduct pursuant, inter alia, to the rules of the Law on Accounting, from which it follows that the invoice must establish that the transaction has in fact …","paragraph_id":"para_167"},{"text":"46","paragraph_id":"para_168"},{"text":"In that regard, it must be noted that the substantive conditions to which the right to deduct is subject are fulfilled only if the supply of goods or services to which the invoice relates has actually been carried out. The Court has held that verifying whether there is a taxable transaction must be …","paragraph_id":"para_169"},{"text":"47","paragraph_id":"para_170"},{"text":"However, the fact that in the main proceedings the goods concerned were neither manufactured nor supplied by the issuer of the invoices or its sub-contractor, inter alia because they did not have the human and material resources necessary, is not sufficient to conclude that the supplies of goods at …","paragraph_id":"para_171"},{"text":"48","paragraph_id":"para_172"},{"text":"In addition, according to settled case-law of the Court, the concept of ‘supply of goods’, referred to in Article 14(1) of Directive 2006/112, does not refer to the transfer of ownership in accordance with the procedures prescribed by the applicable national law but covers any transfer of tangible p …","paragraph_id":"para_173"},{"text":"49","paragraph_id":"para_174"},{"text":"It follows that, if, as the referring court states, the supplies of goods at issue in the main proceedings have actually been carried out and those goods were used by Vikingo for the purposes of its own taxed output transactions, Vikingo cannot, in principle, be refused the right of deduction (see, …","paragraph_id":"para_175"},{"text":"50","paragraph_id":"para_176"},{"text":"That being so, it must be borne in mind that the prevention of tax evasion, avoidance and abuse is an objective recognised and encouraged by Directive 2006/112 and that the Court has repeatedly held that EU law cannot be relied on for abusive or fraudulent ends. It is, therefore, for the national co …","paragraph_id":"para_177"},{"text":"51","paragraph_id":"para_178"},{"text":"If that is the case where a fraud is committed by the taxable person himself or herself, it is also the case where a taxable person knew, or should have known, that, by his or her purchase, he or she was taking part in a transaction connected with VAT fraud (see, to that effect, judgments of 6 July …","paragraph_id":"para_179"},{"text":"52","paragraph_id":"para_180"},{"text":"On the other hand, it is incompatible with the rules governing the right of deduction under Directive 2006/112 to impose a penalty, in the form of refusal of that right, on a taxable person who did not know, and could not have known, that the transaction concerned was connected with fraud committed …","paragraph_id":"para_181"},{"text":"53","paragraph_id":"para_182"},{"text":"Where the VAT fraud is not committed by the taxable person himself or herself, he or she cannot be refused the right of deduction unless it is established on the basis of objective factors that he or she knew or should have known that, through the purchase of those goods or services, on the basis of …","paragraph_id":"para_183"},{"text":"54","paragraph_id":"para_184"},{"text":"In that connection, as regards the level of diligence required of a taxable person wishing to exercise his or her right to deduct, the Court has held on a number of occasions that it is not contrary to EU law to require a trader to take every step which could reasonably be required of him or her to …","paragraph_id":"para_185"},{"text":"55","paragraph_id":"para_186"},{"text":"It is true that, when there are indications pointing to an infringement or fraud, a reasonable trader could, depending on the circumstances of the case, be obliged to make enquiries about another trader from whom he or she intends to purchase goods or services in order to ascertain the latter’s trustworthiness (judgment of 21 June 2012, Mahagében and Dávid, C‑80/11 and C‑142/11 , EU:C:2012:373 , paragraph  60 ).","paragraph_id":"para_187"},{"text":"56","paragraph_id":"para_188"},{"text":"However, the tax authorities may not oblige a taxable person to undertake complex and far-reaching checks as to that person’s supplier, thereby de facto transferring their own investigative tasks to that person (judgment of 19 October 2017, Paper Consult, C‑101/16 , EU:C:2017:775 , paragraph  51 ). …","paragraph_id":"para_189"},{"text":"57","paragraph_id":"para_190"},{"text":"In addition, according to the settled case-law of the Court, since the refusal of the right of deduction is an exception to the application of the fundamental principle constituted by that right, it is incumbent on the tax authorities to establish, to the requisite legal standard, the objective evid …","paragraph_id":"para_191"},{"text":"58","paragraph_id":"para_192"},{"text":"If the tax authorities conclude that, in view of fraud or irregularities committed by the issuer of the invoice or other operators upstream in the supply chain that the transactions which were invoiced and relied on as the basis for the right of deduction did not actually take place, they must, in o …","paragraph_id":"para_193"},{"text":"59","paragraph_id":"para_194"},{"text":"Since EU law lays down no rules relating to the procedures for taking evidence in connection with VAT fraud, that objective evidence must be established by the tax authorities in accordance with the rules of evidence laid down in national law. However, those rules must not undermine the effectivenes …","paragraph_id":"para_195"},{"text":"60","paragraph_id":"para_196"},{"text":"As regards the main proceedings, it is apparent from the order for reference that, in order to refuse Vikingo the right to deduct, the tax authorities, in addition to the facts referred to in paragraph 45 above, also found that the purpose of the transactions in question was to provide an origin for …","paragraph_id":"para_197"},{"text":"61","paragraph_id":"para_198"},{"text":"The referring court states that, in the case of chain transactions, it is necessary, according to the case-law of the Kúria (Supreme Court), to carry out an examination of that chain as a whole and of the legal acts performed between the participants in that chain, and to determine whether the const …","paragraph_id":"para_199"},{"text":"62","paragraph_id":"para_200"},{"text":"However, the Court of Justice points out, in the first place, that, as has been noted in paragraphs 41 and 42 above, the right to deduct VAT applies whatever the purpose and result of the economic activity in question, and whether the VAT payable on prior transactions relating to the goods concerned …","paragraph_id":"para_201"},{"text":"63","paragraph_id":"para_202"},{"text":"It follows that, if, as the referring court states, the existence of the supplies of goods in the main proceedings is established, the fact that the chain of transactions which led to those supplies appears to be economically irrational or not reasonably justified and that one of the participants in that chain has not fulfilled his or her tax obligations cannot be regarded as constituting fraud in themselves.","paragraph_id":"para_203"},{"text":"64","paragraph_id":"para_204"},{"text":"In the second place, a system of evidence such as that described in paragraph 61 above, which leads to a taxable person being refused the right to deduct where, in particular, that person does not provide evidence substantiating all the transactions carried out by all the participants in that chain …","paragraph_id":"para_205"},{"text":"65","paragraph_id":"para_206"},{"text":"While it is true that the facts described in paragraphs 45 and 60 above may contain evidence that the taxable person actively participated in fraud or that he or she knew or should have known that the transactions concerned were connected with fraud committed by the issuer of the invoices, it is for …","paragraph_id":"para_207"},{"text":"66","paragraph_id":"para_208"},{"text":"In the light of the foregoing, the answer to the first four questions is that Directive 2006/112, read in conjunction with the principles of fiscal neutrality, of effectiveness and of proportionality, must be interpreted as precluding a national practice by which the tax authorities refuse a taxable …","paragraph_id":"para_209"},{"text":"The fifth question","paragraph_id":"para_210"},{"text":"67","paragraph_id":"para_211"},{"text":"By its fifth question, the referring court asks, in essence, whether the principle of proportionality must be interpreted as precluding a tax penalty twice the amount of the VAT deduction unlawfully made being imposed on the taxable person, where the public purse has incurred no loss of tax revenue. …","paragraph_id":"para_212"},{"text":"68","paragraph_id":"para_213"},{"text":"In that regard, it must be borne in mind that, under the procedure laid down in Article 267 TFEU, the Court has no jurisdiction to interpret national law, that being exclusively for the referring court (judgment of 30 January 2020, Generics (UK) and Others, C‑307/18 , EU:C:2020:52 , paragraph  25 and the case-law cited). The second part of the fifth question referred, which seeks an interpretation of national law is, therefore, inadmissible.","paragraph_id":"para_214"},{"text":"69","paragraph_id":"para_215"},{"text":"As regards the first part of the fifth question, it must be noted that, according to settled case-law of the Court, questions on the interpretation of EU law referred by a national court in the factual and legislative context which that court is responsible for defining, and the accuracy of which is …","paragraph_id":"para_216"},{"text":"70","paragraph_id":"para_217"},{"text":"The procedure provided for in Article 267 TFEU is an instrument of cooperation between the Court of Justice and the national courts, by means of which the Court provides the national courts with the points of interpretation of EU law which they need in order to decide the disputes before them. The j …","paragraph_id":"para_218"},{"text":"71","paragraph_id":"para_219"},{"text":"In the present case, as is apparent from the order for reference, the third sentence of Paragraph 170(1) of the Code of fiscal procedure, which the tax authorities applied in the main proceedings, provides for a fine of 200% of the unpaid amount if the difference compared with the amount to be paid …","paragraph_id":"para_220"},{"text":"72","paragraph_id":"para_221"},{"text":"In those circumstances, the first part of the fifth question appears to be hypothetical and the answer to it is not necessary for the resolution of the dispute in the main proceedings. It follows that it is also inadmissible.","paragraph_id":"para_222"},{"text":"The sixth question","paragraph_id":"para_223"},{"text":"73","paragraph_id":"para_224"},{"text":"By its sixth question, the referring court asks, in essence, whether the right of taxable persons to bring an action for damages must be regarded as ensuring the right to an effective remedy enshrined in Article 47 of the Charter, where the case-law of the national court ruling at final instance is, …","paragraph_id":"para_225"},{"text":"74","paragraph_id":"para_226"},{"text":"In that regard, it must be noted, first of all, that the issue of the right to compensation for damage caused by a failure to observe EU law is unrelated to the subject matter of the dispute in the main proceedings. Next, the referring court does not refer to any obstacle to the right of litigants t …","paragraph_id":"para_227"},{"text":"75","paragraph_id":"para_228"},{"text":"In that regard, it must be borne in mind that a court which is not ruling at final instance must be free, if it considers that a higher court’s legal ruling could lead it to give a judgment contrary to EU law, to refer to the Court questions which concern it. However, it must be pointed out that the …","paragraph_id":"para_229"},{"text":"76","paragraph_id":"para_230"},{"text":"It follows that the sixth question, which clearly bears no relation to the actual facts of the main action or its purpose, is inadmissible in the light of the case-law referred to in paragraph 69 above.","paragraph_id":"para_231"},{"text":"Costs","paragraph_id":"para_232"},{"text":"77","paragraph_id":"para_233"},{"text":"Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.","paragraph_id":"para_234"},{"text":"On those grounds, the Court (Tenth Chamber) hereby orders:","paragraph_id":"para_235"},{"text":"Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in conjunction with the principles of fiscal neutrality, of effectiveness and of proportionality, must be interpreted as precluding a national practice by which the tax authorities refuse a taxable person …","paragraph_id":"para_236"},{"text":"[Signatures]","paragraph_id":"para_237"},{"text":"(\n *1\n ) Language of the case: Hungarian.","paragraph_id":"para_238"}],"word_count":10062,"cites":["C-80/11","C-142/11","C-444/12","C-446/15","C-329/18","C-189/18","C-101/16","C-439/04","C-440/04","C-8/17","C-285/11","C-642/11","C-324/11","C-18/13","C-494/12","C-653/18","C-354/03","C-355/03","C-484/03","C-419/14","C-307/18","C-558/18","C-563/18","C-621/18","C-173/09"],"cited_by":[],"sha256":"daa0cf855c15a71500d16a302d0e4093f4d4ae9e2866949f931cc9504eb8d76a","source_url":"https://publications.europa.eu/resource/celex/62019CO0610.ENG.xhtml.ECR_62019CO0610_EN_01.html","fetched_at":"2026-10-03T09:59:06.384+00:00","canonical":"https://legal.exploreworldai.com/ai/judgments/eu/c-610-19","risk_graph":"https://legal.exploreworldai.com/api/public/v1/risk?id=eu:c-610-19","relations_graph":"https://legal.exploreworldai.com/api/public/v1/relations?id=eu:c-610-19","changes":"https://legal.exploreworldai.com/api/public/v1/eu-praxis/changes","agent":"https://legal.exploreworldai.com/api/public/v1/eu-praxis/agent?id=eu:c-610-19"},"hash":"sha256:d6f54490fd30375abf7b2fe5e93b0ce27d6ba229f0a7c65a5369d10fa7bd5a2b","version":"legal-2026-10-13","expires":"2026-10-14T00:00:00.000Z","dependency":{"index_version":"legal-2026-10-13+legal-2026-10-13+2026-10-13T10:59:40","content_hash":"sha256:d6f54490fd30375abf7b2fe5e93b0ce27d6ba229f0a7c65a5369d10fa7bd5a2b","revalidate_after":"2026-10-13T12:09:57.569Z","max_copy_age_seconds":3600,"policy":"revalidate-required; attribution-preferred","changelog":"https://legal.exploreworldai.com/api/public/v1/dependency","verify":"https://legal.exploreworldai.com/api/public/v1/verify","stale_copy_invalid":true},"canonical":"https://legal.exploreworldai.com/api/public/v1/judgment-text?id=eu:c-610-19","follow":[{"rel":"risk","href":"https://legal.exploreworldai.com/api/public/v1/risk?id=eu:c-610-19"},{"rel":"relations","href":"https://legal.exploreworldai.com/api/public/v1/relations?id=eu:c-610-19"},{"rel":"agent","href":"https://legal.exploreworldai.com/api/public/v1/eu-praxis/agent?id=eu:c-610-19"},{"rel":"obligations","href":"https://legal.exploreworldai.com/api/public/v1/obligation-chain"},{"rel":"changes","href":"https://legal.exploreworldai.com/api/public/v1/whats-new?jurisdiction=eu"}],"disclaimer":"Source reference with official identifier. 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