Abstract;Judgment — ECLI:EU:C:2024:6
Date: 2024-01-11
Language of the case: Hungarian
Court formation: First Chamber
Subject matter: Taxation;Value added tax;Fundamental rights;Charter of Fundamental Rights
Procedure: Reference for a preliminary ruling
Origin: Hungary

Summary C-537/22 – 1 
Case C-537/22  
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
11 August 2022 
Referring court: 
Fővárosi Törvényszék (Hungary) 
Date of the decision to refer: 
31 May 2022 
Applicant: 
Global Ink Trade Kft. 
Defendant: 
Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága (Appeals 
Division of the National Tax and Customs Administration, 
Hungary) 
  
Principle of the primacy of EU law – Effective judicial protection – Tax evasion – 
VAT Directive – Principle of fiscal neutrality – Scope of the taxable person’s 
general obligation to exercise scrutiny – Due diligence – Objective evidence 
Subject matter of the main proceedings 
Action for judicial review brought against a decision of the national tax authority 
refusing the right to deduct VAT on the basis that that authority required, in 
connection with invoices, evidence additional to that stipulated by EU law and, in 
the absence of such evidence, classified the transactions concerned as fictitious. 
Questions referred for a preliminary ruling 
1) Does the fact that a court in a Member State, adjudicating at last 
instance, interprets a decision of the Court of Justice (adopted in the form of 
an order in response to a request for a preliminary ruling specifically 
concerned with the case-law developed by the self-same court adjudicating at 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-537/22 
 
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last instance) as meaning that there is nothing in that decision which has or is 
likely to have the effect of overturning earlier decisions of the Court of 
Justice or bringing about a change in the previous national case-law 
developed by the court adjudicating at last instance, constitute an 
infringement of the principle of the primacy of EU law and of the right to 
effective judicial protection guaranteed in Article 47 of the Charter of 
Fundamental Rights of the European Union (‘the Charter’)? 
2) Must the principle of the primacy of EU law and the right to effective 
judicial protection guaranteed in Article 47 of the Charter be interpreted as 
meaning that the principle of the primacy of decisions of the Court of Justice 
applies even in the case where a court in a Member State, adjudicating at last 
instance, also relies on [the] earlier judgments [of the Court of Justice] as 
precedent? Is a different answer conceivable, in the light of Article 99 of the 
Rules of Procedures of the Court of Justice, where the decision of the Court 
of Justice takes the form of an order? 
3) Within the framework of the taxable person’s general obligation to 
exercise scrutiny, irrespective of the performance and nature of the economic 
transaction shown on the invoices concerned, and regard being had to 
Articles 167, 168(a) and 178(a) of Council Directive 2006/112/EC of 
28 November 2006 on the common system of value added tax (‘the VAT 
Directive’) and to the principles of legal certainty and fiscal neutrality, may 
the taxable person be required, as a condition of benefiting from the right to 
deduct VAT ― and notwithstanding the absence of a legislative provision to 
this effect in the Member State concerned ―, to maintain contact in person 
with the issuer of the invoice or to contact his supplier only at the officially 
communicated e-mail address? May these circumstances be regarded as 
revealing a failure, demonstrated by objective facts, to exercise the due 
diligence to be expected of the taxable person, account being taken of the fact 
that those circumstances did not yet exist at the time when the taxable person 
carried out the relevant checks before entering into the business relationship 
in question, but are features of the existing business relationship between the 
parties? 
4) Are a legal interpretation and a practice developed in a Member State, 
whereby a taxable person who has an invoice in conformity with the VAT 
Directive is refused the benefit of the right to deduct VAT on the ground that 
he has not acted with due diligence in the course of trade because he has 
failed to demonstrate conduct such as to support the determination that his 
activity was not simply confined to the mere receipt of invoices meeting the 
formal requirements laid down, consistent with the aforementioned articles 
of the VAT Directive, with the principle of fiscal neutrality and, above all, 
with the case-law of the Court of Justice ― which, when interpreting those 
provisions, places the burden of proof on the tax authority ―, even in the 
case where the taxable person has enclosed all documentation relating to the 
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transactions at issue and the tax authority has rejected other offers to furnish 
evidence made by the taxable person during the tax proceedings? 
5) In the light of the aforementioned articles of the VAT Directive and the 
fundamental principle of legal certainty, may the finding, reached in 
connection with due diligence, that the issuer of the invoice was not engaged 
in any economic activity at all, constitute an objective fact, in the case where 
the tax authority takes the view that there has been a failure to demonstrate 
the actual performance (and, therefore, the genuine existence) of an economic 
transaction ― as documented by means of invoices, contracts and other 
supporting accounting documentation, and by correspondence, and as 
confirmed by the statements of the warehousing undertaking and the taxable 
person’s director and employee ―, and bases that view exclusively on the 
statement of the supplier undertaking’s director denying the existence of that 
transaction, without taking into account the circumstances in which that 
statement was made, the interests of the person making the statement or the 
fact that, according to the documents in the case file, that undertaking had 
been founded by the very person making the statement and, according to the 
information available, an agent was acting on its behalf? 
6) Must the provisions of the VAT Directive relating to the deduction of 
VAT be interpreted as meaning that, in the case where the tax authority 
discovers during the tax proceedings that the goods mentioned on the 
invoices concerned are of Community origin and that the taxable person is 
the second member of a chain [of supplies], the configuration of that scenario 
― given that goods of Community origin are exempt from VAT and the first 
Hungarian purchaser is not therefore entitled to deduct VAT, only the 
second member of that chain being so entitled ― is an objective fact 
sufficient in itself to demonstrate tax evasion, or must the tax authority, in 
that case, also show, on the basis of objective facts, which member or 
members of that chain committed tax evasion, by what modus operandi it or 
they did so, and whether the taxable person was or could have been aware of 
this through the exercise of due diligence? 
Provisions of European Union law relied on 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax 
Charter of Fundamental Rights of the European Union: Article 47 
Provisions of national law relied on 
A közigazgatási hatósági eljárás és szolgáltatás általános szabályairól szóló 2004. 
évi CXL. törvény (Law CXL of 2004 laying down general provisions on 
administrative procedures and services): Articles 2(3), 6(2) and 50(1) 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-537/22 
 
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Az adózás rendjéről szóló 2017. évi CL. törvény (Law CL of 2017 on General 
Taxation Procedure): Articles 86(1) and 97(6) 
Az általános forgalmi adóról szóló 2007. évi CXXVII. törvény (Law CXXVII of 
2007 on value added tax; ‘the Law on VAT’): Articles 119(1), 120(a) and 
127(1)(a) 
Succinct presentation of the facts and procedure in the main proceedings 
1 The main business of the applicant, Global Ink Trade Kft., is as a wholesale trade 
intermediary. During the period from July 2012 to June 2013, which forms the 
subject of the main proceedings, the applicant purchased mainly office supplies 
and ink cartridges. Its main supplier was Office Builder Kft., from which it 
received 68 invoices during that period. 
2 The tax authority determined that Office Builder Kft. was not engaged in any 
economic activity, did not have a principal place of business or any branches, did 
not have the material and personal attributes necessary to carry on an economic 
activity, had not engaged any employees and had not discharged its tax 
obligations. The company director, who was questioned in a penal establishment, 
stated that he did not perform any role in that company, which did not conclude 
contracts or issue invoices. As a result, the tax authority determined that the 
financial transactions reflected on the invoices sent to the applicant had not in fact 
taken place between the parties and that Office Builder Kft. operated exclusively 
as an intermediate undertaking. 
3 The tax authority questioned the applicant’s director, who explained, with respect 
to the scrutiny of suppliers, that, in the case of potential business partners (and 
Office Builder Kft., too, therefore), administrative checks (including on the data 
contained in the commercial register) and material checks (whether any orders 
have actually been placed) were carried out, and that, on the basis of those checks, 
he would decide whether a contract was to be concluded. The applicant’s director 
and the director of Office Builder Kft. concluded the contract in person but 
maintained day-to-day contact by e-mail and did not meet face to face. 
4 In its assessment of the evidence obtained, the tax authority noted that the 
statements made by the directors of the two undertakings were contradictory from 
the point of view of their content and, on the basis of those contradictions, 
considered it proved beyond any doubt that the transactions reflected on the 
invoices had not taken place as certified by those invoices with respect to their 
form and substance.  
5 According to the tax authority’s conclusions, the issuer of the invoice was not 
engaged in any genuine economic activity but merely issued invoices the content 
of which was unreliable, its function, as an intermediate undertaking, therefore 
being confined to creating for the benefit of the applicant input tax on goods 
purchased within the European Union, with a view to enabling the applicant to 
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effect the improper recovery of VAT on ostensibly national transactions. The tax 
authority did not consider the invoices received by the applicant to be reliable, 
because the company which had issued them did not recognise them and even 
expressly denied having issued them, and for that reason refused to grant the 
applicant the right to deduct the VAT in question. 
6 The first-tier tax authority declared there to be a tax difference payable by the 
applicant in the amount of HUF 348 876 000 by way of VAT for the period from 
July 2012 to June 2013, of which HUF 348 773 000 was considered to constitute a 
‘tax shortfall’. The tax authority imposed a fine for that shortfall and applied a 
late-payment surcharge. 
7 The second-tier tax authority declared that the applicant had not demonstrated any 
conduct such as to show that its activity was not simply confined to the mere 
receipt of invoices meeting the formal requirements laid down, which is to say 
that it concluded that the applicant had not acted with due diligence in the course 
of trade. For that reason, the second-tier tax authority upheld the decision given by 
the first-tier authority. 
8 The applicant brought an action for judicial review against that decision before the 
Fővárosi Törvényszék (Budapest High Court). 
The essential arguments of the parties in the main proceedings 
9 The applicant submits that the tax authority has failed to furnish irrefutable 
evidence that its invoices are unreliable, inasmuch as that authority based its 
decisions on irrelevant facts, unilaterally assessed the available evidence to the 
applicant’s detriment and rejected the applicant’s offers to submit evidence, with 
the result that its conclusions are founded on supposition and the established facts 
are incomplete. 
10 The applicant also challenges the assertion that the purpose of the supplier’s 
intermediation was to disguise the provenance of goods of unverified origin 
purchased in the European Union and to facilitate the exercise of the right to 
deduct VAT by passing them off as national purchases. 
11 The applicant further contests the veracity of the statement made by the supplier’s 
director and criticises the fact that the defendant based its decision solely on that 
statement while at the same time rejecting the applicant’s offers to furnish 
evidence in rebuttal of that statement, even though it should have dispelled the 
contradictions in question by taking into account other evidence. 
12 The applicant also submits that the defendant has not explained why or shown 
how the applicant failed to act with due diligence or on what grounds it was 
alleged to have knowingly participated in tax evasion. 
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13 The defendant argues that its decision is lawful in the light of the case-law of the 
Court of Justice and the Kúria (Supreme Court, Hungary). In reference to the 
case-law of the Court of Justice, it submits that taxable persons must take such 
reasonable measures as may be expected of them in order to prevent tax evasion, 
and that such measures may consist in particular in collecting information on the 
identity of the supplier, a step which the applicant clearly failed to take. As 
regards the case-law of the Kúria, it notes that this case constitutes passive tax 
evasion and that it has been shown to be an objective fact that, owing to the lack 
of information on the supplier and the non-existence of any personal contact, the 
applicant failed to act with due diligence in the course of trade. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
14 The referring court states that the interpretation of the provisions of the VAT 
Directive has been the subject of numerous decisions of the Court of Justice, the 
most recent of these in Hungarian cases being the orders in Vikingo Fővállalkozó 
(C-610/19, EU:C:2020:673) and Crewprint (C-611/19, not published, 
EU:C:2020:674). It also points out that it has stayed the proceedings that were 
being conducted in the main action pending the conclusion of this reference for a 
preliminary ruling, given in particular that the disputes in all of the 
aforementioned cases were concerned with designating the party carrying the 
burden of proof and determining the relevant and objective facts justifying the 
refusal to refund VAT. 
15 As the aforementioned orders confirm, it is for national courts to establish whether 
the objective evidence relied on by the tax authority satisfies the requirements of 
EU law. Nonetheless, the judicial decisions given since those orders of the Court 
of Justice support the inference that there continue to be differences of opinion 
between national courts, in connection with the allocation of the burden of proof 
as between the taxable person and the tax authority, as regards not only the 
interpretation and application of EU law but also the interpretation of the orders 
made by the Court of Justice in the aforementioned cases. In particular, 
notwithstanding the decisions of the Court of Justice, the correct application of the 
provisions of the VAT Directive is not so obvious to the various Hungarian courts 
and their chambers as to leave no room for reasonable doubt. 
16 In its judgment in Crewprint, the Kúria’s position in principle continues to be that 
it must be examined first and foremost whether ‘genuine economic transactions 
took place between the parties, and not whether […] the applicant has an invoice’. 
In the view of the referring court, however, Article 178(a) of the VAT Directive, 
applicable pursuant to the principle of the primacy of EU law, is to be interpreted 
as meaning that an invoice which meets the requirements laid down in that 
directive is a suitable means of evidencing the deductibility of VAT. 
17 Account being taken of the fundamental principles of accounting, including the 
true and fair view principle, and in the light of the presumption of good faith, it is 
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lawfully presumed that the invoice is authentic and that the taxable person whose 
right to deduct is based on that invoice is acting in good faith. That lawful 
presumption must be rebutted by the party opposing it, which, in tax matters, is 
the tax authority. 
18 The referring court considers that the reason for those different interpretations is 
that, while the Kúria bases its interpretation on Article 127(1)(a) of the Law on 
VAT, the referring court does so on Article 178(a) of the VAT Directive, which 
prescribes compliance with a number of formal and material requirements 
attached to invoices, with the result that the aforementioned presumption applies 
only to invoices which meet those requirements. Those requirements ensure that 
the invoice can be regarded as evidence of performance of the transaction [shown 
on it] and can be used as the basis for deducting VAT without the need for any 
other supporting documentation. 
19 On the basis of all of the foregoing, the referring court considers it necessary for 
the Court of Justice to provide some guidance so as to ensure that a taxable person 
who did not know and could not have known that a transaction prior to the 
transaction which he performed in the chain of supplies was irregular from the 
point of view of VAT cannot be penalised by having his right to deduct VAT 
denied. 
20 By the first and second questions it has referred for a preliminary ruling, the 
referring court, relying on the principle of the primacy of EU law, ask how to 
resolve the contradiction between two decisions having the character of precedent. 
Although the judgments of the Court of Justice are binding on all the Member 
States of the European Union, the Hungarian courts have an obligation to take into 
account the reasoning set out in the judgments of the Kúria. In particular, the 
referring court asks whether it is permissible not to take into account a judgment 
of the Kúria given in a case which also gave rise to a preliminary ruling, or, 
conversely, whether what is decisive is the Kúria’s assertion that, since the orders 
cited contain nothing new by comparison with the rulings of the Court of Justice 
in previous decisions, the fact of not taking into account the content of those 
orders is not contrary to EU law, which is to say that it is permissible not to take 
that content into account. 
21 The other four questions raised by the referring court seek an interpretation of 
Articles 167, 168(a) and 178(a) of the VAT Directive from the point of view of 
the principles of fiscal neutrality and effectiveness. 
22 According to paragraph 45 of the judgment in Mahagében and Dávid (C-80/11 
and C-142/11, EU:C:2012:373), the right to deduct tax can be denied only if the 
tax authority establishes, on the basis of objective factors, that the taxable person 
knew or ought to have known that that transaction was connected with fraud 
previously committed by the supplier or another trader. 
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23 However, the way in which the tax authority and the Kúria interpret and apply the 
law has not changed even since the orders in Vikingo Fővállalkozó and Crewprint: 
they still seek to refuse the benefit of the right to deduct VAT on the basis of the 
fictitious nature of the economic activity and the invoices concerned, and in turn 
to base such fictitiousness on circumstances which they describe as objective but 
which the Court of Justice does not recognise as objective circumstances that 
adequately demonstrate in law that the taxable person was or should have been 
aware of that irregularity. 
24 Finally, the referring court, relying on paragraph 27 of the order in Hardimpex 
(C-444/12, not published, EU:C:2013:318), asks whether the requirement laid 
down by the tax authority to the effect that it recognises the economic transaction 
between the taxable person and the issuer of the invoice (notwithstanding that it is 
undisputed that that transaction has taken place) as a genuine economic 
transaction justifying the deduction of VAT, and, consequently, grants the right to 
deduct VAT, only if the communication and contacts which the taxable person 
maintains with his supplier take place in the manner (personally or by e-mail) 
required by the tax authority and the supplier meets the personal and material 
requirements for purchasing goods under the supply contract in the manner 
prescribed by that authority, may not be regarded as an indirect extension of the 
general obligation to exercise scrutiny incumbent on a taxable person who wishes 
to exercise his right to deduct tax and a reversal of the burden of proof by 
comparison with that established by the Court of Justice (and, therefore, an 
infringement of the principle of legal certainty).