Information;Order — ECLI:EU:C:2023:517
Date: 2023-06-20
Language of the case: Hungarian
Court formation: Sixth Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Hungary

Summary C-426/22 – 1 
Case C-426/22 
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: 
28 June 2022 
Referring court: 
Szegedi Törvényszék (Hungary) 
Date of the decision to refer: 
16 June 2022 
Applicant: 
SOLE-MiZo Zrt. 
Defendant: 
Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága (Hungary) 
  
Subject matter of the main proceedings 
Calculation of interest on value added tax (‘VAT’) which was not refunded as a 
result of a national condition contrary to European Union law. 
Subject matter and legal basis of the request for a preliminary ruling 
Right to compensation for losses incurred through monetary erosion suffered on 
account of inflation until the actual payment of the interest due on the amount of 
VAT which was refunded late. 
Article 267 TFEU. 
Questions referred for a preliminary ruling 
1. In circumstances in which, in accordance with national law, interest on the 
amount of excess deductible VAT which could not be recovered because of 
the paid consideration condition (‘interest on the VAT’) is calculated by the 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-426/22 
 
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application of an interest rate which undisputedly covers the short-term 
money market credit interest rate and which corresponds to the central 
bank’s base rate increased by two percentage points, in relation to the VAT 
reporting period, so that that the interest runs from the day following the 
lodging of the VAT return form on which the taxable person indicated an 
excess of VAT that had to be carried forward to the following reporting 
period because of the paid consideration condition until the last day for 
lodging the next VAT return form, must European Union law, in particular 
Article 183 of Council Directive 2006/112/EC of 28 November 2006 on the 
common system of value added tax (‘the VAT Directive’); the principles of 
effectiveness and equivalence, direct effect and proportionality; and the 
judgment of the Court of Justice of 23 April 2020 in joined Cases Sole-Mizo 
and Dalmandi Mezőgazdasági (C-13/18 and C-126/18) (‘judgment in Sole-
Mizo and Dalmandi Mezőgazdasági’), be interpreted as precluding a 
practice of a Member State, such as that at issue in the present case, which 
does not permit, in addition to interest on the VAT, the payment of interest 
to compensate the taxable person for the monetary erosion of the amount in 
question caused by the passage of time following that reporting period up 
until the actual payment of that interest? 
2. If the answer to the previous question is in the affirmative, must the 
European Union law mentioned in that question and the judgment in Sole-
Mizo and Dalmandi Mezőgazdasági be interpreted as meaning that it is 
compatible with that law and that judgment for a national court to set the 
interest rate applicable to the monetary erosion by making that rate the same 
as the inflation rate? 
3. Must the European Union law mentioned in question 1 and the judgment in 
Sole-Mizo and Dalmandi Mezőgazdasági be interpreted as precluding a 
practice of a Member State which, in calculating the amount of the monetary 
erosion, also takes into account the fact that, until compliance with the paid 
consideration condition, in other words until payment of the consideration 
for the goods or the service, the taxable person concerned had at its disposal 
the consideration paid for the purchases and the applicable tax, and which 
also assesses, in addition to the inflation rate recorded during the period of 
monetary erosion, how long the taxable person had to forgo (could not 
reclaim) the VAT? 
Provisions of European Union law relied on 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax (OJ 2006 L 347, p. 1) (VAT Directive), Article 183. 
Judgment of 23 April 2020, Sole-Mizo and Dalmandi Mezőgazdasági (C-13/18 
and C-126/18, EU:C:2020:292) (judgment in Sole-Mizo and Dalmandi 
Mezőgazdasági). 
SOLE-MIZO 
 
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Principles of effectiveness, equivalence, direct effect and proportionality. 
Provisions of national law relied on 
Az adózás rendjéről szóló 2003. évi XCII. törvény (Law XCII of 2003 on General 
Tax Procedure; ‘the old Law on General Tax Procedure’), Paragraph 124/D and 
Paragraph 37. 
Az adózás rendjéről szóló 2017. évi CL. törvény (Law CL of 2017 on General Tax 
Procedure; ‘the new Law on General Tax Procedure), Paragraph 197(3) and 
Paragraph 274/G. 
Judgment of the Kúria (Supreme Court, Hungary) No Kfv.V.35 577/2021/8, 
paragraphs 54 and 56. 
Succinct presentation of the facts and procedure in the main proceedings 
1 On 30 December 2016, the applicant, relying on the order of 17 July 2014, Delphi 
Hungary Autóalkatrész Gyártó (C-654/13, not published, EU:C:2014:2127), filed 
with the tax authority claims for the calculation and payment of interest on the 
deductible VAT which had not been refunded in a reasonable period as a result of 
the application of the paid consideration condition (see the judgment of 28 July 
2011, Commission v Hungary, C-274/10, EU:C:2011:530), calculated at a rate 
equivalent to twice the Hungarian central bank’s base rate and corresponding to 
different reporting periods falling between December 2005 and June 2011, and for 
compound interest for the late payment of that interest. The defendant, by 
decisions adopted in its capacity as the second-tier authority in the administrative 
appeal proceedings commenced as a result of those claims, ordered the payment 
of interest calculated at the central bank’s base rate, in the amount of 
HUF 104 165 000 (‘interest on the VAT’) and compound interest in the amount of 
HUF 34 660 000 (‘default interest’). 
2 In the administrative appeal lodged against those decisions, the Szegedi 
Közigazgatási és Munkaügyi Bíróság (Administrative and Labour Court, Szeged, 
Hungary) (predecessor of the referring court) asked the Court of Justice to give a 
preliminary ruling. Those preliminary-ruling proceedings gave rise to the 
judgment in Sole-Mizo and Dalmandi Mezőgazdasági. 
3 In the light of that judgment, the applicant amended the forms of order sought as 
follows: 
– in the case concerning the interest on the VAT, it claimed that interest should 
be calculated on two different grounds: (1) interest on the VAT, calculated 
on the basis of the short-term money market credit interest rate, in respect of 
each reporting period in which the paid consideration condition was applied, 
and (2) interest in respect of the monetary erosion, calculated on the basis of 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-426/22 
 
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an interest rate equivalent to the inflation rate for the period between the end 
of the periods referred to above and 6 December 2011 (‘the monetary 
erosion period’); 
– in the case concerning default interest, the applicant claimed default interest 
calculated by applying a rate equivalent to twice the central bank’s base rate 
to a principal amount consisting of the interest on the VAT referred to, in 
respect of the period between 6 December 2011 and the date of payment. 
4 The referring court granted those forms of order by its judgments of 23 June 2020. 
5 In the meantime, the legislature amended the new Law on General Tax Procedure. 
First, it decided that the interest rate equivalent to the central bank’s base rate, 
which was previously applicable, would be increased by two percentage points 
and, second, by the insertion of Paragraph 274/G, it stipulated that that 
amendment would also apply to pending cases and cases concluded by final 
judgment. 
6 The Kúria (Supreme Court), ruling on the appeals in cassation lodged by the 
defendant, set aside the judgments of the referring court of 23 June 2020 in the 
proceedings relating to interest on the VAT and in the proceedings relating to 
default interest and also set aside the first and second-tier decisions given by the 
defendant in those cases. In addition, the Kúria (Supreme Court) ordered the first-
tier tax authority to conduct new proceedings in which it was required to give a 
decision, taking into consideration the new legislative provisions and the terms of 
the judgment in Sole-Mizo and Dalmandi Mezőgazdasági, on the forms of order 
which the applicant had amended in the judicial proceedings. 
7 The decision adopted by the first-tier tax authority, following the judgment of the 
Kúria (Supreme Court) referred to in paragraph 6, in the case concerning the 
default interest became final as no appeal was lodged against it. 
8 In its decision of 23 August 2021, the first-tier tax authority took into 
consideration paragraph 47 of the judgment in Sole-Mizo and Dalmandi 
Mezőgazdasági and calculated the interest on the VAT by applying a rate 
equivalent to the central bank’s base rate increased by two percentage points, in 
accordance with the provisions of the new Law on General Tax Procedure. It did 
not grant the right to receive interest to compensate for the monetary erosion 
suffered by reason of the passage of time in respect of the monetary erosion 
period. 
9 In its administrative appeal to the defendant against that decision, the applicant 
contested the first-tier decision only as regards its final part, which was confirmed 
by the defendant. 
10 The applicant has brought an administrative appeal before the referring court 
against that decision of the defendant. In the appeal, the applicant seeks, primarily, 
the amendment of the defendant’s decision so that the referring court upholds the 
SOLE-MIZO 
 
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claim that it should be granted the right to receive interest in respect of the 
monetary erosion period and, in the alternative, the annulment of the defendant’s 
decision and an order that the defendant conduct new proceedings. The applicant 
claims that the interest for the monetary erosion period should be calculated by 
applying, primarily, the central bank’s base rate increased by two percentage 
points; or, in the alternative, by applying twice the central bank’s base rate; or, in 
the further alternative, by applying a rate equivalent to the inflation rate. 
Essential arguments of the parties in the main proceedings 
11 It is common ground between the parties that the tax authority was in default from 
6 December 2011 as regards the interest on the VAT. 
12 The defendant submits that the interest on the VAT, calculated by applying the 
central bank’s base rate increased by two percentage points, is compatible with the 
judgment in Sole-Mizo and Dalmandi Mezőgazdasági and is sufficient by itself to 
compensate for the monetary erosion. 
13 Moreover, EU law and the judgment cited grant the legislature of each Member 
State the power to determine the rate and method of calculating interest, provided 
that they observe the principles of equivalence, effectiveness and fiscal neutrality. 
14 The defendant further contends that, given that the due date for payment of the 
interest on the VAT was 6 December 2011, the claim for compensation for the 
monetary erosion in relation to the reporting periods before that date is unfounded. 
In that connection, the defendant argues that traders do not pay interest in respect 
of monetary erosion on top of market credit interest either, since that type of 
interest also compensates for inflation. 
15 The applicant submits that the interest on the VAT cannot, by definition, cover 
the loss caused by the passage of time (monetary erosion) because the interest on 
the VAT and the compensation that must be paid in respect of the monetary 
erosion period relate to different periods of time, on the one hand, and are 
calculated on the basis of different principal amounts, on the other. 
16 The applicant contends that the principles of fiscal neutrality, effectiveness and 
equivalence require compensation covering the monetary erosion period in 
addition to the payment of interest on the VAT. The judgment in Sole-Mizo and 
Dalmandi Mezőgazdasági sets out that obligation specifically and expressly. In 
view of the fact that the interest rate equivalent to the central bank’s base rate 
increased by two percentage points is not higher than the market rate but rather 
exactly the same as that rate, that interest is not sufficient to fulfil that 
requirement. 
17 Furthermore, the judgment cited clearly stipulates that the interest on the VAT and 
compensation for the corresponding monetary erosion run from the date of the 
original VAT returns. Compensation for the monetary erosion does not amount to 
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a penalty for the tax authority’s arrears and, for that reason, it is irrelevant that that 
authority only fell into arrears on 6 December 2011. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
18 The referring court is uncertain, first, whether the tax authority’s interpretation of 
the provision – to the effect that, since that authority only fell into arrears on 
6 December 2011 and payment of interest on the VAT only became due on that 
date, no compensation is payable in respect of the monetary erosion period in so 
far as it concerns the monetary erosion of the amount concerned caused by the 
passage of time – is compatible with the correct interpretation of EU law laid 
down in the judgment in Sole-Mizo and Dalmandi Mezőgazdasági and with the 
settled case-law of the Court of Justice according to which its judgments take 
effect ex tunc. 
19 The fact that the tax authority only fell into arrears on 6 December 2011 does not 
mean that interest on the VAT was also incurred from that time. The requirement 
to pay interest as a result of the paid consideration condition, laid down in 
contravention of EU law, is derived from the relevant provisions of the VAT 
Directive and from the general principles of the VAT system. 
20 The requirement to pay interest in respect of the period prior to 6 December 2011 
is not founded on the tax authority’s default but on the objective fact of the late 
refund of the unlawfully retained VAT and on the late payment of interest on the 
VAT intended to compensate for the loss incurred as a result of that retention. 
Therefore, in the referring court’s view, the defendant’s claim to the effect that the 
requirement to pay interest in respect of the monetary erosion period is excluded 
because the payment of interest on the VAT had not fallen due is incorrect. 
21 In addition, the method of calculating the interest on the VAT and the fact that the 
period used as a reference for the purposes of that calculation and the monetary 
erosion period may be different mean that the referring court is uncertain whether 
the interest on the VAT is by itself capable of compensating for that erosion. 
22 By its second question, the referring court asks for clarification of whether it is 
appropriate to use an interest rate equivalent to the inflation rate to compensate for 
the monetary erosion. 
23 In the referring court’s view, in the light of the primacy of EU law, it is not 
possible to uphold the defendant’s claim to the effect that the tax authority cannot 
refrain from applying the Hungarian legislation and cannot apply an interest rate 
different from the rate provided for in that legislation. In addition, a provision of 
Hungarian legislation setting the interest rate applicable in respect of the monetary 
erosion period does not yet exist and, therefore, that interest rate may be derived 
from EU law alone. 
SOLE-MIZO 
 
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24 Paragraph 49 of the judgment in Sole-Mizo and Dalmandi Mezőgazdasági 
stipulates that interest must be paid which enables the taxable person to be 
compensated for the monetary erosion of the amount in question caused by the 
passage of time following the reporting period up until the actual payment of that 
interest. 
25 The third question submitted by the referring court seeks to ascertain whether, in 
accordance with the decision of principle of the Kúria (Supreme Court) on the 
subject, when calculating the monetary erosion, account must also be taken of the 
fact that, until compliance with the paid consideration condition, in other words 
until payment of the consideration for the goods or the service, the taxable person 
concerned had at its disposal the consideration for the purchases and the 
applicable tax, and whether, in addition to the inflation rate recorded during the 
monetary erosion period, it is also necessary to assess how long the taxable person 
was unable to claim a VAT refund, contrary to EU law.