Judgment;Summary — ECLI:EU:C:2023:83
Date: 2023-02-09
Language of the case: Hungarian
Court formation: Eighth Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Hungary

Summary C-482/21 – 1 
Case C-482/21 
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: 
5 August 2021 
Referring court: 
Fővárosi Törvényszék (Budapest High Court, Hungary) 
Date of the decision to refer: 
29 June 2021 
Applicant: 
Euler Hermes SA Magyarországi Fióktelepe 
Defendant: 
Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága (Appeals 
Directorate of the National Tax and Customs Authority, Hungary) 
  
Subject matter of the main proceedings 
Action for amendment or annulment of an administrative decision refusing to 
grant an application for reduction of the taxable amount for value added tax 
(‘VAT’) on transactions underlying debts assigned to an insurer which have 
become irrecoverable. 
Subject matter and legal basis of the request for a preliminary ruling 
Whether the reduction of the taxable amount for VAT on irrecoverable debts can 
be relied on by the assignee of a debt (Directive 2006/112, Article 90). 
Article 267 TFEU. 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-482/21  
 
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Questions referred for a preliminary ruling 
Do the principles of proportionality, fiscal neutrality and effectiveness –having 
regard, in particular, to the fact that a Member State may not charge an amount of 
VAT exceeding that actually received by the supplier of goods or services in 
respect of that supply of goods or services – and the exemption laid down in 
Article 135(1)(a) of the VAT Directive – particularly as regards the requirement 
that that activity is to be treated as a single exempt transaction, by reference to the 
principles laid down in points 35, 37 and 53 of the Advocate General’s Opinion in 
Case C-242/08, Swiss Re – and the obligation to guarantee the free movement of 
capital and services in the internal market preclude a practice of a Member State 
pursuant to which the reduction applicable to the taxable amount in the event of 
definitive non-payment, as provided for in Article 90(1) of the VAT Directive, is 
not applicable where an insurer, in the course of its commercial credit insurance 
business, paid an indemnity to the insured person in respect of the taxable amount 
and also in respect of the VAT due when the risk materialised (non-payment by 
the insured’s client), meaning that, under the insurance contract, the debt, together 
with all associated rights of enforcement, was assigned to the insurer, in the 
following circumstances: 
(i) at the time when the debts in question became irrecoverable, national law 
did not allow any reduction of the taxable amount in respect of an 
irrecoverable debt; 
(ii) since the incompatibility of that prohibition with Union law was made clear, 
national positive law has consistently excluded outright the refund of VAT 
on an irrecoverable debt to the original supplier of the goods or services (the 
insured person) on the grounds that the insurer has reimbursed that amount 
of VAT to the supplier; and 
(iii) the insurer is able to show that its claim against the debtor has become 
definitively irrecoverable? 
Provisions of European Union law relied on 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax, Articles 73, 90 and 135. 
Provisions of national law relied on 
Az adózás rendjéről szóló 2017. évi CL. törvény (Law CL of 2017 on General 
Taxation Procedure; ‘the Law on General Taxation Procedure’), Article 196. 
Az általános forgalmiadóról szóló 2007. évi CXXVII. törvény (Law CXXVII of 
2007 on value added tax), Articles 5, 55, 56 and 77. 
EULER HERMES 
 
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Az adóigazgatási rendtartásról szóló 2017. évi CLI. törvény (Law CLI of 2017 
Regulating the Tax Authority), Article 12. 
Succinct presentation of the facts and procedure in the main proceedings 
1 Euler Hermes SA Magyarországi Fióktelepe (‘the applicant’) is an insurance 
company which, in the course of its business, assumes the obligation to pay 
insured persons an indemnity in respect of a specified debt in the event of non-
payment by the insured’s client. The amount of the indemnity is generally set at 
90% of the value of the unpaid debt plus VAT. Under the contract, payment of the 
indemnity results in the transfer to the applicant of the portion of the debt 
corresponding to the value of the insurance and all rights originally attributed to 
the insured. However, the applicant bears the effective burden of the VAT which 
insured persons have unsuccessfully passed on to their clients. 
2 Relying on the order of the Court of Justice of 24 October 2019 in Porr Építési 
Kft. (C-292/19, EU:C:2019:901), the applicant submitted to the tax authority on 
31 December 2019 an application for a refund of the VAT included in the 
amounts paid in respect of insurance with effect from 1 January 2014, accounted 
for in the invoices issued with an enforcement date later than 1 December 2013, 
for a total amount of HUF 225 855 154 and EUR 128 240.44, plus the applicable 
interest. 
3 The applicant based its application on the fact that, in connection with the 
insurance product in question, it had paid the insurance, also including VAT, in 
respect of debts which had become definitively irrecoverable. For that reason, it 
claimed a reduction a posteriori of the taxable amount. 
4 On 29 January 2020, the Nemzeti Adó- és Vámhivatal Észak-budapesti Adó- és 
Vámigazgatósága (Budapest North Tax and Customs Directorate of the National 
Tax and Customs Authority, Hungary) (first-tier tax authority) rejected that 
application. It based its decision on the fact that the transactions which gave rise 
to the irrecoverable debts had not been carried out by the applicant. 
5 The applicant appealed against that first-tier decision, following which the 
Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága (Appeals Directorate of 
the National Tax and Customs Authority, Hungary; ‘the defendant’) upheld the 
first-tier decision on 15 April 2020. It based its decision on the fact that, from a 
tax law perspective, the applicant was not the insured persons’ successor under the 
insurance contracts. Accordingly, one the of the substantive conditions for a 
refund of the tax had not been met. 
6 The applicant lodged an administrative appeal before the referring court, seeking, 
principally, the amendment of the defendant’s decision and, in the alternative, the 
annulment of that decision and an order that the defendant conduct a new 
procedure. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-482/21  
 
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The essential arguments of the parties in the main proceedings 
7 The applicant submits that the tax authority infringed EU law by refusing it the 
right to a refund of VAT on an irrecoverable debt arising as a result of contracts 
that it concluded with the insured persons. As the successor of those insured 
persons, the applicant was entitled to claim a VAT refund since, pursuant to the 
insurance contract, it became the clients’ successor under civil law. Taking into 
account the principle of fiscal neutrality, it is also entitled to a VAT refund 
pursuant to EU law. The artificial separation of the elements of the insurance 
relationship, which leads to different treatment for tax purposes, infringes 
provisions of EU law and the case-law of the Court of Justice. The amount of 
VAT constitutes a real disadvantage for the applicant, distorts competition and 
also creates prohibited discrimination. 
8 In the defendant’s submission, it follows from a reading of EU law in conjunction 
with national law that a taxable person whose claim against his debtor has become 
definitively irrecoverable is entitled to a reduction of the taxable amount in respect 
of irrecoverable debts. In theory, this means that the applicant for a reduction of 
the taxable amount must be a taxable person who was previously subject to 
declaration and fiscal obligations in relation to the supplies of goods and services 
which it carried out and which gave rise to the irrecoverable debts. That condition 
is not satisfied in this case. 
9 The defendant contends that the applicant was not indirectly required to pay the 
tax either, since it was able to set the insurance premium at an amount 
proportional to the magnitude of the risk assumed. Therefore, a reduction of the 
taxable amount could, as the case may be, lead to unjust enrichment of the 
applicant. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
10 According to the referring court, the essential issue in the main proceedings is the 
compatibility with EU law and with the general EU law principles of 
proportionality, fiscal neutrality and effectiveness of national legislation and an 
administrative practice of the national tax authorities which, in the event of 
assignment of an irrecoverable debt, do not allow a refund of the VAT applicable 
to that debt to either the person who originally carried out the taxable transaction 
or to the assignee of the debt. 
11 In that respect, the referring court states, first, that, in accordance with 
Article 196(3)(a) of the Law on General Taxation Procedure, the insured person 
does not have the right to a refund of 90% of the amount of VAT unsuccessfully 
passed on by him, as a result of total or partial non-payment, because the insured 
person transferred that right to the applicant under the insurance contract. At the 
same time, the defendant refuses to refund the tax to the applicant, claiming that a 
substantive requirement has not been met, namely that the applicant did not carry 
out the transactions concerned and did not bear the corresponding tax obligations. 
EULER HERMES 
 
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12 The referring court considers that it is not possible to adjudicate on the main 
proceedings without the Court of Justice providing the necessary interpretation in 
preliminary ruling proceedings on the questions set out above.