Information;Order — ECLI:EU:C:2019:901
Date: 2019-10-24
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-292/19 — 1 
Case C-292/19 
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: 
10 April 2019 
Referring court: 
Fővárosi Közigazgatási és Munkaügyi Bíróság (Administrative and 
Labour Court, Budapest, Hungary) 
Date of the decision to refer: 
26 February 2019 
Applicant: 
PORR Építési Kft. 
Defendant: 
Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága (Appeals 
Division of the National Tax and Customs Authority) 
  
Subject matter of the main proceedings 
Action brought against a decision rejecting a request for reduction of the taxable 
amount for value added tax (VAT). 
Subject matter and legal basis of the request for a preliminary ruling 
Interpretation of Article 90 of Directive 2006/112 on the common system of value 
added tax (‘the VAT Directive’), in particular, whether it is possible to reduce a 
posteriori the taxable amount as a result of the debtor’s non-payment or the sum 
due having become unrecoverable. 
Legal basis: Article 267 TFEU 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-292/19 
 
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Questions referred 
1. Should Article 90(1) and (2) of the VAT Directive be interpreted as meaning 
that Member States must allow the reduction of the VAT taxable amount 
where it can be demonstrated definitively that the taxable person has not 
received all or part of the consideration in respect of the transaction entered 
into by that person? 
2. Should the case-law of the Court of Justice of the European Union be 
interpreted, taking into account, in particular, the judgments in Almos, 
(C-337/13), paragraph 23, Di Maura, (C-246/16), paragraphs 20 to 29, and, 
by analogy, T-2, (C-396/16), paragraphs 31 to 45, as meaning that, as 
regards the obligation of the Member States, laid down in Article 90(1) of 
the VAT Directive, to reduce a posteriori the taxable amount, a distinction 
must be made between total or partial non-payment of the consideration by 
the purchaser and the situation in which the sum due to the seller has 
become definitively unrecoverable, so that, in the first situation, the Member 
State may make use of the exception provided for in Article 90(2), whereas 
in the second situation use of that exception is precluded and the Member 
State must, in any event, permit the taxable amount to be reduced a 
posteriori? 
Provisions of EU law relied on 
Article 90 of Council Directive 2006/112/EC of 28 November 2006 on the 
common system of value added tax (OJ 2006 L 347, p.1, corrigenda in OJ 2007 
L 335, p. 60, and in OJ 2015 L 323, p. 31). 
Judgment of 3 July 1997, Goldsmiths (C-330/95, EU:C:1997:339). 
Judgment of 15 May 2014, Almos Agrárkülkereskedelmi (C-337/13, 
EU:C:2014:328). 
Judgment of 23 November 2017, Di Maura (C-246/16, EU:C:2017:887). 
Judgment of 22 February 2018, T-2 (C-396/16, EU:C:2018:109). 
Provisions of national legislation relied on 
Paragraph 77 of the az általános forgalmi adóról szóló 2007. évi CXXVII. törvény 
(Law CXXVII of 2007 on value added tax) (‘the VAT Law’). 
Article 195 of the az adózás rendjéről szóló 2017. évi CL. törvény (Law CL of 
2017 on General Taxation Procedure). 
PORR ÉPÍTÉSI KFT. 
 
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Brief summary of the facts and the main proceedings 
1 In 2007 the applicant’s legal predecessor concluded a general works contract with 
the debtor for the construction of a hotel. Under that contract, it issued sixteen 
invoices for a total amount of HUF 440 152 889, which included the amount of 
HUF 88 030 578 in respect of VAT. The applicant’s legal predecessor accounted 
for the latter amount to the tax authority. The debtor did not pay the invoices, and, 
therefore, the applicant requested the winding up of the debtor, which led to the 
removal, in 2017, of the debtor’s registration in the Companies Register. The sum 
claimed by the applicant in the winding up proceedings was not met. In order to 
claim repayment of the VAT that had been accounted for in the amount of 
HUF 88 031 000, in 2018 the applicant submitted an amended tax return which 
was rejected by the first-instance tax authority and then, at second instance, by the 
defendant. The applicant brought an action against that decision before the 
referring court. 
Principal submissions of the parties to the main proceedings 
2 First, in the opinion of the applicant, Article 77 of the VAT law is contrary to 
Article 90 of the VAT Directive. That is clear from the judgment of 23 November 
2017, Di Maura (C-246/16), according to which the legal systems of the Member 
States must ensure that companies are able to recover, by means of a reduction of 
the taxable amount, the VAT included in an invoice payment of which by the 
purchaser has been declared, when the sum due has become definitively 
unrecoverable. However, the VAT Law entirely and absolutely excludes the 
possibility of reducing the taxable amount, including in the event of definitive 
non-payment. The applicant submits that the exception provided for in 
Article 90(2) of the VAT Directive cannot cover a situation in which it is certain 
that the purchaser is unable or unwilling to pay, as is the situation in the present 
case where the purchaser has been wound up. In that case, as regards the 
consideration, there is no longer any uncertainty that would allow Member States 
to derogate from the fundamental principle that the taxable amount is constituted 
by the consideration that is actually paid. 
3 Secondly, the applicant — contrary to the reasoning of the first-instance tax 
authority ― considers that, in the event that the national legislation is contrary to 
EU law, the administrative authorities must act and the courts do not have sole 
competence to examine that question. That point has been confirmed by the Court 
of Justice in several cases. 
4 In the opinion of the defendant, Article 77 of the VAT Law is not contrary to the 
provisions of the VAT Directive. In that regard, it referred to a judgment of the 
Kúria (Supreme Court, Hungary) in 2014 in which that court, referring, inter alia, 
to a previous decision of the Alkotmánybíróság (Constitutional Court, Hungary), 
concluded that Article 90(2) of that directive authorises the Member States to 
provide for a derogation. Hungary has made use of that derogation, and, 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-292/19 
 
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consequently, taxable persons may not, on the basis of Article 90(1) of that 
directive, rely on a right to reduce the taxable amount pertaining to them in the 
event of non-payment of the price. Furthermore, that right of the Member States is 
supported by paragraphs 23 and 24 of the judgment of 15 May 2014, Almos 
Agrárkülkereskedelmi (C-337/13). 
5 As regards the reference made by the applicant to the case-law of the Court of 
Justice, the defendant states that, as Hungary has transposed Article 90 of the 
VAT Directive, the question which arises in the main proceedings must be 
examined solely on the basis of the national legislation. Furthermore, in view of 
the fact that the Court of Justice has not held in previous judgments that the 
Hungarian legislation is contrary to EU law, and as, in those judgments, that 
matter was left to the Hungarian courts to ascertain, it cannot be concluded that 
the Hungarian legislation is incompatible with EU law. 
Brief summary of the basis for the request for a preliminary ruling 
6 In the view of the referring court, the dispute between the parties cannot be 
decided without an interpretation of EU law, in particular of Article 90 of the 
VAT Directive. Hungary transposed that provision by means of Article 77 of the 
VAT Law and made use of the possibility to provide for a derogation, as laid 
down in Article 90(2). 
7 The referring court’s doubts are based on the case-law of the Court of Justice. 
Thus, the judgment of 15 May 2014, Almos Agrárkülkereskedelmi (C-337/13), 
paragraphs 23 to 27, essentially allows the Member States not to apply the rule 
laid down in Article 90(1), whilst requiring that ‘national transposing provisions 
take into account all the situations in which, after a transaction has been 
concluded, part or all of the consideration has not been received by the taxable 
person, which is a matter for the national court to ascertain’. 
8 The referring court’s doubts also stem from points 75 and 76 of the Advocate 
General’s Opinion in Di Maura (C-246/16) and paragraphs 18 and 19 of the 
judgment delivered in that case, according to which the exercise of the power to 
derogate must be justified and must not undermine the objective of tax 
harmonisation (judgment of 3 July 1997, Goldsmiths, C-330/95). 
9 According to the Court’s case-law, exceptions must be interpreted strictly, so that 
the EU legislature has not granted Member States the right purely and simply to 
preclude the correction of the taxable amount or the reduction of the taxable 
amount, which would be contrary to the principle of VAT neutrality. The 
application of the derogation must respect the principle of proportionality and the 
tax authority may not charge an amount of VAT greater than that received by the 
taxable person. 
10 The referring court is uncertain as to how the requirement of proportionality 
should be interpreted in this case, namely, in what circumstances is it permissible 
PORR ÉPÍTÉSI KFT. 
 
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for a Member State not to reduce the taxable amount and in what circumstances is 
it not permitted. 
11 The question also arises as to whether there is a difference between the 
non-payment of the consideration and the fact that the sum due has become 
definitively unrecoverable or has been wholly extinguished. These two situations 
have been assessed differently in the judgments of 23 November 2017, Di Maura 
(C-246/16) and of 22 February 2018, T-2 (C-396/16). If such a difference exists, 
the question arises as to whether the tax authority may refuse to reduce the taxable 
amount where, as in the present case, the sum due has become definitively 
unrecoverable. 
12 Last, the referring court seeks to ascertain whether Article 90 of the VAT 
Directive is to be interpreted as meaning that the Member States must permit the 
reduction of the VAT taxable amount where it can be demonstrated that the 
taxable person has not, on a definitive basis, received all or part of the 
consideration for a transaction entered into by that taxable person, or if the 
Member State may entirely preclude the correction of the taxable amount in that 
situation also on the basis of Article 90(2) of that directive and the relevant 
national legislation.