Information;Order — ECLI:EU:C:2025:106
Date: 2025-02-14
Language of the case: Hungarian
Court formation: Sixth Chamber
Subject matter: Taxation;Value added tax;Fundamental rights;Charter of Fundamental Rights
Procedure: Reference for a preliminary ruling
Origin: Hungary

Summary C-270/24 – 1 
Case C-270/24 
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: 
17 April 2024 
Referring court: 
Fővárosi Törvényszék (Hungary) 
Date of the decision to refer: 
3 April 2024 
Applicant: 
Granulines Invest Kft. 
Defendant: 
Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága 
  
Subject matter of the main proceedings 
A dispute between Granulines Invest Kft and the Nemzeti Adó- és Vámhivatal 
Fellebbviteli Igazgatósága (Appeals Directorate of the National Taxation and 
Customs Authority, Hungary) concerning the right to deduct the input value added 
tax (VAT) stated in an invoice for the purchase of machinery. 
Subject matter and legal basis of the request 
Interpretation of Article 167, Article 168(a), Article 178(a) and Article 226 of 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax, in light of the principles of fiscal neutrality, effectiveness and 
proportionality, and also Article 47 of the Charter of Fundamental Rights of the 
European Union. 
Basis: Article 267 TFEU. 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-270/24 
 
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Questions referred for a preliminary ruling 
1. Is a practice of a tax authority consistent with Article 167, Article 168(a), 
Article 178(a) and Article 226 of Council Directive 2006/112/EC of 28 November 
2006 on the common system of value added tax (‘the VAT Directive’) and with 
the right to a fair trial recognised as a general principle of law by Article 47 of the 
Charter of Fundamental Rights of the European Union (‘the Charter’), in light of 
the principles of fiscal neutrality, effectiveness and proportionality, where that 
practice involves refusing a taxable person the right to a refund of VAT, arguing 
that, even though the delivery of the goods has actually taken place and there is an 
invoice and other supporting accounting documents, the invoice is fictitious 
because the business transactions recorded in it did not actually take place and, 
consequently, the transactions were not concluded between the parties appearing 
in that invoice, because 
a) it was the taxable person who negotiated all of the details with the 
manufacturers and only after the taxable person had abandoned the transaction did 
the issuer of the invoice, established in the national territory, become involved in 
it, in order to satisfy the requirements for the loan, 
b) the machines were delivered to the establishment of the taxable person by 
the manufacturer directly, 
c) the execution date stated in the invoice is false, 
d) the price appearing in the invoice has been inflated, 
e) the issuer of the invoice only complied with its obligation to pay [the VAT] 
in part and late? 
2. Must Article 178(a) of the VAT Directive be interpreted as meaning that it 
precludes the national tax authority from being able to refuse the right to a refund 
of VAT for the sole reason that the taxable person has an invoice which does not 
comply with the requirements laid down in Article 226(6) and (7) of that directive, 
even if that authority has at its disposal all of the documentation and information 
necessary to be able to check, on the basis of that documentation and information, 
whether the substantive requirements established by law for the exercise of that 
right are satisfied? 
a) If the answer to the second question referred is in the affirmative, does it, in 
such a case, constitute a prerequisite for the refund of the VAT that the taxable 
person be requested to rectify the invoice? 
b) If the answer to the second question referred is in the negative, and in view 
of the principles of fiscal neutrality and proportionality, is it, in such a case, 
proportional to impose on the taxable person a tax penalty of 200%, which is the 
amount of the fine which may be imposed in cases of concealment of income or 
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falsification or destruction of supporting documents, accounting documents and 
records? 
3. Is a practice of a tax authority consistent with the above-mentioned 
provisions of the VAT Directive, with the right to a fair trial conferred by 
Article 47 of the Charter and with the principles of effectiveness, proportionality 
and fiscal neutrality, where that practice involves refusing a taxable person the 
right to a refund of VAT, arguing that, even though the business transaction 
recorded in the invoice actually took place, on the basis that the invoice is 
fictitious in nature – for the reasons enumerated in the first question referred and 
considered to be objective by the tax authority – without examining any other 
factors, it automatically finds the conduct of the taxable person to be contrary to 
the requirements for the legitimate exercise of that right and, on the basis of that 
conduct and without expressly examining the aspect of what the taxable person 
knew, finds the taxable person to have deliberately avoided payment of the tax by 
means of the artificial transactions recorded in the invoice? 
Provisions of European Union law and case-law relied on 
Charter of Fundamental Rights of the European Union, Article 47. 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax, Article 9(1), Article 167, Article 168(a), Article 178(a), 
Articles 219 and 220, Article 226(6) and (7) and Article 273. 
Judgment of the Court of Justice of 21 February 2006, Halifax and Others 
(C-255/02, EU:C:2006:121). 
Judgment of the Court of Justice of 6 July 2006, Kittel (C-439/04 and C-440/04, 
EU:C:2006:446). 
Judgment of the Court of Justice of 21 June 2012, Mahagében and Dávid 
(C-80/11 and C-142/11, EU:C:2012:373). 
Order of the Court of Justice of 16 May 2013, Hardimpex (C-444/12, 
EU:C:2013:318). 
Order of the Court of Justice of 3 September 2020, Crewprint (C-611/19, 
EU:C:2020:674). 
Order of the Court of Justice of 3 September 2020, Vikingo Fővállalkozó 
(C-610/19, EU:C:2020:673). 
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Provisions of national law relied on 
Az adózás rendjéről szóló 2003. évi XCII. törvény (Law XCII of 2003 on general 
taxation procedure), Paragraph 1(7), Paragraph 2(1), Paragraph 97(4) and (6) and 
Paragraph 170(1). 
Az általános forgalmi adóról szóló 2007. évi CXXVII. törvény (Law CXXVII of 
2007 on value added tax), Paragraph 119(1), Paragraph 120(a) and 
Paragraph 127(1)(a). 
Opinion 5/2016 of 26 November of the Administrative and Social Division of the 
Kúria (Supreme Court, Hungary). 
Succinct presentation of the facts and procedure in the main proceedings 
1 The applicant is a commercial company involved in the waste trade. In order to 
carry on its activity, it ordered a crusher from Germany. To purchase that 
machine, it took out an interest-free loan under a loan scheme which stipulated 
that only machinery purchased in the national market could be financed. The 
applicant abandoned the purchase in order to apply for the loan and made the 
purchase through a reseller. 
2 The reseller delivered the applicant a crusher and a separator, from Germany and 
Slovakia, respectively. The gross purchase price of the machines came to 
HUF 14 516 100 (approximately EUR 37 000). To purchase the machines, [the 
applicant] took out a loan for HUF 12 461 100 (approximately EUR 31 600), 
which was partially secured by means of a security interest in the machines in 
question. 
3 On the basis of the contract, the applicant received an invoice for the crusher and 
the separator from the reseller (‘the issuer of the invoice’), which stated 
16 November 2016 as the issue and execution date. The applicant paid the invoice 
amount in two instalments, on 16 November and 1 December 2016, and it claimed 
a refund of the VAT included in the invoice (for a total of HUF 3 086 100, 
approximately EUR 7 800) in November 2016. 
4 The tax authority carried out an inspection of the applicant and of the issuer of the 
invoice, requesting information from the German tax authority, and subsequently 
concluded that the applicant was not entitled to claim a refund of the VAT and 
issued it with a fine. 
5 The tax authority determined that the applicant had, without justification, included 
the issuer of the invoice in the distribution chain, that the execution date appearing 
in the invoice was false and that the price of the machines had been inflated. 
According to the tax authority, that conduct constituted an abuse of rights and, 
consequently, tax evasion, since its aim was to allow the applicant to claim a 
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refund of the tax and as the issuer of the invoice only partially complied with its 
obligation to pay the VAT. 
6 The applicant brought a legal challenge to the decision issuing it with a fine. The 
court of first instance (the referring court) modified the decision of the tax 
authority and cancelled the fine imposed on the applicant. 
7 At second instance, the Supreme Court set aside the judgment of the court of first 
instance and ordered that court to initiate new proceedings and give a new 
decision. 
8 In the repeated proceedings, the applicant acknowledged an error in the invoice as 
regards the stated execution date and maintained its previous claims. In the 
context of those proceedings, the court of first instance has formulated questions 
which it wishes to refer to the Court of Justice for a preliminary ruling. 
The essential arguments of the parties in the main proceedings 
9 In the proceedings, the applicant argued that the defendant had not checked the 
facts, since it did not take into consideration the factors which supported the 
applicant’s position and based its findings on irrelevant factors. In particular, the 
defendant did not prove that the applicant had purchased the machine directly 
from the German vendor. 
10 The applicant did not obtain any tax advantage, nor did it engage in any tax 
avoidance. It was obliged to purchase the chosen machine from a reseller because 
there was no distributor in Hungary. The issuer of the invoice sold the machines to 
the applicant at a reasonable price in the national market and declared the tax on 
the profit in full. 
11 The invoice is authentic and a tax liability cannot be found to exist on the basis of 
an incorrectly stated execution date. The tax authority must prove, based on 
objective factors, that the principal purpose of the transactions in question was to 
obtain a tax advantage – something which has not happened in this case. 
12 The defendant showed – based, inter alia, on the statement of a false execution 
date in the invoice – that the applicant did engage in tax avoidance with the 
transaction, since the business transaction recorded in the invoice did not actually 
take place between the parties. The fictitious transactions recorded in the invoice 
were intended to obtain an unlawful advantage by avoiding the application of the 
provisions of the tax legislation, while, for its part, the issuer of the invoice 
consciously and deliberately engaged in tax avoidance, of which the applicant was 
also aware. 
13 The transactions served two purposes: on the one hand, they allowed the applicant 
to purchase the machines in the national market and obtain the loan and, on the 
other, they allowed it to claim a refund of the tax. Furthermore, the issuer of the 
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invoice only partially complied with its obligation to pay the tax. The applicant 
cannot, therefore, exercise the right to deduct the VAT. 
Summary of the decisions of the courts of first and second instance 
14 The court of first instance, taking the order of the Court of Justice of 
3 September 2020, Vikingo Fővállalkozó (C-610/19) as its point of reference, 
found that the tax authority had refused the applicant the right to deduct the VAT 
on the basis of factors which cannot, by themselves, be regarded as objective 
factors capable of being relied on in order to refuse the taxable person its right to 
deduct the VAT. In the present case, the factual requirements for [a finding of] tax 
avoidance are not satisfied and nor has it been possible to prove the intention to 
reduce the tax burden. 
15 Furthermore, in accordance with the judgment of the Court of Justice of 
21 February 2006, Halifax and Others (C-255/02), the contractual structure 
created by the applicant and the issuer of the invoice is not contrary to law and its 
purpose was not to obtain a tax advantage. 
16 According to the court of first instance, the transaction was executed in 
accordance with the contract and, therefore, the execution dates stated in the 
invoice, in the absence of a causal link, were not sufficient to support a [finding 
of] tax avoidance. The prices stated in the invoice had not been inflated, as the 
parties are free to determine the price in the context of their business transactions 
and the tax obligation must be complied with in accordance with that price. 
17 The Supreme Court held that the reasoning in the judgment given at first 
instance was flawed, as the court of first instance did not analyse the facts as a 
whole. According to the Supreme Court, the obligation to issue the invoice is 
connected with the execution of the transaction and not with the duty to pay which 
falls on the purchaser of the goods. The court of first instance should have 
explained the reason why the right to deduct the VAT may be exercised before the 
transaction is actually executed. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
18 According to the referring court, the questions referred are relevant and the correct 
application of the EU law directly applicable to the present case is not, in view of 
the national case-law, so obvious as to exclude any reasonable doubt. 
19 Based on the order of the Court of Justice of 3 September 2020, Vikingo 
Fővállalkozó (C-610/19), to which the present case bears some relation, the 
referring court examined whether the factors relied on by the tax authority in its 
decision and questioned by the applicant may be regarded as objective and, 
consequently, relevant, and also whether the tax authority had adequately satisfied 
the burden of proof imposed on it by legislation. 
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20 However, according to the judgment given at second instance by the Supreme 
Court, the referring court must examine all of the factual elements related to the 
business transaction recorded in the invoice. In such a case, the referring court 
would also have to examine facts which, in view of the case-law of the Court of 
Justice, it did not consider relevant. 
21 Given that, even as regards the most basic questions, there are disagreements 
between national courts which inevitably lead to differences of orientation and 
approach when it comes to judicial control, that, to a considerable degree, affects 
both the right of the parties to a fair trial and to an effective remedy and also the 
primacy of EU law and legal certainty. 
Regarding the first question referred 
22 The referring court is uncertain as to whether, in approving the VAT Directive, 
the EU legislature intended that the right of the taxable person to deduct VAT, 
where the carrying out of the economic activity recorded in the invoice has been 
proved and acknowledged, should also be excluded and whether the fact that the 
undertakings involved at a stage prior to that at which the applicant was involved 
declared the VAT and other taxes, but only paid them to the tax authority in part 
or late, and that, for its part, the applicant asserted its right to a refund of the VAT 
constitutes an unlawful tax advantage. 
23 To ascertain that, it is necessary to determine whether the factors mentioned may 
be regarded as objective factors within the meaning of the case-law of the Court of 
Justice. 
24 The referring court is uncertain as to whether the fact that the parties to a contract 
for the delivery of goods are modified or that the place of delivery of the goods is 
established according to current practice in international trade may constitute an 
objective reason for refusing the right to a refund of the VAT. 
25 Moreover, according to the referring court, contrary to the position of the Supreme 
Court, the right to a refund of the VAT is not based on the formal correctness of 
the invoice, but rather on the financial result, and the determination of the price 
belongs to the sphere of the parties’ freedom of contract. In that regard, however, 
the Supreme Court requires an examination and a justification which go beyond 
the that criterion. 
Regarding the second question referred 
26 In the course of the proceedings, the referring court reached the conclusion that 
the transactions took place in accordance with the terms of the contract and, 
consequently, the error in the invoice cannot constitute a basis for refusing the 
right to a refund of the VAT. 
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27 However, according to the decision of the Supreme Court, how the right to a 
refund of the VAT on the basis of the invoice could be exercised prior to the 
actual execution of the transaction, that is, in November 2016, must be examined. 
28 The referring court considers it necessary to refer questions regarding the formal 
error in the invoice, its impact on the right of the applicant to a refund of the VAT, 
its possible rectification and the penalty it may give rise to, since the Supreme 
Court has ordered it to repeat the proceedings. 
Regarding the third question referred 
29 With this question, the referring court seeks clarification as to whether the fact 
that, in the proceedings conducted by the tax authority, the main object of scrutiny 
was the reconstruction of all the elements of the chain established between the 
parties and the fact that the tax authority found a right to have been exercised 
unlawfully and tax avoidance to have taken place on the basis of facts which, 
according to the case-law of the Court of Justice, cannot be grounds for refusing 
the deduction of VAT, with the consequent refusal of the right to a refund of the 
VAT, are consistent with the provisions and fundamental principles of EU law. 
30 The tax authority did not mention the rule which it believed the parties intended to 
evade. In this case, the referring court considers that the exercise of the right to a 
refund of the VAT does not, in itself, constitute tax evasion, even where the issuer 
of the invoice does not pay the tax in full. Accordingly, it is also necessary to 
examine whether the applicant was aware or should have been aware of that fact. 
31 Given that, as regards whether the involvement of the other undertaking was or 
was not justified, the tax authority did not cite any objective fact considered 
acceptable by the Court of Justice, the referring court considers the action of that 
authority to contravene EU law, in view of the principles of fiscal neutrality and 
effectiveness. 
32 The conduct of the defendant therefore gives rise to the suspicion that it does not 
comply with the provisions of EU law, since the defendant avoids examining what 
the taxable person knew (that is, whether the taxable person was aware or should 
have been aware of the unlawfulness) and, in that case, the exemption from VAT 
of an intra-Union purchase would by itself and automatically – without any need 
to prove due diligence – signify the evasion of tax rules. The consequence of that 
is the refusal of the right to deduct the VAT. Such a situation, if the subjective 
elements (actual knowledge or knowledge which would necessarily have been 
acquired if due diligence had been exercised) referred to by the Court of Justice in 
the judgment of 6 July 2006, Kittel (C-439/04 and C-440/04) are not analysed, 
leads to the right to deduct the tax, conferred by Articles 168 and 178 of the VAT 
Directive and recognised in the judgments of the Court of Justice, being rendered 
ineffective.