Expert Opinion on the VAT Refund for Fuel Purchases in Hungary

Contents:

1. Factual Background

2. Client Request/Legal Question

3. Legal Sources

4. Model Presentation

– A. Outline

– B. Process and Legal Requirements/Aspects

– I. Direct Refund from the Hungarian Tax Authority

– II. Refund Application in Austria

5. Conclusion

1. Factual Background

The logistics company Speditions-AG (hereinafter referred to as “AG”) is engaged not only in pure logistics tasks but also in VAT refund procedures in various countries. Clients of this service include Serbian transport companies.

Under the previous method, known as the sub-account method, Serbian transport companies had to maintain at least one dedicated account in Hungary and submit or at least sign the application themselves. Since the AG was dependent on the extended involvement of the transport companies for account management and application submission, it lost customers to a competing company.

2. Client Request/Legal Question

The AG inquired about a way to recover the VAT paid by Serbian transport operators when refueling. The key question is whether and to what extent the AG can receive a generalized VAT refund directly from the Hungarian tax authority, without requiring individual applications from each driver.

By presenting various invoices, the AG highlighted the existence of a model that allows for such a refund, as a competitor, EUROWAG, is already benefiting from a similar generalized tax refund.

The following analysis determines whether and under what conditions the AG is entitled to claim a direct and generalized VAT refund for fuel purchases made by its drivers/customers from the Hungarian tax authority.

3. Legal Sources

– Directive 2008/9/EC of the Council of 12 February 2008 (hereinafter: Directive)

– Act CXXVII of 2007 (hereinafter: VAT Act)

– Act CL of 2017 (hereinafter: Tax Procedure Act)

– Regulation 32/2009 (XII.21.) PM (hereinafter: Regulation)

4. Model Presentation

Outline

Szövegdoboz: R2: ver-kauft den Krafstoff

Szövegdoboz: Erstattung der USt. durch das ungarische Finanzamt

The AG is entitled to a VAT refund for tax amounts it has incurred itself. Therefore, the fuel purchase must be structured as two separate transactions:

Szövegdoboz: zahlt USt. abzügl. Provision nach Rechnungseingang

This model effectively turns a simple fuel purchase into three separate contracts:

1. Purchase Agreement: AG buys fuel from the gas station.

2. Purchase Agreement: The Serbian transport company buys fuel from the AG.

3. Loan Agreement: AG extends credit to the Serbian transport company.

Important: This structure does not affect the contract between the transport company and the AG regarding VAT refunds. It simply provides a more efficient way for AG to fulfill its obligations. However, this model requires the cooperation of the contract partner. Therefore, the general terms and conditions (GTC) should be amended to require that fuel invoices be issued in the AG’s name.

B. Process and Legal Requirements/Aspects

I. Direct Refund from the Hungarian Tax Authority

Step 0: The AG applies for a Hungarian tax registration number

– This number is similar to a VAT number and is required for companies without a Hungarian branch.

– The tax registration number is automatically assigned when the application (Form 20 T 201) is submitted.

Step 1: Serbian truck drivers state the AG (including its Hungarian tax number) as the buyer when purchasing fuel

– The driver acts as a representative of the AG, which is the contractual party.

– Fuel purchases related to import/export activities are VAT-exempt under Sections 118, 112 in conjunction with Sections 24 and 111 of the VAT Act.

Step 2: The driver sends the invoice (R1) to the AG, which shows the AG as the buyer

– The AG needs this invoice to claim the VAT refund from the Hungarian tax authority.

Step 3: The AG reimburses the VAT amount to the truck driver, minus a service fee

– This service is VAT-exempt, as it is related to freight transport.

Step 4: The AG issues two invoices:

1. Invoice R2: Fuel sale from AG to the transport company.

2. Invoice R3: Net invoice (without VAT).

Step 5: The AG submits invoice R1 to the Hungarian tax authority and applies for a refund of the “negative VAT” using Form 20 T 201

– Refunds are processed under Sections 184, 186 (II) (b) (bc), 153A (II) (b), and 119 ff. of the VAT Act.

– The refund can be requested as soon as a minimum amount of 50,000 HUF is reached.

– From the moment of tax registration, AG is obliged to submit regular VAT returns, but this is insignificant compared to the frequency of refund applications.

Additional Requirements:

– The initial application must include a recent extract (max. 30 days old) from the Austrian commercial register.

– A representative in Hungary should be designated for communication with the tax authority.

– Processing time: Typically less than three weeks.

– Refunds can be deposited into a Hungarian or Austrian account.

II. Refund Application in Austria

Step 1: Dual Purchase Structure

– The procedure follows the same steps as in 4.A.

– The invoice R1 must also be issued in the name of the AG.

Step 2: Refund via the Austrian Tax Authority

– A Hungarian tax registration number is not required for this method.

– The procedure is governed by Sections 244 ff. of the VAT Act and Section 4 of the Regulation.

– The online application is submitted via FinanzOnline (Austria’s tax portal) under:

“Further Services → VAT Refund from Other EU Member States.”

– The application is automatically forwarded to KAVIG (Budapest, Dob u. 75-81, 1077).

– Invoice R1 must be attached as proof of the VAT paid.

Processing Timeline:

– Refunds are generally processed annually.

– The application deadline is September 30 of the following year (strict deadline).

– Applications for shorter periods can be submitted, covering at least 3 months (except for year-end claims).

– Refunds can be transferred to either a Hungarian or an Austrian account.

5. Conclusion

By applying the described model, the AG can obtain a direct and generalized VAT refund from the Hungarian tax authority for VAT paid by truck drivers. The refund can be processed in two ways:

1. Directly through the Hungarian tax authority.

2. Via the Austrian tax authority.

However, both methods require that the fuel invoices be issued in the name of the AG.

For implementation and further inquiries, we remain available.

Dr. Katona Géza, LL.M. ügyvéd (Rechtsanwalt / attorney at law)

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