Decision (EU) 2018/486 authorising Hungary to apply a special measure derogating from Article 193 of Directive 2006/112/EC on the common system of value added tax

Pursuant to Article 193 of Directive 2006/112/EC (‘the VAT Directive’), any taxable person carrying out a taxable supply of goods or services, as a general rule, is liable for the payment of value added tax (VAT) to the tax authorities.

In order to combat VAT fraud in the sector of temporary employment agencies, in 2014 Hungary requested authorisation to to apply a special measure derogating from Article 193 of Directive 2006/112/EC in order to make the recipient liable for the payment of VAT for the supply of staff (‘reverse charge mechanism’). Authorisation was granted by Council Implementing Decision (EU) 2015/2349 and expired on 31 December 2017.

On 26 June 2017, Hungary requested authorisation to continue to apply the special measure. Based on the information provided by Hungary, a significant number of measures were introduced to combat VAT fraud, and other anti-fraud measures with particular focus on temporary employment agencies are planned. Notwithstanding those measures, Hungary considers that, to further reduce the damage done to the sector, the protective reverse charge mechanism should continue to apply.

On 9 February 2018 the European Commission published a proposal for a Council Implementing Decision authorising Hungary to continue to apply the special measure. On 19 March 2018 the Council adopted a Decision approving the extension of the derogation from 1 January 2018 to 31 December 2020.

EUR-Lex: COM(2018)58: Proposal for a Council Implementing Decision authorising Hungary to apply a special measure derogating from Article 193 of Council Directive 2006/112/EC on the common system of value added tax https://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2018:058:FIN

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