Decision (EU) 2018/789 authorising Hungary to introduce a special measure derogating from Article 193 of Directive 2006/112/EC on the common system of value added tax

In accordance with Article 193 of Directive 2006/112/EC, 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.

Member States may provide that the person liable for the payment of VAT is the taxable person to whom the supply of immovable property sold by a judgement debtor in a compulsory sale procedure is made (the reverse charge mechanism).

On 13 July 2017, Hungary requested a derogation from Article 193 of Directive 2006/112/EC to be authorised in order to introduce the reverse charge mechanism to other supplies by taxable persons under insolvency procedure, namely the supply of capital goods and the supply of other goods or services with an open market value exceeding HUF100,000.

On the basis of information provided by Hungary, designating the recipient as the person liable for the payment of VAT in those particular cases will simplify the procedure for collecting VAT and prevent tax evasion and avoidance. Hungary considers that the special measure will also limit losses to public revenues and will result in generating additional revenues.

On 14 March 2018 the European Commission published a proposal for a Council Implementing Decision authorising Hungary to introduce the special measure. On 25 May 2018 the Council adopted a Decision authorising the application of the derogation until 31 December 2021.

EUR-Lex: COM(2018)126: Proposal for a Council Implementing Decision authorising Hungary to introduce a special measure derogating from Article 193 of Directive 2006/112/EC on the common system of value added tax https://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2018:126:FIN

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