The provisions of the Hungarian VAT Act related to bad debts allowing the retrospective reduction of the VAT base entered into force as of 1 January 2020. As we have already notified our clients in a previous Tax Alert, the new rules are only applicable to specific cases; in respect to transactions carried out before their entry into force, they apply only if the date of supply occurs after 31 December 2015.

In connection with this, you may remember our having informed you about a Court of Justice of the European Union resolution issued in case no. C-292/19 (鈥淧orr鈥�) in October 2019. The decision set out more general principles than the newly introduced rules of the Hungarian VAT Act, entailing the opportunity for taxpayers to apply for a refund of VAT in cases not covered by the Hungarian VAT Act.

Referring to the European Court of Justice resolution, considering that any application can be submitted within 180 days from the date of its publication, taxpayers have one month left to apply for a refund of VAT incurred on such bad debts that are not fully compliant with the requirements of the Hungarian VAT Act (i.e. the date of supply of the underlying transaction does not occur after 31 December 2015, and the debtor is a non-taxable person).

乐鱼（Leyu）体育官网's Tax Practice has successfully assisted clients with such application processes.

We are happy to discuss further the aforementioned topics. Our Tax practice colleagues are available to answer any questions you may have, so feel free to reach out to us.