CASES OF VAT EVASION ON THE BASIS OF EUROPEAN COURT JUDGMENTS

Abstract

In a supply chain, the business entity or entities often “forget(s)” to fulfil their obligation to pay VAT. This is all the more true in the case of transactions within the Community, where many abuse the right to tax exemption. Both NAV (National Tax and Customs Administration) and the government are fighting fraudulent taxpayer behaviour, aiming to whiten the economy by curbing fraud. As VAT evasion is difficult or impossible to catch up with, often an intermediary entity within the chain is held accountable as the entity knew or must have known that its transaction contributed to the realization of VAT fraud within the chain. The topicality of the issue is provided by the application of various new tools continuously introduced in Hungary in order to whiten the economy. One of the reasons for this is that there is a lot of abuse in the field of VAT fraud, which means a significant loss of revenue for the Hungarian central budget. Not only do abuses result in a loss of revenue, but revenue is also lost from the state due to unfounded VAT returns. In such cases, the issue involves billions that the state could have spent on the development of health care, education, or other areas. In the absence of due diligence, anyone might inadvertently get into a fictitious invoice chain, thereby supporting the “work” of legal offenders. In general, participation in VAT fraud can be eliminated with due care and reasonable measures. The main objective of the presented study is to introduce, through the verdicts of the Court of Justice of the European Union, some of the measures that the court can reasonably expect from the taxpayer.

Keywords

• information
• value added tax
• budget fraud
• vat evasion