Taxable persons who are not established in Hungary and whose permanent establishment or, in the absence thereof, residence or habitual abode for economic purposes is located, inter alia, in one of the (so-called recognised) states listed in Annex 8/A of Act CXXVII of 2007 on Value Added Tax (hereinafter: VAT Act) and who do not supply goods or render services within the country with the exception of certain services listed in Point b) of Section 244 (1) of the VAT Act, are entitled to the refund of VAT under the conditions laid down in Chapter XVIII of the VAT Act.
Pursuant to Point a) of Section 95 and Point 2 of Annex 17 of Act XLI of 2018 on the Amendment of Certain Tax Laws and Other Related Acts and on the Immigration Surtax (hereinafter: Amendment Act), a new point, i.e. point 5 has been added to Annex 8/A of the VAT Act from 22 May 2019. [The date of entry into force was determined by Decision 1/2019 (V.21.) of the Ministry of Finance subject to Section 255 (13) of the Amendment Act.] Thus, the Republic of Turkey is already a recognised third country for the purposes of Point b) of Section 244 (2) of the VAT Act. This means that VAT taxable persons established in the Republic of Turkey or have their residence or habitual abode for economic purposes there can now also obtain a refund of VAT in Hungary under the special rules for VAT refunds, however, only in respect of the transactions referred to in point 5 of Annex 8/A of the VAT Act.
The VAT refund under Chapter XVIII of the VAT Act is not unlimited for taxable persons established in the Republic of Turkey. Taking into account the provisions of point 5 of Annex 8/A of the VAT Act, they are entitled to it only in respect of fuel purchased or road services used for the purpose of supplying goods or passenger transport services, goods or services purchased for the purpose of operating or maintaining a motor vehicle, and goods or services purchased for the purpose of exhibiting at trade fairs and exhibitions, A condition for this is that the completion date of the said purchases (transactions) falls on or after 22 May 2019.
In addition to Chapter XVIII of the VAT Act, the detailed rules on tax refunds are also set out in Chapter XXIII of Act CL of 2017 on the Rules of Taxation as well as in Decree No. 32/2009 (XII. 21.) PM of the Minister of Finance on the Provisions for Asserting the Right of Taxable Persons Not Established in the Territory of Hungary to the Refund of Value Added Tax in the Republic of Hungary, and the Right of Taxable Persons Established in the Territory of Hungary to the Refund of Value Added Tax in Other Member States of the European Community.
Just like taxpayers established in other recognised third states, taxpayers established in the Republic of Turkey can submit their applications for tax refund in Hungary to the National Tax and Customs Administration using the IAFAK form (Hungarian language version only).
In parallel with the above, the Republic of Turkey has also undertaken to provide a refund of the VAT charged in Turkey to VAT taxable persons established, resident or habitually resident in Hungary for the same range of transactions as detailed above.
[Ministry of Finance, Department of Indirect Taxes PM/3807-23/2019 – NTCA, Central Management, Department of Taxpayer Services and Information 4974902143/2019.]