For Hungarian companies and commercial representative offices involved in foreign purchases, claiming a refund of foreign VAT paid forms part of the annual tax routine every September as it may offer companies a significant liquidity opportunity. The deadline for submitting applications for the refund of foreign VAT paid in 2025 in European Union countries is 30 September 2026. We have already summarised the general conditions for refunds in our previous article; this time, we review the key elements of a successful refund claim, the options available in the event of rejection, and this year’s changes.
Basic information on refunds
During the refund procedure, it is particularly important to meet the peremptory deadline and to submit all documents required for the refund in full and as soon as possible. A particular feature of VAT refund procedures is that tax authorities frequently rely on formal requirements when rejecting applications, without conducting a substantive examination.
However, rejection of the application does not mean that the right to a refund of foreign VAT paid is definitively lost. By making use of the available legal remedies, a possible infringement of rights may still be remedied retrospectively.
The Wagner Sport Signage case: the weight of formal errors
The conflict between “formalism and a substance-based approach” is well illustrated by the Wagner Sport Signage case (T-407/26), currently pending before the Court of Justice of the European Union (CJEU). In its request for a preliminary ruling, the Budapest-Capital Regional Court asked the CJEU whether it is compatible with EU law for the Hungarian tax authority to reject an entire VAT refund application without substantive examination, or treat it as not having been submitted, because of a single formal deficiency – the absence of a VAT identification number. The central question in the case is how far formalism may restrict the exercise of an otherwise existing right to a refund.
The Wagner Sport Signage case makes the issue particularly timely: how can a swift and trouble-free refund be ensured during the initial procedure, and what options remain available if the application is rejected on formal grounds?
Deadline is approaching
Applications for the refund of foreign VAT paid in other EU Member States in 2025 must be submitted to the Hungarian tax authority (NAV) by 30 September 2026 at the latest. A fundamental condition for a successful refund is that the application must reach NAV by this date, as the deadline is a peremptory deadline. As a general rule, refund claims relating to 2025 can no longer be enforced after this date.
Typical refundable costs may include:
- accommodation costs for business trips;
- conference and event participation fees;
- exhibition and trade-fair costs;
- fuel purchases;
- certain vehicle-related costs;
- local services;
- professional services used abroad.
For businesses engaged in international activities, the refundable amount may therefore reach several tens of thousands of euros.
How does the refund of foreign VAT paid work?
The foreign VAT refund procedure cannot in itself be considered complicated; however, numerous formal and administrative requirements must be met.
Several applications may be submitted for a given refund period, although no more than five refund applications may be filed in a calendar year. A refund may be requested only once for the same amount of VAT.
The legislation also specifies minimum thresholds:
- at least EUR 50 for an annual application;
- at least EUR 400 in refundable tax for an application submitted during the year or for a shorter period.
As a general rule, the competent tax authorities decide on applications within four months. If necessary, they may request additional information, for which applicants typically have one month to respond.
The rules are not the same in every country
Although the system is harmonised at EU level, the practices of individual countries may differ significantly.
Differences may arise in:
- the range of deductible costs;
- the formal requirements applicable to invoices;
- the supporting documents to be submitted;
- the strictness of tax audit practices.
It is therefore advisable to examine the specific requirements of the relevant country before preparing the application.
The form to be submitted has changed
From 1 April 2026, applications for refunds of VAT charged in another Member State must, as a general rule, be submitted to NAV using form 26ELEKAFA. This also applies to the vast majority of refund, amendment and adjustment applications relating to 2025 and 2026. There are exceptions: for example, the previous form applies to refunds relating to 2025 invoiced in Bulgarian lev.
Why is prevention important?
Successful recovery of foreign VAT paid depends primarily on prevention. Based on our experiences, the risk of rejection or a request for supplementary documents can be significantly reduced if, before the initial procedure:
- invoices are checked;
- supporting documents are collected;
- local deduction restrictions are analysed;
- the relevant country’s specific requirements are identified.
A properly prepared application not only provides greater certainty but often also results in faster payment.
What happens if NAV rejects the application?
NAV’s practice in foreign VAT refund procedures is often more formalistic than the approach applied in conventional VAT audits. However, rejection does not necessarily mean that the right to a refund is definitively lost.
Under Hungarian tax procedural rules, it may be possible to submit new evidence and documents during the legal remedy phase. Pursuant to Section 124(3) of the Act on Tax Administration, evidence may be invoked in an appeal if, subject to specified conditions, it was not yet available during the initial procedure.
This may be particularly important where NAV rejected the application solely on the basis of formal deficiencies, even though the substantive legal conditions for the refund were in fact met.
Tax neutrality application as a final safety net
CJEU case law consistently emphasises the importance of the principle of VAT neutrality. An entitlement to a refund or deduction cannot automatically be lost solely because of administrative errors if the substantive legal conditions can demonstrably be established.
Following a rejection, it is therefore worth examining whether arguments based on tax neutrality and a tax neutrality application may be applied. With appropriate tax representation, many cases in which a legitimate VAT refund failed solely for formal reasons can be salvaged during the legal remedy phase. This option should also be examined in relation to previously unsuccessful and closed refund procedures.
The two keys to a successful refund
As the above shows, a successful refund of foreign VAT paid may have two keys:
- On the one hand, full compliance with formal requirements during the initial procedure. This requires a preventive approach on the taxpayer’s part and is highly worthwhile in terms of cost efficiency and time savings.
- On the other hand, thorough knowledge and use of the available legal remedies and procedural rights, since these can remedy a possible infringement retrospectively.
The objective is simple: to recover the VAT to which the business is legally entitled as quickly as possible and with the lowest possible risk. Proper prevention generally delivers the best result; however, if rejection has already occurred, legal remedies and arguments based on tax neutrality may still be effective tools for preserving a legitimate refund.
Today, the success of recovering foreign VAT paid largely depends on proper preparation. Our experts assist with identifying refundable VAT, preparing applications, conducting preliminary reviews of documentation, representation before NAV, legal remedy procedures, and preparing tax neutrality applications. We also support EU, Swiss, Liechtenstein, Norwegian, Serbian, Turkish and UK businesses seeking refunds of Hungarian VAT on purchases made in Hungary under the special foreign VAT refund procedure.
This article is for general information purposes only and should not be considered as advice.
