The Constitutional Court of Hungary made a decision in July 2017 that the provisions concerning the applicability of tax registration procedure do not infringe the principle of non-retroactivity.
According to the Hungarian Act XCII of 2003 on the Rules of Taxation, those taxpayers who are obliged to be registered in the company registry may receive tax number only once the state tax authority has examined whether there is any impediment preventing the issuance of tax number. In general, during the tax registration procedure, the national tax authority refuses to issue a tax number for those companies whose managing directors or members have contributed to the accumulation of tax debts owed to the tax authority within a specific time period preceding the day when the application for tax number is submitted.
The Constitutional Court of Hungary considered whether the provisions relating to tax registration procedure infringe the Fundamental Law of Hungary, as they shall be applied retroactively with respect to the examination of the past conduct of the managing directors or members of the companies applying for tax number. The Constitutional Court of Hungary declared that the provisions of tax registration procedure shall apply to proceedings commenced after the entry into force thereof, and the fact that they set out the requirements towards the managing directors and members relating to their past taxpayer conduct, does not infringe the principle of non-retroactivity.
By Gabriella Galik, Partner, KCG Partners Law Firm