The European Commission has initiated an infringement procedure by sending a letter of formal notice to Hungary with respect to its Electronic Trade and Transport Control System (EKAER). Under the EKAER, companies are obliged to provide detailed information on all EU sales or acquisitions as well as certain domestic sales, if goods are transported over road. In the Commissions’ view, this requirement infringes on the VAT Directive in that affects cross-border EU transactions and institutes administrative formalities related to border crossings. If Hungary does not bring its national requirements on VAT in line with EU rules, the Commission may next issue a reasoned opinion to the Hungarian government.

The Hungarian Ministry of National Economy stated that it will defend the EKAER system, which it states is effective in eliminating VAT fraud. The Ministry cited an opinion by the European Court of Auditors that acknowledged the EKAER system’s suitability in filtering out fraudulent activities. The Ministry also argued that the efficiency of the EKAER system is proven by the fact that VAT avoidance in Hungary is 50% less than in the region (13.7 % compared to the region’s 25.5%.) The Ministry also stated that in 2015, when the EKAER system was introduced, VAT fraud decreased by 3%. The EKAER scheme had been examined by almost all of the EU member states, and two have adopted it: Poland’s SENT system begins in 1 May 2017, and in 2018 the Slovak tax authority will announce a system based on the Hungarian EKAER.