Ever closer union - why and how?

Do not be deceived, I will not philosophise about federalism, power to the EU or power away from it. These are important questions and are dealt with on this blog several times, connected to concrete questions.
What I want to recall here, is just where this term comes from and how it became an obsession.
First of all, the reference is to the first recital of the Rome Treaty, creating the European Economic Community or simply said, the Common Market. Great, let's see whether the Rome treaty actually contains this formulation, or something else. We open EUR-Lex, look for the Rome treaty and find it - surprise, surprise, as the United Kingdom was not among the founding members - in Dutch, French, German and Italian (in alphabetic order of the name of the languages) - Belgium spoke French and Dutch and Luxembourg German and French, therefore four languages for the six founding states. No English, sorry. Here is the link: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:11957E/TXT - EN stands for the language of the interface, not of the text.
As a devout European and speaking some European languages (one from each main language family), I can try to find the phrase in the existing versions. In Dutch: "verbond", German: "Zusammenschluß". However, in French: "union", in Italian: "unione". So far tie.
The English translation is, however available on the Commission archives.
Let's see this text: it talks about: "lay the foundations of an ever-closer union among the peoples of
Europe".
Before continuing, a look at the Maastricht treaty shows a new text as the first recital: "to mark a new stage in the process of European integration undertaken with the establishment of the European Communities" while the last recital already continues the line of thought: " to continue the process of creating an ever closer union among the peoples of Europe, in which decisions are taken as closely as possible to the citizen in accordance with the principle of subsidiarity,.

Some commentators conclude from the first recital, that it has nothing to do with political union, but targets to bring the peoples of Europe closer together. Reading the other linguistic versions, this interpretation seems close. The member states creating the European Union, however, saw their enterprise expanding co-operation to non-economic political areas, although at different depth - the famous "three-pillar approach" abandoned by the Lisbon Treaty -  as the further implementation of the original idea, thus giving it a more express political dimension retroactively.

I did not really hear any "federalist" to quite this passage to support any idea of closer co-operation while this was often quoted as the stumbling block by Britons - be euroskeptic or just opportunist like Cameron - hindering their country's commitment to the EU. The thoughts I outlined above are quoted in defence of loosening the union by Fullfacts, which calls itself "the UK’s independent factchecking charity" - and is actually fairly neutral

So what is left is to quote again the  final phrase of the already quoted recital of the Maastricht treaty: "...in which decisions are taken as closely as possible to the citizen in accordance with the principle of subsidiarity". This can be seen as a limit, or even as a guiding principle what this ever closer union will really look like.

Miscellaneous

Although Sunday evening isn't the best time to blog, the last weeks were so full that it is worth reviewing some of the events.
As I write this, the first exit polls are out on the Greek referendum: they predict a narrow win for the "No" while the official data an overwhelming "No". No is no, so what is the difference? Well, an overwhelming "No" would give a much stronger mandate for the government (as counts progress, it seems "No" is over 60% - oh wait, what for?
No one knows (pun not intended). We will see, what the Greek government does - they also had several proposals on the table, the last two or three maybe not so far from the proposal of the Troika - which is off the table but probably would be acceptable for them again.
While we wait to see, let's talk about Hungary (and also about the U.S. Supreme Court). It's Pride weekend, and just before it, the SCOTUS (official abbreviation of the Court) ruled that same-sex couples have a right to marriage. And this stirs waves in Hungary. OK, the decision to save Obamacare by correcting the badly written law is not so relevant, but that Hungarian facebookers totally ignored the other decision (from early June) about a threat on Facebook, is somewhat surprising. A man was writing on Facebook (apparently in a rap poem - according to experts it was disastrously bad) about wanting to see his ex-wife killed. He was condemned by a court, and actually isn't off the hook due to the Supreme Court's verdict. But the verdict reinforced the "clear and present danger" principle. If the husband really wanted to have her wife killed and called others who could do it to do it, he is guilty (my simplistic interpretation). But if he did not really want it (here the "literary" expression comes into play), or it was unrealistic that anybody do it, he is protected by the freedom of speech.
Meanwhile Hungary is receiving almost as many refugees (asylum seekers) as Italy. And the government wants to seal off the Serbian boarder by a big and strong fence, costing 22 bn forints (itself sufficient to feed 14 thousand refugees for a year - although the decision to accept or reject their demand for asylum should be decided within months and a lot of them go further to the west). Let's forget about the money for the fake "National consultation" and the outraging publicity campaign.
What is more important that first a collection was started to counter the government giant poster campaign. The estimated cost was 3 million forints (as compared to a hundred times as much for the government giant posters), but within a week or so, ten times as much was donated by private individuals.
Then real actions started to emerge: groups of volunteers sacrificed their free time to help them, information leaflets were translated and printed (why only by volunteers? - the link is there, you can see what vital information it contains), food, drink (there is a heat wave also in Hungary) clothes, toys for children, medicines, blankets etc. etc. collected. The coordination runs of Facebook, even between groups in different locations to try to warn when a bigger group is due to arrive (they have to travel usually changing at least once but sometimes more - see also the leaflet). But the group is kept closed to exclude those who would only post rude comments (I see them on posts on articles dealing with the problem).
I should close now on an optimistic note - it is heartwarming what these, mostly young people do and tell about the solidarity they encounter - people bringing donations, coming to help, travelling dozens of kilometres to go to help.

"Suspension or no suspension?"

The tenth anniversary of the "big bang" enlargement and thus the accession of Hungary was also marked by some controversy. Some Court decisions against Hungary in infringement procedures (I will return to these later) and a controversy about disbursement of EU funds. So let's now speak about this and return to a summary of these ten years later.

The European commission is asking for additional information on the new system of managing EU funds in Hungary and asked the Hungarian authorities not to send new requests for disbursements (invoices) to the Commission before the workings of the new system is clarified. This is not a suspension of payments in the sense that payments on already submitted claims are going to be done. It is quite logical, these funds were disbursed under the old system which was working in a way (according to information from OLAF, there were twelve cases where OLAF proposed further follow-up (which can mean criminal prosecution, recovery of amounts paid or disciplinary action). The situation is that OLAF cannot directly take disciplinary action or initiate prosecution, it is up to the national authorities do it. The low percentage of criminal charges brought by the national prosecutors against fraudsters embezzling EU funds was the reason why the Commission proposed to set up a European Prosecutor's Office which would bring in these charges.

The Hungarian change came – and this shows the ignorance or lack of political feel, or even worse, lack of interest or understanding towards European developments – at an inopportune time: the Commission was strongly called upon in the report of the Court of Auditors and the discharge resolution (which accepts the report on the previous year and evaluates the management of the EU budget) by the Council and the Parliament to do more to tackle the loss of EU funds due to irregular and/or fraudulent claims for reimbursement submitted and not controlled by the member states.

The background is that while administrative expenditure and in general expenditure areas where the Commission directly spends EU money, get since years a "green" mark from the Court of Auditors, meaning that error rates are below the 2% materiality limit, i.e. are in the normal range, in the area of agricultural and structural funds, there is an error rate which is significantly beyond that. And the reason is that the member states' implementing and audit authorities do not provide the assurance requested that this spending really happens also in the quality expected. Unjustified costs are paid, documentation is lacking or erroneous affecting more than the (in)famous 2% (the materiality limit of 2% means that this is the level of errors which is considered a level where the cost of introducing additional controls is exceeding already the savings (improvement) which could be expected from them, and therefore this level of error is considered as inevitable). It can be disputed whether this level really is at 2% (some suggest it may be higher in complex areas), it is commonplace, however, that the authorities of the member states are too lenient towards their beneficiaries – among others because beyond the obvious economic interest, there is a political pressure to spend the funds assigned. This is evidently visible in Hungary, where the slow catch-up at the start makes the rate of spending an obvious target, in particular as the negotiations on the 2014-2020 financial framework did not result in a spectacular success for the government, so they want to differentiate themselves from the previous government by spending better.

So the Commission is finally planning to introduce a stricter monitoring and re-auditing of the implementation of EU funds by the member states, and it was in this process when the announcement by the Hungarian authorities to further centralise the implementation system and eliminate some actors in it came. And it is clear that at least a side-effect of this (if not the objective) will be less hassle – which would be nice if it would eliminate administrative hassle and unnecessary complications, on which the Commission is also working – and a quicker spending. This, however, entails more risk of irregularities being left unnoticed. And this risk – and weakening of the control system - the Commission cannot afford when its main task is to reinforce controls. Had the Hungarian decisionmakers taken this into account, we were better off now.

Together - Együtt 2014

Good news - Bad news. I'm afraid mostly bad news today. The co-operation platform launched the 23rd October (see my post ) was never promised to have an easy way. Its founder Gordon Bajnai, being an ex-minister in the Gyurcsány-government, prime minister thereafter, was exposed to "character murder" pinpointing a past business failure which harmed a number of small entrepreneurs who sold to the company - the links of Bajnai to the company then are up for discussion but he won a number of lawsuits on the topic which cleared him personally - that the comp,any was due to pay indemnities is no surprise as no one doubts it owed money but bankruptcy is the situation where you cannot pay and limited liability companies are invented to stop the failure of a business to cripple its owners. The panic caused among the ruling party (formally parties) is the good news, and also that the movement achieved the political sympathy rating which in votes would be needed to get into parliament (5%) within days is the good news. Its manifesto was signed by a number of personalities who have credibility (including the founder of the "Danube circle" or Duna-kör, which was one of the cores of the resistance during communism, taking up the symbolic case of the Bős-Nagymaros dam. However, one can hear voices that the signatories are "people of the bad socialist regime" - not the one before 1990 but the "pasteightyears" as FIDESZ likes to condemn. Here the bad news starts. But there are only two people among the signatories who were politicians and both were in the back lines, in particular during the Gyurcsány-government, actually both tied to the smaller partner, the liberal SzDSz. Some days after the announcement of the start of the movement as an association, FIDESZ changed the draft election law under discussion (well, this was an exaggeration) in Parliament to forbid for associations to participate in the elections. This is a sign of their panic, referred to above. Furthermore, the election campaign will be shortened and the media available for election advertisements limited to the public service media (i.e. commercial tv which is watched really is excluded) and to open air posters (in which area FIDESZ-friendly enterprises have a dominant position). Now this can be regarded already a significant limitation of citizens' rights in my opinion. A package of more than 200 modification proposals was submitted by one member of the FIDESZ and half a day was given to the MPs to read, discuss and agree in the factions. The debate was very short and - as is usual for critical issues - scheduled for late night. That's why I called the term "discussed" an exaggeration. Of course private individuals or associations can submit private advertisements which have nothing to do with the elections (but expect a scrutiny by friendly attorneys and courts - here setting the retirement age for judges will serve well). So did a pseudo-civil forum start an ad on buses (look at the picture) (of the Budapest Transport Company which is also managed by political appointees) depicting Bajnai and Gyurcsány together, with the text "they ruined the country together" etc. Some facts about the association: its president, who also organised the pro-government "Peace march" also mentioned in my 23rd October article, is also chairman of the committee distributing the government funds for civil associations (NGO's) and the association received government subsidies this year. So is this election advertising? And finally, the congress of LMP (Politics can be different), the anti-globalist green and human-rights-oriented party, which came from nowhere into Parliament (a nice feat in the Hungarian system) in 2010, refused to co-operate with the movement of Bajnai. The decision was more diplomatic, of course: the congress empowered the leaders to start talks about anything except joining. The also new 4K! (fourth republic - the present one is called the third) welcomed the decision which they took before. This formation is brand new, was created by secession from Milla ("a million for the freedom of Hungarian press", a movement which started on Facebook, achieved about a hundred thousand likes but staged several successful demonstrations - one of these was the 23rd October referred to above where Bajnai announced starting the movement Együtt 2014 (Together 2014, latter being the year of the next elections). Its leader said that they want to resemble most the Scandinavian social democrats, thus they also have a left-wing programme. So two new formations refused co-operation. 4K! could be considered irrelevant (their reaction to the announcement of president Barroso on a federal Europe simply was that they also require the harmonisation of social systems - in a tone as if they were an important political player in a powerful member state and also ignoring that this is to some extent already the case. The "loss" of LMP is also more a loss of image for the new movement as this step may cost LMP more voters than the new movement. The head of the parliamentary faction and his deputy immediately resigned, calling the decision irresponsible and unrealistic both for the party and for the country. Their announcement was greeted with loud "hurray"-s and applause probably by the 77 who voted against the decision (97 voted for). The diplomatic formulation of the decision leaves a small opening to return but already called disappointing comments from some blogs and commenters on websites and also on Facebook.

European Court Cases affecting Hungary - part two

This time about a case which got some publicity in Hungary and one which did not. It concerns customer protection, which is in the powers of the EU as a unified market clearly requires uniform consumer protection rules. The cases were so-called "references for preliminary ruling" where a national court dealing with a topic which is subject to European law, can ask the European Court of Justice to interpret a European regulation or directive. A lot of these cases are about whether a certain national law is in line with European legislation as if it is not, it cannot be applied. In most cases if a directive is not implemented correctly, the directive should be applied, except against individuals if the national law is unfavourable to the State (this means that a Member State cannot benefit from its own failure to implement the directive). (for example Case 8/81, Ursula Becker v Finanzamt Münster-Innenstadt). But also interpretation of a regulation can be asked from the Court. In the case (C 472/10) between the National Authority for Consumer Protection (Nemzeti Fogyasztóvédelmi Hatóság) and Invitel Távközlési Zrt, a telecommunications company, the Hungarian court proceedings were about the right of the provider to charge its cost from expenses due to a specific form of payment to the client who chose this form of payment. The client had a contract - fairly frequent - where in exchange for a benefit (like free or cheaper purchase of equipment) the client undertook not to cancel the contract for a certain binding period. Thus, it did not have the possibility to chose another provider due to the increase of the charge. Another aspect of the fee increase was also taken into account by the Court: " term included in the general business conditions of consumer contracts" enabling "unilateral amendment of fees connected with the service to be provided, without setting out clearly the method of fixing those fees or specifying a valid reason for that amendment". The Court set out some guidelines in judging terms in the general conditions invalid: "The national court must determine, inter alia, whether, in light of all the terms appearing in the general business conditions" "and in the light of the national legislation" whether "the reasons for, or the method of, the amendment of the fees connected with the service to be provided are set out in plain, intelligible language and, as the case may be, whether consumers have a right to terminate the contract". Thus, the reason and method of the change of price must be set out clearly in the general conditions, but the absence of the right to terminate the contract is also a factor to be considered. Thus, the general interpretation in the Hungarian press that all clauses in the general conditions which give the provider the right to change the price are invalid, is too wide, there are conditions under which price increases - in particular if there are elements of cost which change - can be valid. There is one factor I miss actually from among these factors: it is the possibility of the consumer to change some behaviour to escape from the price increase. In this concrete case, the fee was tied to a certain method of payment and the change of payment method may have been open to the customer. The other question was whether the national authority has the right to declare the clause found invalid by the national court invalid in respect of all other contracts. The answer of the European Court of Justice to this question was also yes: "it does not preclude the declaration of invalidity of an unfair term included in the standard terms of consumer contracts in an action for an injunction, provided for in Article 7 of that directive, brought against a seller or supplier in the public interest, and on behalf of consumers, by a body appointed by national legislation from producing, in accordance with that legislation, effects with regard to all consumers who concluded with the seller or supplier concerned a contract to which the same general business conditions apply, including with regard to those consumers who were not party to the injunction proceedings" This means that if national legislation gives the right to the consumer protection or similar authority to declare invalid the clause which was found invalid by a court also in respect of consumers who were not parties to these court proceedings. The other case (C 137/08) between VB Pénzügyi Lízing Zrt. and Ferenc Schneider , the question again is the validity of a clause in the general conditions, this time the court having jurisdiction for a case between the service provider and the client. It is normal practice to assign a court which has jurisdiction in a case. This is also often contained in the clauses of general contractual conditions. Under Hungarian law, the court on the seat or residence of the defender has default jurisdiction. That would mean that the service providers suing customers would have to sue them at the court where they live and this is usually avoided by this clause, prescribing the jurisdiction of the court close to the service provider. As these are in the bigger cities, typically in Budapest, they can be assumed to be usually more experienced in business law. The court in which the case, in conjunction with which the preliminary ruling was requested, suspected that this clause of assigning jurisdiction may be invalid and thus asked the European Court of Justice whether it can refuse to handle it. The question was also raised whether a clause in a contract can be considered invalid when the client did not contest its validity before. The Court suspended the case until the judgment in another (C243/08) between Pannon GSM Zrt. and Erzsébet Sustikné Győrfi where it was established that: "The national court is required to examine, of its own motion, the unfairness of a contractual term where it has available to it the legal and factual elements necessary for that task." Thus, the court could declare on its own motion invalid the its assignment and refuse to handle the case. A more interesting question is, which finally has to be decided by the national court and sorry enough, I did not find any information about the result of the case in the Hungarian court, whether such an assignment can be declared invalid. The court found that a “term whose purpose is to confer jurisdiction in respect of all disputes arising under the contract on the court in the territorial jurisdiction of which the seller or supplier has his principal place of business, obliges the consumer to submit to the exclusive jurisdiction of a court which may be a long way from his domicile. This may make it difficult for him to enter an appearance. In the case of disputes concerning limited amounts of money, the costs relating to the consumer’s entering an appearance could be a deterrent and cause him to forgo any legal remedy or defence. Such a term thus falls within the category of terms which have the object or effect of excluding or hindering the consumer’s right to take legal action”. Thus, taking into account the circumstances, such a term may be invalid. The court did not establish that such a term is necessarily invalid, just that it can be invalid (“must be considered in the light of the particular circumstances of the case in question (see Freiburger Kommunalbauten, paragraph 22)”) and that if it is, the court assigned in the contract can refuse to deal with the case. There is one gap in the argumentation of the court: as mentioned, in Hungary the default court is the one on the seat or domicile of the defendant, thus, when the customer wants to sue the provider, the default court is also not necessarily one close to him/her. On the other hand, the argument is valid when (as in the concrete case) the provider sues the customer.

Hungarian cases at the European Cout of Justice part 1 - some taxes

I collected some cases of the European Court of Justice in the area of consumer protection and taxes where Hungary was affected. I start with taxes, the second part will deal with consumer protection cases. Let’s start with a tax case where Hungary won against the Commission. The Court ruled in its judgement in the case C 253/09 about the deduction from the base of the personal income tax payable on the sale of property and about the deduction of the transfer tax paid on the purchase of property of the transfer tax paid on property sold by the same person (although it is paid by the buyer) that it is not discriminatory if only amounts paid for properties purchased can be deducted from the tax base of property sold where the property purchased is in Hungary. This sounds logical, as it was also established by the Court, saying that “there is a direct link between the tax advantage granted and the initial levy. First, that advantage and the tax levy are applied to one and the same person and, second, they both relate to the same tax” and “that the objective of the legislation at issue is to avoid – upon the purchase of a second principal residence in Hungary – the double taxation of the capital invested in the purchase of the previous residence that has been sold”. However, the Court looked a little further. Firstly it established that these rules constitute a discrimination but recognised that in light of the above arguments this discrimination is justified by pursuing and objective in public interest (i.e. to preserve the coherence of the tax system and also: "If taxpayers not having paid the tax at issue previously were able, under the tax regime at issue, to benefit from the tax advantage concerned, they would take unfair advantage of taxation that was not applicable to their previous purchase outside Hungary.") Interestingly, no specific arguments are found in the judgement about the transfer tax but the same logic would apply here, except that the tax in not paid by the same person (but was paid at the time of purchase by the seller, although on a value at that time).
The COurt made an interesting statement, by also giving its opinion about tax harmonisation: “While the property transactions carried out in other Member States might also have been subject to similar or even identical taxes to that at issue, it must be noted, however, that in the current stage of the development of EU law, the Member States enjoy a certain autonomy in the area of taxation provided they comply with EU law, and are not obliged therefore to adapt their own tax systems to the different systems of tax of the other Member States in order, inter alia, to eliminate the double taxation.” So, according to the Court, one way of further integration can be a harmonization of these taxes also and a mutual recognition of taxes paid in another member state.

This harmonization has relevance to a problem now widely discussed, the importance of which is secondary but some way emblematic. The issue is the registration tax and the amendment of the law about road transport, which introduced draconian fines for Hungarians who avoid the – very high though recently decreased – registration tax on passenger cars by registering their car in a neighbouring country where this tax does not exist or is lower. There is a European Directive on the harmonisation of car taxes, mainly targeted at the tax continuously paid in different countries on vehicles registered in that country. The annex to this directive lists a number of specific taxes in different countries but the registration tax in Hungary is not listed. There is also a draft directive, which wants to harmonise further the conditions of the obligation to re-register cars moved from one member state to another. In both the directive and the draft, there is a precise definition of the residence which defines where a car has to be registered and pay taxes. In contrast to this definition, the Hungarian law does not define residence but takes the registration in the residence register as a formal condition. There are two lists of conditions, one for the driver, which acknowledges the situation of those who are abroad temporarily (for work, for example) but the formulation of the conditions for the owner (operator) of the vehicle are chaotic. Driving a car rented abroad or registered on a foreign company – for which the driver may work – is, however, only authorised for one day for someone who does not have a temporary residence abroad. This is also causing problems. For those, however, who stay abroad but do not want to give up their permanent residence in Hungary (or have a temporary residence in Hungary) to go to Hungary in a car registered on their name can mean a fine of up to 3200 Euro and losing their car. This is clearly offending the freedom of establishment and of move within the EU and also the spirit of the mentioned directive, and the re-registration directive is still far away and has only partial impact. Recently a judgement of the Court in the joined cases C 578/10 to C 580/10, can mean some hope that at least when their case comes to the European Court of Justice, the Hungarian regulation may be declared contravening European Law. The judgement namely concerns the Dutch registration tax, and says: “that Article 56 EC must be interpreted as meaning that it precludes legislation of a Member State which requires residents who have borrowed a vehicle registered in another Member State from a resident of that State to pay, on first use of that vehicle on the national road network, the full amount of a tax normally due on registration of a vehicle in the first Member State, without taking account of the duration of the use of that vehicle on that road network and without that person being able to invoke a right to exemption or reimbursement where that vehicle is neither intended to be used essentially in the first Member State on a permanent basis nor, in fact, used in that way.”, which means that not only the tax paid regularly, but also the tax paid on registration cannot be levied on a vehicle which is not used “essentially in the” country “on a permanent basis”. By the way, the Hungarian registration tax was once subject to proceedings at the European Court of Justice (joined cases C-290/05 and C-333/05), when the question was again about proportionality (also referred to in the judgement in question), i.e. that the registration tax on used vehicles has to take into account the depreciation of the vehicle, i.e. can be levied only on basis of its real value and not on its purchase value.

Court of Justice detects flaw in Hungarian VAT system

The European Court of Justice decided in its judgment in Case C-274/10 that the Republic of Hungary has failed to fulfil its obligations under Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax - by requiring taxable persons whose tax declaration for a given tax period records an ‘excess’ within the meaning of Article 183 of to carry forward that excess or a part of it to the following tax year where the taxable person has not paid the supplier the full amount for the purchase in question, and
– because, as a result of that requirement, certain taxable persons whose tax declarations regularly record such an ‘excess’ may be required more than once to carry forward the excess to the following tax year,
More precisely, Hungary has exceeded the limits of the freedom available to the Member States under Article 183 which allows the Member States to lay down conditions for the refund of a deductible VAT excess.

What is this about? One way of VAT fraud is when the seller does not pay the VAT which is claimed by and refunded to the buyer. In these cases sometimes the buyer does not pay the seller. The first Orbán government decided that one way to counter this is not to enable actual payment of the VAT reclaimed if the buyer did not pay the seller. The amount can be deducted from VAT payable, the excess being carried over to the next period (which can be the next month, the next quarter or the next year, depending on the amount of VAT payable by the company over the previous year – exceptions to shorten the period are difficult to get), Thus, companies having one big purchase (usually investing) can in some cases have to wait a year or more till the get the VAT back.
This of course addressed only a marginal aspect of the problem as in VAT fraud it is often the seller which then vanishes with the money. This regulation put actually investors and leasing companies (who invest in goods and thus have immediately a claim to reimbursable VAT to lease them out where their income comes over time) and also their lessees (who only pay in installments and were thus not able to get even the VAT of the first large installment repaid) in a difficult position. After a discussion between the Ministry of Finance and the Leasing Association the problem was partially solved (in this case reimbursement can be made if the amount of the VAT is paid which leaves only lessees who pay a first installment below 20/% out in the cold).
The complaint of sellers, which could also be the basis of the rule, namely that if they do not receive the payment, it is difficult to pay the VAT (and thus this rule could improve payment discipline) could actually have been solved based on Article 66(b) of the Directive which allows that a Member States makes VAT chargeable, in respect of certain transactions or certain categories of taxable person no later than the time the payment is received. However, the Republic of Hungary has not claimed to have made use of that possibility (point 50 of the judgment).
The Court of Justice found that this rule infringes the fiscal neutrality of the VAT system: "such conditions must enable the taxable person, in appropriate circumstances, to recover the entirety of the credit arising from that excess VAT. This implies that the refund is made within a reasonable period of time by a payment in liquid funds or equivalent means, and that, in any event, the method of refund adopted must not entail any financial risk for the taxable person" (point 45 of the judgment).

It must be noted that no deadline has been set for changing this rule. It is also clear that the main problem highlighted by the Court was that there was no assurance that the tax will be recovered and when it can be recovered (the taxable person may have to carry forward the excess several periods giving rise to an uncertainty and a long delay).
Point 55 of the judgment states: "In that regard, it must be borne in mind that the carrying forward of a VAT excess over several tax periods following that in which the excess in question arose is not necessarily irreconcilable with the first paragraph of Article 183 of Directive 2006/112 (see, to that effect Enel Maritsa Iztok 3, paragraph 49). However, given that the national legislation at issue provides for tax periods from one month to a year in length, it may create a situation in which certain taxable persons, do not, because of the repeated carry-over of an excess, obtain a refund of that excess within a reasonable period."

So the consequence is not - as it is hinted by several articles in the news - that the amount of VAT has to be repaid immediately to everybody who has an outstanding claim, but the time to refund has to be limited to a reasonable and foreseeable extent and the conditions have to be in accordance with the VAT directive.

Of course, from this moment on, VAT subjects can request the refund of their excess VAT in their first VAT return. The judgment of the Court gives them the assurance that they are acting correctly. Although in general, European directives are not directly applicable, the member states have to transpose them into their national legislation and the national legislation is applicable, the judgment of the Court of 19 January 1982 in the case 8/81, (Ursula Becker v Finanzamt Münster-Innenstadt) enables direct applicability of the directives if the provisions of a directive "appear, as far as their subject matter is concerned, to be unconditional and sufficiently precise, those provisions may, in the absence of implementing measures adopted within the prescribed period, be relied upon as against any national provision which is incompatible with the directive …". And this can be done by all those who still have recoverable VAT which has not been paid to them based on the provision of the Hungarian VAT law which was annulled by the Court. If they do not request it, however, then they have to wait till the Hungarian Parliament modifies the tax law - ideally the modification should contain transitional provisions on the cases in progress.

Data protection

In Case C‑518/07, European Commission/EDPS Federal Republic of Germany, the European Court of Justice stated:

Declares that, by making the authorities responsible for monitoring the processing of personal data ... subject to State scrutiny, and by thus incorrectly transposing the requirement that those authorities perform their functions "with complete independence", the Federal Republic of Germany failed to fulfil its obligations under the second subparagraph of Article 28(1) of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data;
In relation to a public body, the term ‘independence’ normally means a status which ensures that the body concerned can act completely freely, without taking any instructions or being put under any pressure.

... the supervisory authorities responsible for supervising the processing of personal data outside the public sector must enjoy an independence allowing them to perform their duties free from external influence. That independence precludes not only any influence exercised by the supervised bodies, but also any directions or any other external influence, whether direct or indirect, which could call into question the performance by those authorities of their task consisting of establishing a fair balance between the protection of the right to private life and the free movement of personal data.
... they must remain free from any external influence, including the direct or indirect influence of the State

That principle does not preclude the existence of public authorities outside the classic hierarchical administration and more or less independent of the government. The existence and conditions of operation of such authorities are, in the Member States, regulated by the law or even, in certain States, by the Constitution and those authorities are required to comply with the law subject to the review of the competent courts. 

...conferring a status independent of the general administration on the supervisory authorities responsible for the protection of individuals with regard to the processing of personal data outside the public sector does not in itself deprive those authorities of their democratic legitimacy. 
 

From the news: Hungary plans to set up a government "Authority for data protection and information liberty". The latter phrase is  most probably a reflection of the term "free movement of [personal]  data".