In this guideline, we would like to call your attention to a tax administrative amendment as of 2015 by the Hungarian tax legislation, which have significant effect on the movement of goods at Hungarian established or VAT registered businesses.
LeitnerLeitner offers advisory services in connection with the recently implemented EKAER system, such as the VAT connected to international sale transactions and transportation. If you are considering doing business in Hungary, or you have any questions or tax problems, don't hesitate to contact us!
As of 2015 the transportation of goods underlies a new and special reporting obligation in Hungary liability in the new Electronic Road Freight Control System (“EKAER” in Hungarian). The delivery of goods carried out by vehicles subject to electronic road-toll fee (over 3.5 tons) has to be reported to the Hungarian Tax Authority unless the following delivery maximum thresholds are met: 2,500 kilograms of weight / net value of HUF 5 million (approx. EUR 16,000). The system generates a so-called Electronic Road Freight Control System number („EKAER number”) which is valid for 15 days.
The following movements of goods are subject to registration (declaration):
- Acquisition of goods in Hungary from another Member State or other transports into Hungary;
- Supply of goods from Hungary to another Member State or other transports;
- Performing the first taxable domestic supply of goods to parties other than end customers.
Regardless of the vehicle used for the purpose of transportation, the delivery of certain risky foods and other risky products has to be reported over 500 kilograms of weight / a net value of HUF 1 million (approx. EUR 3,200).
Furthermore, the transportation of the products in the risky categories is bounded to deposit as well. The amount of deposit has to reach 15% of the net value of the transported products subject to reporting obligation in the previous 45 days. Providing a deposit might be avoided by getting registered at the Hungarian Tax Authority in the certified taxpayer’s database or in the public debt-free taxpayer’s database combined with an operation of at least two years. The registration into these databases requires the fulfilment of certain criterion; therefore, in the case of supplies of the above mentioned risky products with transportation it is worth investigating the feasibility of the registration into such databases.
The EKAER number always has to be claimed prior to the beginning of the transportation by the domestic or VAT-registered taxable person; i.e. in the case of intra-Community acquisitions by the recipient, at intra-Community supplies by the supplier and at the first domestic supplies by either the supplier or recipient (to be determined by specific rules). The respective declarations might be submitted through an electronic interface.
Failing the reporting obligation results that the goods not reported will be automatically classified as having no certificate of origin and a default penalty up to 40% of the product value might be imposed. In the lack of an EKAER number the Hungarian Tax Authority has the right to seize the goods or to impound the transportation.
Considering the fact that failure in the EKAER obligations may lead to the reveal of mismatches and defaults in the VAT management system, it is advised to reconsider the transportation of goods, to investigate the transportation means as well as to review the transport related VAT processes. The compliance with the new obligations requires an utmost care and a precise administration.
If you need assistance in connection with the EAKER / VAT system do not hesitate to contact us!
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