The present guideline provides you with a brief summary of the Hungarian VAT compliance rules, informing you about the Hungarian VAT registration and VAT return obligations.
LeitnerLeitner offers assistance in the VAT registration and provides full-scope assistance for the forthcoming VAT compliance:
- VAT registration
- Preparing and filing of VAT returns, sales listings, Intrastat
- Advisory for invoicing and registration of invoicing programmes
- Tax audit assistance
- Representation in front of the tax authority.
To initiate the registration, a specific registration form has to be filled in and submitted to the Hungarian tax authority. The information necessary for the VAT registration includes the general data of the registrant company (e.g. name, seat, postal address, representatives, activity codes and the commencement date of the Hungarian activity). In practice, the Tax Authority may also require additional documents or information from the registrant(s).
Please also be informed that Hungary applies two formats of the VAT ID numbers, one for domestic and another for intra-Community purposes. Both numbers may be claimed upon registration within the same procedure.
In our experiences, the completion of the documents usually lasts about 1 week after receiving all necessary documents from the registrant. The registration procedure itself also takes about 2 weeks after submitting the request for VAT registration to the Hungarian Tax Authority. The VAT number is effective retroactively from the date of submission of the registration application. For special request; however, a retroactive registration may also be requested by providing the starting date of the Hungarian activity.
As the filing of tax returns is made via an electronic platform in Hungary, the VAT registration should be followed by another electronic registration procedure.
As soon as the VAT ID number is issued, the registrant is liable to file VAT returns on a monthly basis as well as EC Sales Lists (recapitulative statement) both for intra-Community acquisitions and intra-Community supplies. Please note that the Hungarian VAT return is also due even without any taxable activity to be reported, in this latter case so-called nil return shall be submitted to the tax authority (this is applicable only for the VAT return itself, the EC Sales List does not have to be submitted in the lack of intra-Community transactions). The deadline for submission is the 20th day of the following month.
A detailed reporting obligation (so-called domestic itemized reporting) lies both for the supplier and the recipient for invoices over a VAT amount of HUF 1 million (approx. EUR 3,225). Further, the customer also needs to provide information if the VAT charged on the domestic acquisition of goods and services from the same supplier in the given VAT assessment period exceeds HUF 1 million (approx. EUR 3,225). As of 1 July 2018 the reporting limit is planned to be reduced from HUF 1 million to HUF 100 000 (approx. EUR 320).
Parallel to the above provisions and changes, the domestic VAT ID number of the recipient shall be indicated on invoices over a VAT amount of HUF 100,000 already from 1 January 2017.Further, it is planned that for issued invoices including a VAT amount over HUF 100,000 electronic on-time data submission will be required at the time of invoicing. However, at the same time the outgoing invoices would not fall under the domestic itemized report liability. Please note that the test system is already available; so do not hesitate to turn to our tax advisors for assistance in the implementation.
VAT returns shall also be supported with adequate analytical registers indicating the data of invoices as the basis of the VAT assessment. This shall not be filed with the VAT returns; however, in the case of a VAT audit it is subject to hand over to the tax auditors. Further, after the VAT registration, the invoicing software used for issuing invoices under the Hungarian VAT ID number shall also be reported to the Hungarian Tax Authority.
We would also call your attention that in Hungary VAT returns are regarded as final after submission; therefore, we do not apply for preliminary VAT returns as in certain countries (e.g. Austria), i.e. the so-called “Voranmeldung” and subsequent yearly tax return do not exist in Hungary. If the already filed VAT return is subject to changes, a self-revision might be prepared and submitted.
The Intrastat threshold in Hungary is HUF 100 million (approx. EUR 310,000) which might also be due (the Central Statistical Office sends a letter in case the liability emerges).
Reporting of the transportation of goods
We would also like to call your attention that the transportation of goods might fall under a special administrative reporting liability in the new Electronic Road Freight Control System (“EKAER” in Hungarian). The products, which are transported on vehicles that are subject to road-toll (over 3.5 tons) have to be registered at the Hungarian Tax Authority.
The following transactions of goods are obliged to registration provided that no exemption is applicable:
- intra-Community acquisition of goods or similar activities from other Member States to Hungary (including e.g. deemed intra-Community acquisitions and manufacturing);
- intra-Community supply of goods from Hungary to another Member State or similar activities;
- Performing the first taxable domestic supply of goods to parties other than end users.
An exemption is applicable from the reporting provided that the net value of the goods is under HUF 5 million (approx. EUR 16,000) and the weight does not exceed 2.5 tons for one freight. There are certain products categorized according to the customs tariff codes as being “risky” where stricter rules are applicable both for the exemption and the vehicle used for transportation.
Hungarian invoicing requirements
First of all, please note that the Hungarian invoicing requirements set forth by the Hungarian Act on VAT, the Hungarian Act on Accounting and Decree No. 23/2004 of Ministry of National Economy are fairly strict and go beyond what is required by the EU VAT Directive.
Invoices may be issued in any currency. For the reporting and calculation of VAT payable, however, the HUF equivalent of the invoiced VAT should be calculated and also to be indicated on every invoices.
Invoices issued by entities registered for VAT in Hungary are subject to the so-called “strict accounting regulations”. This means, among other things, that the copy number of the invoice should be indicated on each copy. Therefore, when using invoicing software, it should also ensure the continuous numbering of the copies without interruption and/or any possibility of repetition. This also means that foreign entities should apply a separate invoicing line for the transactions falling under the Hungarian VAT ID.
Please also be informed that a computer-generated invoice may not be completed or corrected by hand.
If you need assistance in the VAT registration or full-scope assistance for the forthcoming VAT compliance do not hesitate to contact us!
Address: 1027 Budapest, Kapás utca 6-12.
Telephone: +36 1 279 2930
Fax: +36 1 209 4874