Tuesday, 3 January 2017

2017 amendments in the Hungarian VAT legislation

From 1 January 2017, the scope of goods and services subject to the reduced VAT rates will be extended.

  • The VAT rate on basic foodstuff including poultry, eggs and fresh milk (except for breast milk, UHT and ESL milk) will be lowered to 5% (from the former 27% or 18%).
  • The VAT rate on internet services will be reduced to 18%.
  • The catering industry will also be affected by the VAT rate cuts. The current 27% tax rate will be reduced to 18%, and once again, from 1 January 2018, to 5% on meals provided and certain non-alcoholic beverages prepared locally in bars and restaurants. (However, as of 2018, parallel to the reduction of the VAT rate, a so-called tourism development contribution will be introduced).

Reverse charge mechanism

From 1 January 2017, the scope of goods subject to reverse charge mechanism will be extended to the sale of chromium and vanadium waste and debris.

New EU real estate regulations

Effective from 1 January 2017, the EU real estate regulations will change and introduce new definitions regarding real estates and related activities. The EU regulations have a primacy over and therefore will supersede Hungarian legislation. The new regulation will have relevance mainly in determining the place of supply of real estate-related services, consequently planning, construction, installation, inspection, appraisal, lease, providing accommodation, property maintenance, property management, legal services related to transfer of ownership over real estate, etc. will all be affected by the change

It is therefore advisable to give due consideration to the VAT assessment of activities related to real estates and in case of uncertainties seek guidance from LeitnerLeitner’s experts.

VAT tax exempt status

The threshold of VAT exemption for small taxpayers will rise from HUF 6 million to HUF 8 million from 1 January 2017.

Invoicing and VAT administration

From 1 January 2017, at the taxpayer’s choice, and from 1 July 2017 with mandatory effect, the threshold of domestic recapitulative statements will decrease to HUF 100,000 from the current HUF 1 million. Therefore, the customer’s tax number will have to be indicated on all invoices with a VAT content that reaches or exceeds  this threshold. According to the transitional provisions, it will not be mandatory to indicate the customer’s tax number on invoices issued in 2016 with a settlement date in 2017.

From 1 July 2017, VAT taxpayers will be required to supply data online to the tax authority on invoices that are issued using invoicing software and have a VAT content of at least HUF 100,000. The Minister for National Economy is authorised to formulate the detailed rules.

With effect from 26 November 2016, vending machines must be equipped with a surveillance device that facilitates online data reporting to the tax authority.