As suspected by the previous publications of the Hungarian tax authority, fuelled by the success of the already partially introduced online reporting system, the authority will require entrepreneurs to provide full data from mid-2020. According to the general justification for the amendments, the aim of the changes is to achieve a solution for a more transparent economy and simplified tax administration.
Although the introduction of the changes in 2018 was already a year later than previously planned, the system at that time did not start smoothly. However, looking back over the past two years, we can state based on the information confirmed by the Ministry of Finance that the online invoicing system has been successfully adapted, moreover its initiation has generated over HUF 200 billion additional revenue for the state treasury only in the past year.
Subsequently, the Tax Authority will introduce the changes at two dates. Once this two-step change comes to force, the Tax Authority will have all the necessary information to prepare a draft VAT statement for businesses – similar to the personal income tax return of individuals.
As of July 1, 2020, the following changes will be introduced:
1. Online data Provision
1.1. Issuer of the invoice
- the obligation of data provision covers all invoices issued to a resident taxable person in respect of goods or services supplied within the territory of the country (meaning that data provisions concerns not only invoices of at least HUF 100.000, but all invoices with or without VAT – e.g. reverse charge transactions or tax-exempt services)
- if the execution is preceded by an advance payment, the final invoice for data provision shall include the full amount reduced by the amount of the advance payment
- in case of printed invoices less than HUF 500.000, the reporting obligation is reduced from the previous 5 days to 4 days
- as a transitional provision, invoices issued before 1st July 2020 – regardless of the date of VAT payment – shall be subject to the rules applicable on 30th June 2020.
Please note that billing software developers should be contacted as soon as possible – if they were not already contacted – to ensure that the software in use meets the requirements outlined above.
1.2 Recipient of the invoice
- the taxable person must include the received invoices in the VAT return, regardless of the value. In the event of modification or cancellation of the invoices included in the summary report, it is necessary to declare the documents, which are to be treated in the same way as the related invoice – irrespective of the value.
- if the execution is preceded by an advance payment, the final invoice for data provision shall include the full amount reduced by the amount of the advance payment
- under a transitional arrangement, in case of invoices based on which the taxable person is entitled to deduct VAT in June 2020 (monthly tax return), in Q2 of 2020 (quarterly tax return) or in 2020 (annual tax return) during the tax year, the rules that are still in force on 30th June, 2020 shall apply.
Again, we would like to draw your attention to contact the developers of your accounting software as soon as possible to check if the software in use can properly handle the above-mentioned data collections.
You can also find information about online reporting on the website of Tax Authority.
2. Deadline for issuing invoices
The time limit for issuing invoices is reduced from 15 days to 8 days; therefore invoices must be issued within 8 days of completion
3. Required content of invoices
The first 8 digits of the tax identification number of the taxable person domestically registered is mandatory to be displayed on all invoices by a taxable person resident in Hungary for economic purposes; meaning that displaying the tax number is mandatory even if the VAT content of the invoice is less than HUF 100.000 or the invoice does not include VAT (e.g. reverse charge transactions or tax-exempt services).
4. Invoicing obligation
Taxable persons are required to issue an invoice for the following supplies of VAT-exempt goods and services (previously it was sufficient to issue an accounting certificate only):
- sale of unbuilt property / part of property and the sale of related estate
- sale of built-in property / part of property
- non-public health care, dental care
- other educational activity (not public education or higher education)
- tax-free services provided by a cooperative community to its members
From January 1st, 2021 – according to the current plans – the following changes shall be introduced:
Information shall be provided on all invoices issued for domestic transactions subject to the Hungarian invoicing rules. By way of exception, only taxpayers subject to the special rule applicable (MOSS system) to taxable persons carrying out transactions and providing services remotely in another Member State are mentioned in the law. This means that from the given date on, data must be provided about invoices issued not only to taxable persons, but also to non-taxable persons. In the case of an invoice issued to a non-taxable person, the name and address of the customer does not need to be indicated.
